TIDMWTL
RNS Number : 0241O
Waterlogic PLC
16 September 2013
16 September 2013
WATERLOGIC PLC
("Waterlogic", the "Group" or the "Company")
INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2013
(UNAUDITED)
Waterlogic Plc (AIM: WTL.L), a leading designer, manufacturer
and distributor of point-of-use ("POU") drinking water purification
and dispensing systems, today announces its unaudited interim
results for the six months ended 30 June 2013.
Six months Six months Growth Year
ended ended ended
30 June 30 June 31 December
2013 2012 2012
Revenue $54.6m $46.5m 17.4% $101.0m
Gross margin 63.3% 59.7% 6.0% 60.9%
Adjusted EBITDA $7.6m $4.8m 58.3% $14.7m
EBITDA $5.2m $3.0m 73.3% $9.9m
Adjusted operating profit $4.3m $2.3m 87.0% $9.1m
Operating profit $0.6m $0.0m - $2.5m
Adjusted net income (1) $3.1m $1.7m 88.2% $7.8m
Net income ($0.4m) ($0.8m) 50.0% $1.4m
Net debt/(funds) (3) $35.7m ($29.9m) - ($24.4m)
Group highlights
-- Rental and service revenue increased to 38% of total revenue (H1 2012: 34%)
-- Organic revenue growth of 3.0% using constant exchange rates (2)
-- Gross margin increased by 3.6% due to channel mix in 2013
with larger proportion of higher margin generating activities
-- Completed acquisition of Cool Clear Water Group Ltd ("CCWG")
during H1 establishing a large base in a major new territory
-- Completed arrangement of five year multi-currency credit
facility including term and revolving credit facilities of AUS$
54.6 million and NOK 51.6 million
-- Waterlogic Consumer customer Indesit launched in Turkey, Russia and Italy
-- Waterlogic Consumer signed an agreement with a well-respected
trading company for the distribution of the Group's Consumer
products in Japan
-- New Group CFO, John Skidmore, appointed June 17(th)
-- Machines in field are estimated to have increased by 120,000 to 715,000 (H1 2012: 595,000)
-- New distributors added in Bulgaria and Italy plus new
territories were opened in Lithuania and Chile
Jeremy Ben-David, Waterlogic Group CEO, commented:
"We continue to pursue our strategy, growing our recurring
revenue base and achieving growth both organically and via
acquisitions in Waterlogic Commercial. The acquisition of CCWG in
Australia is the Group's largest acquisition to date and adds
substantial recurring revenue and growth opportunities for the
Group. We are proud to have the support of Clydesdale and HSBC
banks that supported the Group in this acquisition. We are very
pleased to welcome such prestigious banking partners and see this
as an excellent illustration of support for the Waterlogic Group.
These new facilities reflect the banks' confidence in the Group's
strength and strategy going forward.
Waterlogic Consumer continues to pursue several opportunities
around the world, although planned launches have taken longer than
expected. The Board remains excited by the opportunities in
Waterlogic Consumer, while revenues in 2013 are only expected to be
approximately USD 2.0 million (2012 : USD 0.5 million) we remain
positive about the long term prospects.
As with previous years, the Board expects the Group to
experience a H2 weighting in terms of revenue with full year
revenue being between USD 120.0 million - USD 125.0 million."
(1) The Directors use adjusted measures to judge the
profitability of the Group to provide them with a consistent basis
for comparison of the Group's results, on a year on year basis.
During the periods under review, "Adjusted" measures include
adjustments for the share based incentives expense, capital
reorganisation related costs, acquisition & integration related
costs, amortisation of acquired intangibles and corporate
reorganisation costs. Further details and reconciliations to
statutory measures are included in note 5 to the financial
information.
(2) Organic growth is measured as the change in revenue year on
year, at constant currency excluding current year revenues from
acquisitions until after the first anniversary of the
acquisition.
(3) Net debt/(funds) represents total borrowings less cash and cash equivalents.
Enquiries:
Waterlogic Plc Via Redleaf Polhill
Jeremy Ben-David, Group Chief Executive
Officer
John Skidmore, Group Chief Financial
Officer
Liberum Capital (Nominated Adviser Tel: +44 (0)20 3100 2000
and Broker)
Steve Pearce
Richard Bootle
Redleaf Polhill (PR Adviser) Tel: +44 (0) 207 382 4730
Rebecca Sanders Hewett Email: waterlogic@redleafpr.com
Charlie Geller
Emma Kane
David Ison
Website: www.waterlogic.com
Notes to editors:
Waterlogic Plc
Waterlogic Plc (AIM: WTL.L) is a leading designer, manufacturer,
distributor and operator of mains attached point-of-use ("POU")
drinking water purification and dispensing systems designed for
environments such as offices, factories, hospitals, hotels,
schools, restaurants and other workplaces. Waterlogic is a Jersey
registered company. Waterlogic's products and services are built on
the simple vision of a three stage approach to purity:
1. Filtration to remove unwanted contaminants, chlorine and other water-borne tastes and odours
2. Waterlogic's Firewall(TM) ultra-violet ("UV") technology is
one of the most effective water purification technologies for POU
water dispenser applications currently on the market and its
dispensers are certified by the Water Quality Association as being
able to guarantee 99.9999% pure water 100% of the time, a fact
which has been confirmed by over 5,000 physical tests in
independent laboratories. The innovative Firewall(TM) technology
incorporates a highly-specialised, compact UV system in the
faucet/tap, which ensures that water passes through the UV system
immediately before it is dispensed into a cup. This point of
differentiation for Firewall(TM) is unique in the POU market.
3. BioCote silver anti-microbial protection. Plastic surfaces
surrounding dispensing areas of Waterlogic units are infused with a
silver additive called BioCote, a natural anti-microbial that
inhibits the growth of micro-organisms, giving yet another layer of
hygienic defence.
Founded in 1992, Waterlogic was one of the first companies to
introduce POU systems to Europe and has been a leader in the POU
market in terms of product design and quality, the application of
new technologies and in sales and service. Waterlogic has an
extensive and expanding independent global distribution network in
place, reaching over 50 countries around the world.
Waterlogic products are currently being sold in North and South
America, Europe, Asia, Australia and South Africa. Waterlogic's
leading markets are the USA and Western Europe, in particular
Germany, France, Scandinavia and the UK. Of the 2.1 million new POU
and bottled water installations in the business-to-business market
in the USA and Europe between 2005 and 2012, approximately 77%
incorporated POU technology, of which approximately 29% were
Waterlogic products.
The Directors believe that the movement away from bottled water
coolers (BWC) to POU water dispensers is set to continue its
current trend as a result of cost, convenience, health benefits and
environmental considerations.
As part of Waterlogic's on-going commitment to providing safe
water, the Group has pledged to donate USD 225,000 over the three
years from 2012 to 2014 to WaterAid. WaterAid is a renowned
international non-profit organisation that transforms lives by
improving access to safe water, hygiene and sanitation in the
world's poorest countries. Since 1981 WaterAid has reached 15.9
million people globally with safe water. Website:
www.wateraidamerica.com
CHIEF EXECUTIVE'S STATEMENT
Waterlogic continues to work towards its stated strategy.
Waterlogic Commercial has grown its direct sale and rental business
and has significantly increased its revenue and recurring revenue
via the acquisition of CCWG in Australia.
Waterlogic Commercial successfully launched new products based
on the Company's unique Firewall(TM) technology in several markets.
A new sparkling range of products including the Firewall(TM)
technology were launched in Europe. In France the company launched
a high water volume dispenser, incorporating the Firewall(TM),
which targets the hotel, restaurant and catering markets. Several
new national accounts were acquired in Germany, France, Scandinavia
and the USA. Organic growth was achieved even as the company
focuses more efforts in procuring rental contracts and increasing
its recurring revenue.
Waterlogic Commercial
Machines in field at the end of H1 2013 are estimated to have
risen to 715,000 (H1 2012 : 595,000).
The business entered a new geographic territory in June through
the acquisition of CCWG, a market leader in POU water dispensers in
Australia, with an install base of approximately 30,000
machines.
New distributors were added in Bulgaria and Italy, and new
distributor territories were opened in Lithuania and Chile.
A number of new products were launched in Germany, France,
Sweden and the USA incorporating the innovative Firewall(TM)
technology.
A major procurement initiative got underway in H1 focused on
partnering with world-class suppliers to deliver best value for our
operations in China. Benefits from this initiative are expected to
begin in Q4 2013. The first contract signed with a major components
supplier is expected to save approximately USD 0.5 million per
annum.
Major multi-year rental contracts were won in France, Germany
and in the United States.
New initiatives were implemented with Aqua Cure (UK), and in
France, Norway and the USA to develop our e-commerce business.
Waterlogic Consumer
Waterlogic Consumer achieved USD 0.8 million revenue in H1 (H1
2012: nil) and revenues for the full year are expected to be
approximately USD 2.0 million. With launches planned in several new
European markets in the coming months as well as in Japan, growth
is expected to continue to accelerate. The Company is assessing its
go to market strategy in several geographies where a more direct
approach to retailers and consumers is being considered.
In May, the Group signed an agreement with a well-respected
trading company for the distribution of the Company's Waterlogic
Consumer products in Japan. The five-year agreement grants
Waterlogic exclusivity for the supply of drinking water
purification devices to the Japanese partner, which will in turn
become the sole distributor of Waterlogic Consumer products to the
Japanese market. The agreement has volume commitments in place for
the first year and includes certain performance clauses. The volume
commitments for the following years of the agreement will be
negotiated in line with the Company's expectations.
The Waterlogic Consumer range of products is expected to be
launched in Japan in late 2013. The products will carry the
"Waterlogic" and "Firewall(TM)" branding for direct distribution,
and "OEM brand" and "Firewall(TM)" for OEM. The Japanese partner
will be distributing to the market through kitchen manufacturers
and wholesalers, mail order catalogues and through healthcare
organisations to the medical industry. The Japanese residential
water treatment market is one of the largest in the world, valued
at more than USD 2 billion and represents a significant opportunity
for the Company.
The Indian joint venture with Eureka Forbes is progressing with
manufacturing expected to start in the new factory, located in
Dehradun by the end of 2013. The Group remains very excited by the
prospects of this partnership with Eureka Forbes and by the long
term potential within the Indian market.
Waterlogic Consumer customer Indesit launched in Turkey, Russia
and Italy. Although these launches were later than originally
anticipated, Indesit plans to continue the rollout in further
European territories this year and next.
There have been delays in the deployment of certain other
Waterlogic Consumer projects, with the most significant impact from
one particular customer expected to launch in Q1 2013. At present
this launch remains in discussion with the customer with regards to
the specification of their product and other contractual
matters.
Opportunities are being pursued in several other countries and
segments.
Results and Operations
Group revenue increased by 17.4% to USD 54.6 million (H1 2012:
USD 46.5 million). Organic revenue growth was 3% using constant
exchange rates. This included USD 0.8m (H1 2012: USD Nil) from
Waterlogic Consumer. Waterlogic Commercial direct sales revenue and
revenue from rental and service both experienced healthy organic
growth (7% and 4% respectively). The strongest Waterlogic
Commercial growth territory was Germany where additional sales
heads have driven strong growth. There was a decline of 3% in
Waterlogic Commercial indirect sales where a recovery from last
year's weaker trading performance in Waterlogic Commercial Products
in the US was offset by organic revenue declines in the
International Trading business where weakness has persisted into
2013 and in Aqua Cure which has been impacted by the termination of
a distribution agreement by a filter supplier.
The Group's combined gross margin for the period has increased
to 63.3%, compared to 59.7% in H1 2012 and 60.9% for FY 2012. This
results from the increase in higher margin rental and service
revenues delivered by the FY2012 acquisitions, and a change in the
mix between direct and indirect sales.
Adjusted EBITDA has increased to USD 7.6 million compared to USD
4.8 million in H1 2012. Adjusted operating profit has increased to
USD 4.3 million compared to USD 2.3 million in H1 2012, including,
an adjustment for the amortisation of acquired intangibles USD 1.3
million (2012 : USD 0.6 million).
At the end of H1 the Group had net debt of USD 35.7 million
compared with net funds of USD 24.4 million at 31 December 2012.
The increase reflects the impact of the CCWG acquisition completed
in June 2013. The Group secured a five year multicurrency loan
comprising; NOK 51.6 million which is fully drawn and AUD 54.6
million of which AUD 46.7 million is drawn as at 30 June 2013 in
order to provide the funding for the CCWG acquisition.
Net cash from operating activities was USD (1.0) million for the
period, compared to USD (0.6) million over H1 2012. The net effect
of working capital movements reported in the cash flow reflected an
outflow of USD 3.7 million (2012: outflow of USD 1.8 million). A
significant part of this increase relates to higher stock levels
including initial Waterlogic Consumer components stock items,
combined with increased receivables driven by strong trading in the
month of June.
The Market
According to the latest Zenith West Europe Coolers Report 2013,
the number of plumbed-in mains water coolers (i.e. POU) units
increased by 6% in 2012, reaching the 1.2 million units in field
mark and taking POU's share of the cooler market to 43%. Zenith
confirm the growing POU trend by estimating that POU are expected
to reach 50% of the market by 2017. Estimates for the market size
of North America and Europe remain at 10 million units with
traditional bottled water coolers still representing circa 80% of
all coolers in the US and Eastern Europe. The opportunity to
convert customers away from bottled water to the far more
convenient, environmentally-friendly and cost effective solution of
POU represents a continuing opportunity for the Group for several
years to come.
Outlook
The Group has strengthened its recurring revenue base and
advanced products based on its innovative Firewall(TM) UV
technology to the stage of commercial release. Direct sales and
rental continue to experience healthy organic growth in several
geographies. The acquisition of CCWG in Australia provides an
excellent platform for growth and increases the Groups recurring
revenue.
The Board expect that revenues for the year ended 31 December
2013 to be in the range of approximately USD 120.0 to USD 125.0
million (2012: USD 101.0 million) and adjusted EBITDA to be
approximately USD 20.0 million (2012: USD 14.7 million).
Jeremy Ben-David
Group Chief Executive
13 September 2013
WATERLOGIC PLC
CONSOLIDATED INCOME STATEMENT
FOR THE SIX MONTHS ENDED 30 JUNE 2013
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2013 2012 2012
Note USD'000 USD'000 USD'000
------------------------------------------ ----------- ----------- -------------
Continuing operations
Revenue 3 54,579 46,453 100,968
Cost of sales (20,014) (18,698) (39,463)
----------- ----------- -------------
Gross profit 34,565 27,755 61,505
Distribution expenses (330) (504) (900)
Marketing expenses (724) (533) (911)
Administrative expenses (32,793) (26,430) (57,513)
Other gains and losses (88) (334) 346
----------- ----------- -------------
Operating profit/(loss) 630 (46) 2,527
------------------------------------------ ----------- ----------- -------------
Adjustment for the effect of:
Share based incentives 1,202 965 1,630
Capital reorganisation related costs - - 56
Acquisition and integration costs 1,146 750 2,308
Corporate reorganisation costs - - 774
Amortisation of acquired intangibles 1,280 641 1,792
------------------------------------------ ----------- ----------- -------------
Adjusted operating profit 5 4,258 2,310 9,087
------------------------------------------ ----------- ----------- -------------
Finance income 70 91 177
Finance costs (253) (262) (730)
----------- ----------- -------------
Profit/(loss) before tax 447 (217) 1,974
Income tax expense (863) (550) (525)
----------- ----------- -------------
(Loss)/ profit for the period (net
income) (416) (767) 1,449
=========== =========== =============
(Loss)/ profit attributable to:
Owners of the Company (451) (909) 1,185
Non-controlling interests 35 142 264
----------- ----------- -------------
(416) (767) 1,449
=========== =========== =============
Earnings per share: 6
Basic (cents per share) (0.59) (1.20) 1.56
=========== =========== =============
Diluted (cents per share) (0.59) (1.18) 1.53
=========== =========== =============
WATERLOGIC PLC
CONSOLIDATED STATEMENT OF COMPREHENSIVE
INCOME
FOR THE SIX MONTHS ENDED 30 JUNE 2013
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2013 2012 2012
USD'000 USD'000 USD'000
------------------------------------------------------ -------------------- -------------
(Loss)/ profit for the period (416) (767) 1,449
Exchange differences on translation of
foreign operations (1,751) (808) 882
--------- -------------------- -------------
Total comprehensive income for the period (2,167) (1,575) 2,331
========= ==================== =============
Total comprehensive income attributable
to:
Owners of the Company (2,241) (1,715) 2,061
Non-controlling interests 74 140 270
--------- -------------------- -------------
(2,167) (1,575) 2,331
========= ==================== =============
WATERLOGIC PLC
CONSOLIDATED BALANCE SHEET
AS AT 30 JUNE 2013
As at As at As at
30 June 30 June 31 December
2013 2012 2012
USD'000 USD'000 USD'000
----------------------------------------------- --------- -------------
ASSETS
Non-current assets
Goodwill 50,607 20,916 24,858
Other intangible assets 41,007 11,810 20,296
Property, plant and equipment 24,040 13,653 16,302
Deferred tax asset 1,070 1,011 1,071
------------------------------------- -------- --------- -------------
Total non-current assets 116,724 47,390 62,527
------------------------------------- -------- --------- -------------
Current assets
Inventories 17,048 13,118 13,361
Trade and other receivables 27,775 21,231 23,312
Derivative financial instruments - - -
Cash and cash equivalents 13,840 37,287 30,154
------------------------------------- -------- --------- -------------
Total current assets 58,663 71,636 66,827
------------------------------------- -------- --------- -------------
Total assets 175,387 119,026 129,354
------------------------------------- -------- --------- -------------
EQUITY AND LIABILITIES
Capital and reserves
Stated capital - - -
Additional paid in capital 60,624 60,261 60,389
Translation reserve (1,453) (1,385) 298
Share based payment reserve 5,523 3,678 4,420
Retained earnings 24,768 23,125 25,218
------------------------------------- -------- --------- -------------
Equity attributable to Shareholders 89,462 85,679 90,325
Non-controlling interest 74 167 297
------------------------------------- -------- --------- -------------
Total equity 89,536 85,846 90,622
------------------------------------- -------- --------- -------------
WATERLOGIC PLC
CONSOLIDATED BALANCE SHEET (continued)
AS AT 30 JUNE 2013
Note As at As at As at
30 June 30 June 31 December
2013 2012 2012
USD'000 USD'000 USD'000
EQUITY AND LIABILITIES (continued)
Non-current liabilities
Borrowings:
- bank and other borrowings 46,774 3,776 2,783
- convertible loan notes - - -
- obligations under finance leases 22 42 21
------------------------------------------ --------- --------------------- ---------------------
Total borrowings 46,796 3,818 2,804
Derivative financial instruments - - 96
Provisions 135 74 81
Deferred tax liabilities 1,292 1,548 1,520
Deferred and contingent consideration 46 781 1,271
------------------------------------------ --------- --------------------- ---------------------
Total non-current liabilities 48,269 6,221 5,772
Current liabilities
Trade and other payables 20,297 16,789 19,407
Borrowings:
- bank and other borrowings 2,731 3,475 2,855
- convertible loan notes - - -
- obligations under finance leases 20 95 65
------------------------------------------ --------- --------------------- ---------------------
Total borrowings 2,751 3,570 2,920
Current tax liabilities 2,367 573 1,484
Provisions - - 81
Derivative financial instruments - 114 -
Deferred revenue 8,061 4,465 5,496
Deferred and contingent consideration 4,106 1,448 3,572
------------------------------------------ --------- --------------------- ---------------------
Total current liabilities 37,582 26,959 32,960
------------------------------------------ --------- --------------------- ---------------------
Total liabilities 85,851 33,180 38,732
------------------------------------------ --------- --------------------- ---------------------
Total equity and liabilities 175,387 119,026 129,354
------------------------------------------ --------- --------------------- ---------------------
This financial information was approved by the Board of
Directors and authorised for issue on 13 September 2013 and was
signed on its behalf by:
John Skidmore
Group Chief Financial Officer
WATERLOGIC PLC
CONSOLIDATED CASH FLOW STATEMENT
FOR THE SIX MONTHS ENDED 30 JUNE 2013
Note Six months Six months Year
ended ended ended
30 June 30 June 31 December
2013 2012 2012
USD'000 USD'000 USD'000
(Loss)/profit after tax for the period (416) (767) 1,449
Adjustments:
depreciation and amortisation 4,577 3,088 7,363
acquisitions (negative goodwill and contingent
consideration) - 132 375
share based incentives expense 1,202 965 1,630
income tax expense 863 550 525
net interest expense and changes in the
fair value of derivative financial instruments 183 153 584
loss on disposal of non-current assets - 24 57
--------------------------------------------------- ----------- ----------- -------------
Adjusted operating profit before working
capital movements 6,409 4,145 11,983
Net effect of working capital movements
7 (3,709) (1,772) 1,534
--------------------------------------------------- ----------- ----------- -------------
Cash flow before purchase of rental assets,
interest and tax 2,700 2,373 13,517
Purchases of rental assets (2,535) (1,715) (3,931)
Proceeds on disposal of rental assets 36 40 57
Interest paid (139) (227) (488)
Tax paid (1,055) (1,093) (2,016)
--------------------------------------------------- ----------- ----------- -------------
Net cash from operating activities (993) (622) 7,139
Investing activities
Interest received 70 90 181
Proceeds on disposal of property, plant
and equipment - - 4
Purchases of property, plant and equipment (972) (608) (2,181)
Purchases of intangible assets (852) (434) (1,380)
Acquisitions, net of cash acquired (55,177) (11,700) (21,045)
Acquisition of non-controlling interests (1,622) - -
Deferred and contingent consideration
paid (212) (12) (12)
Investment in Joint Venture (435) - (234)
Net cash used in investing activities (59,200) (12,664) (24,667)
Financing activities
New bank loans raised (net of costs) 49,413 671 1,257
Repayment of bank loans and other financing (5,205) (1,426) (4,567)
--------------------------------------------------- ----------- ----------- -------------
Net cash from financing activities 44,208 (755) (3,310)
Translation differences 15 451 17
Net decrease in cash and cash equivalents (15,970) (13,590) (20,821)
Net cash and cash equivalents at beginning
of the period 29,810 50,631 50,631
--------------------------------------------------- ----------- ----------- -------------
Net cash and cash equivalents at end of
the period 7 13,840 37,041 29,810
--------------------------------------------------- ----------- ----------- -------------
WATERLOGIC PLC
NOTES TO THE INTERIM FINANCIAL INFORMATION
FOR THE SIX MONTHS ENDED 30 JUNE 2013
1. General information
Waterlogic Plc (the "Company") and its subsidiaries (together
the "Group") operate as a vertically integrated business engaged in
the design, manufacture, distribution, servicing and sale of point
of use water machines in worldwide markets.
The Company is a Public Limited company which is listed on the
London Stock Exchange's Alternative Investment Market (AIM) The
Company is incorporated in Jersey under registration number 108193.
The address of its registered office is 15, Union Street, St
Helier, Jersey, Channel Islands, JE2 3RF and the Company's
operating activities are based in Ireland.
The financial information set out above for the year ended 31
December 2012 does not constitute the Company's statutory accounts,
but is derived from those accounts. The auditors reported on those
accounts on 12 April 2013 and their report was unqualified.
2. Basis of preparation
The annual financial statements of Waterlogic Plc are prepared
in accordance with International Financial Reporting Standards
(IFRSs) as adopted by the European Union. Certain information and
footnote disclosures normally included in financial statements
prepared in accordance with IFRSs have been condensed or omitted
from the half year condensed financial information. However, this
information includes all adjustments, which are, in the opinion of
management, necessary to fairly state the results of the interim
period and the Group believes that the disclosures are adequate to
make the information presented not misleading. The same accounting
policies, presentation and methods of computation are followed in
the condensed financial information as applied in the Group's
latest annual audited financial statements.
The Directors have a reasonable expectation that the Group has
adequate resources to continue in operational existence for the
foreseeable future. Thus they continue to adopt the going concern
basis of accounting in preparing this condensed financial
information.
The half year condensed financial information for the six months
ended 30 June 2013 have not been audited or reviewed by auditors
pursuant to the Auditing Practices Board guidance on Review of
Interim Financial Information, and was approved by the Board for
issue on 13 September 2013.
3. Revenue
An analysis of the Group's revenue is as follows:
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2013 2012 2012
USD'000 USD'000 USD'000
---------------------- ----------- ----------- -------------
Continuing operations
Direct sales 11,468 8,865 16,004
Indirect sales 22,110 21,820 45,994
Rental and service
income 21,001 15,768 38,970
---------------------- ----------- ----------- -------------
Consolidated revenue 54,579 46,453 100,968
---------------------- ----------- ----------- -------------
4. Business and geographical segments
The following is an analysis of the Group's revenue and
operating profit by geographical segment:
Six months Six Year
ended months ended
30 June ended 31 December
2013 30 June 2012
USD'000 2012 USD'000
USD'000
---------------------------------------------------------------------------------------------- --------- ----------------------------
International Trading
External sales 6,139 6,053 14,375
Inter-segment
sales 9,003 6,966 12,636
----------------- --------------------------------------------------------------------------- --------- ----------------------------
Total revenue 15,142 13,019 27,011
----------------- --------------------------------------------------------------------------- --------- ----------------------------
Segment
operating
profit (237) 2,218 3,500
Scandinavia
External sales 16,926 14,423 31,786
Inter-segment
sales 106 328 563
----------------- --------------------------------------------------------------------------- --------- ----------------------------
Total revenue 17,032 14,751 32,349
----------------- --------------------------------------------------------------------------- --------- ----------------------------
Segment
operating
profit 2,314 292 2,958
France
External sales 3,653 3,378 7,342
Inter-segment - - -
sales
----------------- --------------------------------------------------------------------------- --------- ----------------------------
Total revenue 3,653 3,378 7,342
----------------- --------------------------------------------------------------------------- --------- ----------------------------
Segment
operating
profit 317 (129) 451
Germany
External sales 6,935 5,810 11,934
Inter-segment
sales 56 134 25
----------------- --------------------------------------------------------------------------- --------- ----------------------------
Total revenue 6,991 5,944 11,959
----------------- --------------------------------------------------------------------------- --------- ----------------------------
Segment
operating
profit 1,196 919 1,986
US
External sales 15,301 11,055 24,768
Inter-segment - 401 -
sales
----------------- --------------------------------------------------------------------------- --------- ----------------------------
Total revenue 15,301 11,456 24,768
----------------- --------------------------------------------------------------------------- --------- ----------------------------
Segment
operating
profit (68) (752) (1,092)
UK
External sales 4,986 5,730 10,757
Inter-segment sales 330 163 374
--------------------- ----------------------------------------------------------------------- --------- ----------------------------
Total revenue 5,316 5,893 11,131
--------------------- ----------------------------------------------------------------------- --------- ----------------------------
Segment operating
profit 488 653 1,195
Australia
External sales 585 - -
Inter-segment sales - - -
Total revenue 585 - -
Segment operating profit (239) - -
PRC
---------------------------------------------------------------------------------------------------------------------------------------
External sales 53 4 6
Inter-segment sales 9,039 6,882 15,258
--------------------- ----------------------------------------------------------------------- --------- ----------------------------
Total revenue 9,092 6,886 15,264
--------------------- ----------------------------------------------------------------------- --------- ----------------------------
Segment operating
profit (192) (986) (115)
Eliminations
External sales - - -
Inter-segment sales (18,533) (14,874) (28,856)
--------------------- ----------------------------------------------------------------------- --------- ----------------------------
Total revenue (18,533) (14,874) (28,856)
--------------------- ----------------------------------------------------------------------- --------- ----------------------------
Segment operating
profit (822) 1,369 (100)
CONSOLIDATED
External sales 54,579 46,453 100,968
Inter-segment sales - - -
--------------------- ----------------------------------------------------------------------- --------- ----------------------------
Total revenue 54,579 46,453 100,968
--------------------- ----------------------------------------------------------------------- --------- ----------------------------
Aggregate segment
operating profit 2,757 3,584 8,783
Share based
incentive
costs (1,202) (965) (1,630)
Central
administration
costs (925) (2,665) (4,626)
----------------- --------------------------------------------------------------------------- --------- ----------------------------
Operating profit 630 (46) 2,527
----------------- --------------------------------------------------------------------------- --------- ----------------------------
Segment operating profit represents the profit earned by each
segment without allocation of the share of central administration
costs including Directors' salaries, investment revenue and finance
costs and income tax expense. This is the measure reported to the
Group's Chief Executive for the purpose of resource allocation and
assessment of segment performance.
Central administration costs comprise principally the employment
related costs and other overheads incurred by the Company, and its
subsidiaries WIL and WLI (UK) Ltd, net of management charges to and
from other subsidiaries, and inter-company commission income.
Other segment information
The Group is managed on the basis of segment performance,
focused on the geographical location of markets. Following the
establishment of the new Consumer Division, operations are also
reviewed on the basis of performance of the Consumer and Commercial
Divisions. Accordingly, the following additional disclosure has
been made with respect to the Consumer and Commercial
Divisions.
Six months Six Year
ended months ended
30 June ended 31 December
2013 30 June 2012
USD'000 2012 USD'000
USD'000
----------------------------------------------------------------------------------------------------- --------- ---------------------
Waterlogic Commercial
External sales 53,793 46,433 100,461
Gross profit 34,466 27,746 61,416
----------------- ---------------------------------------------------------------------------------- --------- ---------------------
Gross margin 64% 60% 61%
----------------- ---------------------------------------------------------------------------------- --------- ---------------------
Segment
operating
profit 3,710 4,608 11,264
Waterlogic Consumer
External sales 786 20 507
Gross profit 99 9 89
----------------- ---------------------------------------------------------------------------------- --------- ---------------------
Gross margin 13% 45% 18%
----------------- ---------------------------------------------------------------------------------- --------- ---------------------
Segment
operating
loss (953) (1,024) (2,481)
Consolidated
External sales 54,579 46,453 100,968
Gross profit 34,565 27,755 61,505
Gross margin 63% 60% 61%
Aggregate segment operating
profit 2,757 3,584 8,783
Share based
incentive
costs (1,202) (965) (1,630)
Central
administration
costs (925) (2,665) (4,626)
----------------- ---------------------------------------------------------------------------------- --------- ---------------
Operating profit
/ (loss) 630 (46) 2,527
----------------- ---------------------------------------------------------------------------------- --------- ---------------
5. Adjusted profitability measures
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2013 2012 2012
USD'000 USD'000 USD'000
Operating profit/(loss) 630 (46) 2,527
Add depreciation and
amortisation 4,577 3,088 7,363
--------------------------- ------------------------- ----------------------------
EBITDA 5,207 3,042 9,890
Adjusting items:
Share based incentives expense 1,202 965 1,630
Capital reorganisation related
costs - - 56
Costs related to completed and
non-completed
acquisitions 1,146 750 2,308
Corporate reorganisation costs - - 774
Total EBITDA adjusting items 2,348 1,715 4,768
Amortisation of acquired
intangibles 1,280 641 1,792
Total operating profit
adjusting items 3,628 2,356 6,560
=========================== ========================= ============================
Adjusted operating profit 4,258 2,310 9,087
Adjusted EBITDA 7,555 4,757 14,658
(Loss)/profit for the period
(Net
Income) (416) (767) 1,449
Total adjusting items and
related
finance costs 3,628 2,471 6,675
Tax effect of adjusting items (78) (39) (365)
--------------------------- ------------------------- ----------------------------
Adjusted net income 3,134 1,665 7,759
=========================== ========================= ============================
6. Earnings per share
The calculation of the basic and diluted earnings per share is
based on the following data:
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2013 2012 2012
USD'000 USD'000 USD'000
(Loss)/ profit attributable to the
owners of the Company (451) (909) 1,185
====== =========== =============
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2013 2011 2012
Number Number Number
Weighted average number of shares
in issue 77,604,207 77,604,207 77,604,207
Weighted average number of shares
held by the employee benefit trust (1,660,000) (1,660,000) (1,660,000)
------------ ------------ ------------------------
Shares used to calculate basic earnings
per share 75,944,207 75,944,207 75,944,207
Dilution due to share based incentive
plans 1,130,962 1,005,047 1,356,781
Shares used to calculate diluted earnings
per share 77,075,169 76,949,254 77,300,988
============ ============ ========================
Basic earnings per share (cents) (0.59) (1.20) 1.56
Diluted earnings per share (cents) (0.59) (1.18) 1.53
7. Notes to the cash flow statement
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2013 2012 2012
USD'000 USD'000 USD'000
Movements in working capital
(Increase)/decrease in trade and other
receivables (915) 134 (217)
(Increase) / decrease in inventories (1,919) (103) 362
Increase/(decrease) in trade and other
payables (1,055) (3,759) 1,513
Increase/(decrease) in deferred revenue 180 1,956 (124)
-------- ----------- -------------
Net effect of working capital movements (3,709) (1,772) 1,534
======== =========== =============
Net Cash
Cash and cash equivalents 13,840 37,287 30,154
Bank overdrafts - (246) (344)
-------- ----------- -------------
Net cash and cash equivalents 13,840 37,041 29,810
======== =========== =============
Cash and cash equivalents comprise cash and short-term bank
deposits with an original maturity of three months or less. The
carrying amount of these assets is approximately equal to their
fair value.
8. Acquisition of subsidiaries
TaylorMade Water Systems Inc.
On 23 August 2012, the Group acquired 100% of the shares of Taylor Made
Water Systems, Inc. ("TMW") for total consideration of $7.9 million.
TMW of the US is a leading vendor of water dispensers and coffee machines
in the Northern California region and the acquisition represents a strategic
opportunity for Waterlogic to enter a new geographic region.
Fair value
$'000
--------------------------------------------------------- -------------
Net assets acquired:
- property, plant and equipment 1,122
- trade receivables 436
- other monetary assets 312
- monetary liabilities assumed (1,627)
- intangible assets recognised 2,300
Total net assets acquired 2,543
Goodwill recognised 5,345
--------------------------------------------------------- -------------
7,888
--------------------------------------------------------- -------------
Satisfied by:
- cash consideration 5,000
- contingent consideration paid post balance sheet 1,903
- contingent consideration 985
7,888
--------------------------------------------------------- -------------
Net cash flow on acquisition:
Cash consideration 5,000
Less: cash balances acquired (47)
--------------------------------------------------------- -------------
4,953
--------------------------------------------------------- -------------
Intangible assets of $2,300,000 have been recognised comprising the
value of the trade name "Taylor Made Water Systems", non-compete agreements
with vendors and on-going customer relationships that existed at the
date of acquisition. The customer relationship value represents the
future discounted cash flows arising on the customer base projected
over ten years allowing for customer attrition rates and expected growth
in revenue and profits from these customers. The trade name is being
amortised over a five year period.
Acquisition-related costs of $225,000 have been expensed and are included
in administrative expenses as incurred.
The Group has an obligation to the vendors to make payments in the future
based upon the earnings of the TMW business over the three years after
acquisition. Payments are to be made in stages and the obligation has
been recorded as either a current or non-current liability dependent
on the expected timing of the payment. The first payment was $1,903,000
and the present value of the expected future payments is $985,000.
8. Acquisition of subsidiaries (continued)
AquaPrix Inc.
On 18 September 2012, the Group acquired the Waterlogic
Commercial POU coolers and rental contracts of AquaPrix Inc.
("APX") for total consideration of $1.8 million. APX of the US is a
leading vendor of water dispensers and coffee machines in the
Northern California region and the acquisition represents an
opportunity for Waterlogic to increase market share in this
region.
Fair value
$'000
-------------------------------- ------------
Net assets acquired:
- property, plant and equipment 164
- trade receivables 47
- other monetary assets 69
- monetary liabilities assumed (60)
- intangible assets recognised 1,110
Total net assets acquired 1,330
Goodwill recognised 475
-------------------------------- ------------
1,805
-------------------------------- ------------
Satisfied by:
- cash 1,800
- purchase price adjustment 5
1,805
-------------------------------- ------------
Net cash flow on acquisition:
Cash consideration 1,800
1,800
-------------------------------- ------------
Intangible assets of $1,110,000 have been recognisedcomprising
the value of the trade name "AquaPrix", non-compete agreements with
vendors and on-going customer relationships that existed at the
date of acquisition. The customer relationship value represents the
future discounted cash flows arising on the customer base projected
over ten years allowing for customer attrition rates and expected
growth in revenue and profits from these customers. The trade name
is being amortisedover a five year period.
Acquisition-related costs of $100,000 have been expensed and are
included in administrative expenses as incurred.
8. Acquisition of subsidiaries (continued)
AquaPerfect LLC
On 14 November 2012, the Group acquired the Waterlogic
Commercial POU coolers and rental contracts of Aqua Perfect LLC
("APT") for total consideration of $2.4 million. APT of the US is a
leading vendor of water dispensers and coffee machines in the
Northern California region and the acquisition represents an
opportunity for Waterlogic to increase market share in this
region.
Fair value
$'000
-------------------------------- ------------
Net assets acquired:
- property, plant and equipment 138
- trade receivables 72
- other monetary assets 58
- monetary liabilities assumed (73)
- intangible assets recognised 1,100
Total net assets acquired 1,295
Goodwill recognised 1,103
-------------------------------- ------------
2,398
-------------------------------- ------------
Satisfied by:
- cash 2,350
- purchase price adjustment 48
2,398
-------------------------------- ------------
Net cash flow on acquisition:
Cash consideration 2,000
Deferred consideration 350
2,350
-------------------------------- ------------
Intangible assets of $1,100,000 have been recognisedcomprising
the value of the trade name "AquaPerfect", non-compete agreement
with the vendor and on-going customer relationships that existed at
the date of acquisition. The customer relationship value represents
the future discounted cash flows arising on the customer base
projected over ten years allowing for customer attrition rates and
expected growth in revenue and profits from these customers. The
trade name is being amortisedover a five year period.
Acquisition-related costs of $109,000 have been expensed and are
included in administrative expenses as incurred.
8. Acquisition of subsidiaries (continued)
Water Filters Limited
On 27 February 2013, the Group acquired 100% of the shares of Water Filters
Limited ("WFL") for total consideration of $0.5 million. WFL is a key distributor
of Aqua Cure Ltd's products to the Scottish market and the acquisition
represents an opportunity for Waterlogic to increase both its market share
and geographic reach in the UK market. The purchase price allocation exercise
is not yet finalised and accordingly the fair values set out below are
provisional.
Provisional
fair value
$'000
-------------------------------- -----------
Net assets acquired:
- property, plant and equipment -
- trade receivables 44
- other monetary assets 224
- monetary liabilities assumed (51)
- intangible assets recognised 132
Total net assets acquired 349
Goodwill recognised 156
-------------------------------- -----------
505
-------------------------------- -----------
Satisfied by:
- cash consideration 509
- working capital adjustment (4)
505
-------------------------------- -----------
Net cash flow on acquisition:
Cash consideration 509
Less cash acquired (165)
344
-------------------------------- -----------
Intangible assets of $132,000 have been recognised comprising non-compete
agreements with vendors and on-going customer relationships that existed
at the date of acquisition. The goodwill and amortisation charges of the
intangible assets will not be deductible for tax purposes.
Acquisition-related costs of $34,000 have been expensed and are included
in administrative expenses as incurred. WFL contributed $136,000 of revenue
and $27,000 of operating profit to the Group's results for the period between
the date of acquisition and the balance sheet date. Had the acquisition
of WFL occurred on 1 January 2013, Group revenue would have been approximately
$206,000 higher and Group operating profit would have been approximately
$30,000 higher.
8. Acquisition of subsidiaries (continued)
Cool Clear Water Group Ltd
On 21 June 2013, the Group acquired 100% of the shares of Cool Clear Water
Group Ltd ("CCWG") for total consideration of $55.1 million. CCWG is the
market leading POU operator in Australia. This acquisition is a strategic
expansion into a new geographical region which secures a platform for growth
and also strengthens the Group's recurring contracted revenue.
Provisional
fair value
$'000
-------------------------------- --------------------
Net assets acquired:
- property, plant and equipment 7,519
- trade receivables 3,244
- other monetary assets 2,028
- monetary liabilities assumed (5,577)
- intangible assets recognised 22,031
Total net assets acquired 29,245
Goodwill recognised 25,893
-------------------------------- --------------------
55,138
-------------------------------- --------------------
Satisfied by:
- cash consideration 54,966
- working capital adjustment 172
55,138
-------------------------------- --------------------
Net cash flow on acquisition:
Cash consideration 54,966
Less cash acquired (152)
54,814
-------------------------------- --------------------
Intangible assets of $22,031,000 have been recognised comprising non-compete
agreements with vendors and on-going customer relationships that existed
at the date of acquisition. The purchase price allocation valuation is
currently in process and these figures are therefore provisional.
Acquisition costs of $894,000 have been expensed and are
included in administrative expenses as incurred. CCWG contributed
$585,000 of revenue and $149,000 of adjusted operating profit to
the Group's results for the period between the date of acquisition
and the balance sheet date. Had the acquisition of CCWG occurred on
1 January 2013, Group revenue would have been approximately
$9,945,000 higher and Group operating profit would have been
approximately $2,533,000 higher.
9. Events after the balance sheet date
On 10(th) July 2013, an amount of $0.3 million was paid to the
vendors of InnoTech LLC in settlement of consideration for the
acquisition of this subsidiary by the Group on 30 March 2011.
On 30 July 2013, an amount of $1.9 million was paid to the
vendors of TaylorMade Water Systems Inc in settlement of the first
stage of deferred consideration which is calculable over the three
years after acquisition by the Group, this having occurred on 23
August 2012. This amount was financed through borrowings.
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR EADNSFDADEAF
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