TIDMWTL
RNS Number : 1972S
Waterlogic PLC
22 September 2014
22 September 2014
WATERLOGIC PLC
("Waterlogic", the "Group" or the "Company")
INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2014
(UNAUDITED)
Waterlogic Plc (AIM: WTL.L), a leading designer, assembler and
distributor of mains attached point-of-use ("POU") drinking water
purification and dispensing systems, today announces its unaudited
interim results for the six months ended 30 June 2014.
Six months Six Growth Year
ended months ended
30 June ended 31 December
2014 30 June 2013
2013*
Revenue $68.3m $54.6m +25.1% $124.0m
+170
Gross margin 64.8% 63.1% bps 63.6%
Adjusted EBITDA $10.9m $7.0m +55.3% $19.5m
EBITDA $8.8m $4.7m +89.1% $16.1m
Adjusted operating profit $6.8m $4.1m +65.2% $12.3m
Operating profit $2.7m $0.5m +449.1% $5.4m
Adjusted net income (1) $3.5m $3.0m +16.6% $7.6m
Net (loss)/income ($0.2m) ($0.6m) -62.2% $1.7m
Net debt (2) $30.2m $35.9m -15.7% $31.0m
Group highlights
-- Revenue increased by 25.1% to $68.3m (H1 2013: $54.6m)
-- Recurring rental and service revenue increased to 43% of
total revenue (H1 2013: 38% of total revenue)
-- Repeating revenue (4) increased to 26% of total revenue (H1
2013: 25%) due mainly to the acquisition of CCWG in Australia in
June 2013
-- Combined recurring and repeating revenue increased to 69% of total revenue (H1 2013: 63%)
-- Consumer revenue increased to $1.3m (H1 2013: $0.8m)
-- Organic revenue grew by 5.5%, 4.5% at constant exchange rates (3)
-- Gross margin increased by 170 basis points to 64.8% (H1 2013:
63.1%) due to increase in higher margin recurring rental and
service revenues
-- Machines in field are estimated to have increased by 70,000 to 785,000 from 715,000
Jeremy Ben-David, Waterlogic Group CEO, commented:
"Waterlogic Commercial continued to improve its earnings quality
and the significant growth in recurring and repeating revenue is a
result of the successful integration of the acquisition of CCWG in
Australia, and organic growth, most notably in Germany and France.
Waterlogic Consumer also increased revenue to USD 1.3 million in H1
compared to USD 0.8 million in H1 2013 and a number of new consumer
product launches took place in the Middle East, Europe and Canada.
The pending consumer product launch in the United States is
expected to provide continued growth in H2.
The Directors remain confident that the solid foundations put in
place together with investment in the Group's Firewall(TM)
technology, potential acquisitions and the Group's organic business
will continue to deliver Shareholder value."
(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) Net debt represents total borrowings less cash and cash equivalents.
(3) Organic growth is measured as the change in revenue year on
year, at actual and constant currency excluding current year
revenues from acquisitions until after the first anniversary of the
acquisition.
(4) Repeating revenue is the sale of parts, filters and
consumables for POU units in field and the sale of POU units to
leasing companies.
* See note 2 for details of restatement of prior period
figures
Enquiries:
Waterlogic Plc Via Redleaf Polhill
Jeremy Ben-David, Group Chief
Executive Officer
Robert Bell, Group Chief
Financial Officer
Liberum Capital (Nominated Tel: +44 (0)20 3100 2000
Adviser and Broker)
Steve Pearce
Richard Bootle
Redleaf Polhill (PR Adviser) Tel: +44 (0) 207 382 4730
Rebecca Sanders Hewett Email: waterlogic@redleafpr.com
David Ison
Information on Waterlogic Plc
Waterlogic (AIM: WTL.L) is a leading designer, assembler,
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.
Website: www.waterlogic.com
Further Information
This announcement is not intended to, and does not, constitute
or form part of any offer, invitation or the solicitation of an
offer to purchase, otherwise acquire, subscribe for, sell or
otherwise dispose of, any securities, or the solicitation of any
vote or approval in any jurisdiction, pursuant to this announcement
or otherwise. Any offer will be made solely by certain offer
documentation which, if published, will contain the full terms and
conditions of any offer, including details of how it may be
accepted.
The distribution of this announcement in jurisdictions outside
the United Kingdom may be restricted by law and therefore persons
into whose possession this announcement comes should inform
themselves about, and observe, such restrictions. Any failure to
comply with the restrictions may constitute a violation of the
securities law of any such jurisdiction.
Summary of Rule 8
Under Rule 8.3(a) of the Takeover Code, any person who is
interested in 1% or more of any class of relevant securities of an
offeree company or of any securities exchange offeror (being any
offeror other than an offeror in respect of which it has been
announced that its offer is, or is likely to be, solely in cash)
must make an Opening Position Disclosure following the commencement
of the offer period and, if later, following the announcement in
which any securities exchange offeror is first identified. An
Opening Position Disclosure must contain details of the person's
interests and short positions in, and rights to subscribe for, any
relevant securities of each of (i) the offeree company and (ii) any
securities exchange offeror(s). An Opening Position Disclosure by a
person to whom Rule 8.3(a) applies must be made by no later than
3.30 pm (London time) on the 10th business day following the
commencement of the offer period and, if appropriate, by no later
than 3.30 pm (London time) on the 10th business day following the
announcement in which any securities exchange offeror is first
identified. Relevant persons who deal in the relevant securities of
the offeree company or of a securities exchange offeror prior to
the deadline for making an Opening Position Disclosure must instead
make a Dealing Disclosure.
Under Rule 8.3(b) of the Takeover Code, any person who is, or
becomes, interested in 1% or more of any class of relevant
securities of the offeree company or of any securities exchange
offeror must make a Dealing Disclosure if the person deals in any
relevant securities of the offeree company or of any securities
exchange offeror. A Dealing Disclosure must contain details of the
dealing concerned and of the person's interests and short positions
in, and rights to subscribe for, any relevant securities of each of
(i) the offeree company and (ii) any securities exchange offeror,
save to the extent that these details have previously been
disclosed under Rule 8. A Dealing Disclosure by a person to whom
Rule 8.3(b) applies must be made by no later than 3.30 pm (London
time) on the business day following the date of the relevant
dealing.
If two or more persons act together pursuant to an agreement or
understanding, whether formal or informal, to acquire or control an
interest in relevant securities of an offeree company or a
securities exchange offeror, they will be deemed to be a single
person for the purpose of Rule 8.3.
Opening Position Disclosures must also be made by the offeree
company and by any offeror and Dealing Disclosures must also be
made by the offeree company, by any offeror and by any persons
acting in concert with any of them (see Rules 8.1, 8.2 and 8.4).
Details of the offeree and offeror companies in respect of whose
relevant securities Opening Position Disclosures and Dealing
Disclosures must be made can be found in the Disclosure Table on
the Takeover Panel's website at www.thetakeoverpanel.org.uk,
including details of the number of relevant securities in issue,
when the offer period commenced and when any offeror was first
identified. You should contact the Panel's Market Surveillance Unit
on +44 (0)207 638 0129 if you are in any doubt as to whether you
are required to make an Opening Position Disclosure or a Dealing
Disclosure.
This announcement will be available on the Company's website at
www.waterlogic.com as soon as possible and in any event by no later
than 12 noon on 23 September 2014.
CHIEF EXECUTIVE'S STATEMENT
Waterlogic delivered a strong H1 performance and made progress
in delivering on its strategy. Waterlogic Commercial continued to
improve its earnings quality, and recurring and repeating revenue
now represents 69% of total Group revenue (H1 2013: 63% of total
Group revenue). This growth in recurring and repeating revenue is a
result of the successful integration of both the acquisition of
CCWG in Australia and organic growth, most notably in Germany and
France. Several new national accounts were acquired in Germany,
France, Scandinavia and the USA, and organic growth was achieved
even as the Group continues to focus more efforts in procuring
rental contracts and increasing its recurring revenue.
Waterlogic Consumer also increased revenue to USD 1.3 million
revenue in H1 (H1 2013: USD 0.8 million). A number of new consumer
product launches took place in the Middle East, Europe and Canada
and the pending launch in the United States are expected to provide
continued growth in H2.
Waterlogic Commercial
Machines in field at the end of H1 2014 are estimated to have
risen to 785,000 (H1 2013: 715,000).
New distributors were added in Hungary and Poland, and new
distributor territories were opened in Romania, Slovenia and
Colombia.
The worldwide roll out of the new WL3 product range
incorporating Firewall(TM)technology was completed at the end of
June 2014 and good progress is being made in the marketing of
products incorporating Firewall(TM)technology into the healthcare
and education sectors.
Procurement initiatives focused on partnering with world-class
suppliers to deliver best value for our operations are expected to
deliver cost savings commencing in H2 2014.
New tele-business platforms were established in a number of key
geographic markets, including Germany and the USA, and our
continued investment in IT systems has further improved our
productivity in service, administration and sales.
Waterlogic Consumer
Waterlogic Consumer achieved USD 1.3 million revenue in H1 (H1
2013: USD 0.8 million) and continued growth is expected in H2.
The joint venture with Eureka Forbes, in India, has commenced
with the manufacture and supply of the Eterniti product to Eureka
Forbes. The Board is encouraged by the prospects of this
partnership and by the long term potential within the Indian
market.
In Europe, the Group signed exclusive distribution agreements
with seven distributors in Portugal, Czech Republic, Greece,
Cyprus, Hungary, Slovakia and Slovenia, with initial orders shipped
and is expecting to sign more distribution agreements in other
markets by the end of 2014.
The first orders in the Middle East were delivered in H1 to
Electra Consumer Products, who launched in June 2014. Repeat orders
have been placed and are due to be supplied early in H2.
The launch in the United States via e-commerce and catalogue
companies occurred in H2 following a successful initial trial with
a major retailer in Canada. A new OEM client has placed orders for
launch in Taiwan and Thailand.
Opportunities are also being pursued in several other countries
and segments.
Results and Operations
Group revenue increased by 25.1% to USD 68.3 million (H1 2013:
USD 54.5 million), including revenue of USD 1.3 million from
Waterlogic Consumer (H1 2013: USD 0.8 million). Organic revenue
growth was 5.5% (4.5% at constant exchange rates). Waterlogic
Commercial direct sales revenue experienced organic growth of 9% at
constant currency. The strongest Waterlogic Commercial growth
territory was Germany, where ongoing investment in the sales team
has driven revenue growth. There was an increase of 6% in
Waterlogic Commercial indirect sales due to strong performances
from International Trading, Germany and France.
The Group's combined gross margin for the period has increased
to 64.8%, compared to 63.1% in H1 2013 and 63.6% for FY 2013. This
is a result of the increase in higher margin rental and service
revenues delivered by the FY 2013 acquisitions, which also improved
the mix between direct and indirect sales.
Adjusted EBITDA has increased to USD 10.9 million compared to
USD 7.0 million in H1 2013. Adjusted operating profit has increased
to USD 6.8 million compared to USD 4.1 million in H1 2013,
including an adjustment for the amortisation of acquired
intangibles of USD 2.0 million (2013: USD 1.3 million).
At the end of H1, the Group had net debt of USD 30.2 million
compared to USD 31.0 million at 31 December 2013. The Group has a
five year committed multicurrency loan comprising: NOK 45.4
million, which is fully drawn at 30 June 2014 and AUD 50.8 million
of which AUD 43.9 million is drawn at 30 June 2014. The Group also
has the ability to call upon further uncommitted facilities in
order to provide funding for future acquisitions.
Net cash from operating activities was USD 4.8 million for the
period, compared to USD (1.0) million in H1 2013. The net effect of
working capital movements reported in the cash flow reflected an
inflow of USD 1.3 million (2013: outflow of USD 3.7 million). The
inflow mainly relates to lower inventory and lower trade and other
receivables, resulting from the introduction of working capital
reduction targets for the year.
During 2014 the Company discovered an accounting error at one
subsidiary. This error resulted in a restatement of the Balance
Sheet of the Group, including an adjustment to reserves at 30 June
2012 for prior periods of USD 1.1 million. The adjustment to
reserves is in respect of the over recognition of revenue and
related items that impacted the Group's reported profit and the
related Balance Sheet accounts. As a result of the findings by the
Company, amendments are being made to both control processes and
systems.
In accordance with IFRS, acquired intangibles, such as customer
relationships and brands, are recognised separately from goodwill
on acquisitions, with intangible assets subject to amortisation and
with no amortisation of goodwill. Impairment reviews of these
balances are performed at least annually, and any impairment is
recognised through the income statement. Whilst there is no current
impairment, there does remain sensitivity within our US
operations.
The Market
According to the latest Zenith West Europe Coolers Report 2013,
the number of plumbed-in mains water coolers (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 confirms the
growing POU trend by estimating that it is expected to reach 50% of
the market by 2017. The US market represents an opportunity for
continued growth where Zenith report that of the 5.5 million water
coolers in use, c.80% of these are accounted for by the traditional
bottled water cooler, whereas POU units are reported to be
continually taking share from the traditional bottled cooler,
growing consistently by 11% over the last three years. The
opportunity to convert customers away from bottled water to the
more convenient, environmentally-friendly and cost-effective
solution of POU represents a continuing opportunity for the Group
for several years to come.
Outlook
Direct sales and rental income continue to experience healthy
organic growth in several geographies. The Directors remain
confident that the solid foundations put in place together with
investment in the Group's Firewall(TM) technology, potential
acquisitions and the Group's organic business will continue to
deliver shareholder value.
Further to the announcement on 30 June 2014, the Company is
continuing to conduct its strategic review which includes a Formal
Sale Process in accordance with the Takeover Code. The review is
proceeding and a further announcement will be made in due
course.
Jeremy Ben-David
Group Chief Executive
22 September 2014
WATERLOGIC PLC
CONSOLIDATED INCOME STATEMENT
FOR THE SIX MONTHS ENDED 30 JUNE 2014
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2014 2013* 2013
Note USD'000 USD'000 USD'000
---------------------------------------- ------------ ----------- -------------
Continuing operations
Revenue 3 68,288 54,579 124,043
Cost of sales (24,062) (20,151) (45,184)
------------ ----------- -------------
Gross profit 44,226 34,428 78,859
Administrative expenses (41,442) (32,793) (72,096)
Distribution expenses (276) (330) (679)
Marketing expenses (874) (724) (1,525)
Other gains and losses 6 1,073 (88) 868
------------ ----------- -------------
Operating profit 2,707 493 5,427
---------------------------------------- ------------ ----------- -------------
Adjustment for the effect of:
Share based incentives 1,282 1,202 1,709
Acquisition and integration costs 770 1,146 1,710
Corporate reorganisation costs 21 - 44
Amortisation of acquired intangibles 2,029 1,280 3,368
---------------------------------------- ------------ ----------- -------------
Adjusted operating profit 5 6,809 4,121 12,258
---------------------------------------- ------------ ----------- -------------
Finance income 7 46 70 139
Finance costs 8 (2,045) (253) (2,216)
------------ ----------- -------------
Profit before tax 708 310 3,350
Income tax expense (917) (863) (1,684)
------------ ----------- -------------
(Loss)/profit for the period (209) (553) 1,666
============ =========== =============
(Loss)/profit attributable to:
Owners of the Company (234) (588) 1,601
Non-controlling interests 25 35 65
------------ ----------- -------------
(209) (553) 1,666
============ =========== =============
Earnings per share: 9
Basic (cents per share) (0.31) (0.77) 2.10
============ =========== =============
Diluted (cents per share) (0.30) (0.76) 2.07
============ =========== =============
* See note 2 for details of restatement of prior period
figures
WATERLOGIC PLC
CONSOLIDATED STATEMENT OF COMPREHENSIVE
INCOME
FOR THE SIX MONTHS ENDED 30 JUNE
2014
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2014 2013* 2013
USD'000 USD'000 USD'000
-------------------------------------------------- ----------- -------------
(Loss)/profit for the period (209) (553) 1,666
Cash flow hedges: losses arising
during the year (137) - (187)
Exchange differences on translation
of foreign operations 313 (1,751) (2,021)
Income tax relating to items
that may be reclassified 40 - 52
------ ----------- -------------
Total comprehensive income for
the period 7 (2,304) (490)
====== =========== =============
Total comprehensive income attributable
to:
Owners of the Company (22) (2,316) (542)
Non-controlling interests 29 12 52
------ ----------- -------------
7 (2,304) (490)
====== =========== =============
* See note 2 for details of restatement of prior period
figures
WATERLOGIC PLC
CONSOLIDATED BALANCE SHEET
AS AT 30 JUNE 2014
As at As at As at
30 June 30 June 31 December
2014 2013* 2013*
USD'000 USD'000 USD'000
----------------------------------------------- --------- -------------
ASSETS
Non-current assets
Goodwill 57,138 50,607 55,159
Other intangible assets 33,729 41,007 35,065
Property, plant and equipment 27,878 22,313 26,349
Deferred tax asset 1,102 1,342 1,171
Investment in joint venture 760 - 825
Derivative financial instruments 47 - 187
------------------------------------- -------- --------- -------------
Total non-current assets 120,654 115,269 118,756
------------------------------------- -------- --------- -------------
Current assets
Inventories 16,290 17,048 18,155
Trade and other receivables 23,288 26,962 24,578
Cash and cash equivalents 18,507 13,840 16,619
------------------------------------- -------- --------- -------------
Total current assets 58,085 57,850 59,352
------------------------------------- -------- --------- -------------
Total assets 178,739 173,119 178,108
------------------------------------- -------- --------- -------------
EQUITY AND LIABILITIES
Capital and reserves
Stated capital - - -
Additional paid in capital 62,109 60,624 62,109
Translation reserve (1,410) (1,453) (1,723)
Hedging reserve (232) - (135)
Share based payment reserve 5,250 5,523 4,132
Retained earnings 24,159 22,204 24,393
------------------------------------- -------- --------- -------------
Equity attributable to Shareholders 89,876 86,898 88,776
Non-controlling interest 143 74 114
------------------------------------- -------- --------- -------------
Total equity 90,019 86,972 88,890
------------------------------------- -------- --------- -------------
* See note 2 for details of restatement of prior period
figures
WATERLOGIC PLC
CONSOLIDATED BALANCE SHEET (continued)
AS AT 30 JUNE 2014
Note As at As at As at
30 June 30 June 31 December
2014 2013* 2013*
USD'000 USD'000 USD'000
EQUITY AND LIABILITIES (continued)
Non-current liabilities
Borrowings:
- bank and other borrowings 44,135 46,889 43,944
- obligations under finance leases 10 22 18
----------------------------------------- --------- --------- -------------
Total borrowings 11 44,145 46,911 43,962
Derivative financial instruments 328 - 187
Provisions 111 135 112
Deferred tax liabilities 5,531 1,292 5,610
Deferred and contingent consideration
12 917 46 1,414
----------------------------------------- --------- --------- -------------
Total non-current liabilities 51,032 48,384 51,285
Current liabilities
Trade and other payables 22,111 20,298 25,269
Borrowings:
- bank and other borrowings 4,589 2,770 3,631
- obligations under finance leases 21 20 38
----------------------------------------- --------- --------- -------------
Total borrowings 11 4,610 2,790 3,669
Current tax liabilities 1,922 2,367 1,608
Provisions 326 - 345
Deferred revenue 8,629 8,202 7,002
Deferred and contingent consideration
12 90 4,106 40
----------------------------------------- --------- --------- -------------
Total current liabilities 37,688 37,763 37,933
----------------------------------------- --------- --------- -------------
Total liabilities 88,720 86,147 89,218
----------------------------------------- --------- --------- -------------
Total equity and liabilities 178,739 173,119 178,108
----------------------------------------- --------- --------- -------------
* See note 2 for details of restatement of prior period
figures
This financial information was approved by the Board of
Directors and authorised for issue on 22 September 2014 and was
signed on its behalf by:
Robert Bell
Group Chief Financial Officer
WATERLOGIC PLC
CONSOLIDATED STATEMENT
OF CHANGES IN EQUITY
FOR THE SIX MONTHS ENDED
30 JUNE 2014
Additional Hedging Share
paid reserve based Attributable Non-
Stated in $000 Translation payment Retained to controlling
capital capital reserve reserve earnings* Shareholders interest Total
$'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000
---------------- ------- ---------- -------- ----------- -------- --------- ------------ ------------ -------
Balance at 1
January 2013 - 60,389 - 298 4,420 22,792 87,899 297 88,196
Purchase of
non-controlling
interest - 235 - - - - 235 (235) -
Exercise of PSP
awards - - - - (99) - (99) - (99)
Transfer to
reserves for
share based
payment expense - - - - 1,202 - 1,202 - 1,202
Loss for the
period - - - - - (588) (588) 35 (553)
Other
comprehensive
income - - - (1,751) - - (1,751) (23) (1,774)
---------------- ------- ---------- -------- ----------- -------- --------- ------------ ------------ -------
Balance at 30
June 2013 - 60,624 - (1,453) 5,523 22,204 86,898 74 86,972
Exercise of PSP
awards - 1,485 - - (1,893) - (408) - (408)
Transfer to
reserves for
share based
payment expense - - - - 502 - 502 - 502
Profit for the
period - - - - - 2,189 2,189 30 2,219
Other
comprehensive
income - - (135) (270) - - (405) 10 (395)
---------------- ------- ---------- -------- ----------- -------- --------- ------------ ------------ -------
Balance at 31
December
2013 - 62,109 (135) (1,723) 4,132 24,393 88,776 114 88,890
---------------- ------- ---------- -------- ----------- -------- --------- ------------ ------------ -------
Transfer to
reserves for
share based
payment expense - - - - 1,118 - 1,118 - 1,118
Profit for the
period - - - - - (234) (234) 25 (209)
Other
comprehensive
income - - (97) 313 - - 216 4 220
---------------- ------- ---------- -------- ----------- -------- --------- ------------ ------------ -------
Balance at 30
June 2014 - 62,109 (232) (1,410) 5,250 24,159 89,876 143 90,019
---------------- ------- ---------- -------- ----------- -------- --------- ------------ ------------ -------
* see note 2 for details of restatement of prior period
figures
WATERLOGIC PLC
CONSOLIDATED CASH FLOW STATEMENTS
FOR THE SIX MONTHS ENDED 30 JUNE 2014
Note Six months Six months Year
ended ended ended
30 June 30 June 31 December
2014 2013* 2013
USD'000 USD'000 USD'000
(Loss)/profit for the period (209) (553) 1,666
Adjustments:
depreciation and amortisation 6,099 4,164 10,645
acquisitions (contingent consideration
adjustments) (505) - (41)
share based incentives expense 1,282 1,202 1,709
income tax expense 917 863 1,684
net interest expense and changes
in the fair value of derivative
financial instruments 1,999 183 2,077
loss on disposal of non-current
assets 24 - 253
share of loss of equity accounted
joint venture 68 - 65
foreign exchange movements (559) 7 (1,048)
------------------------------------------ ----------- ----------- -------------
Adjusted operating profit before
working capital movements 9,116 5,866 17,010
Net effect of working capital
movements 10 1,292 (3,716) 191
------------------------------------------ ----------- ----------- -------------
Cash flow before purchase of
rental assets, interest and tax 10,408 2,150 17,201
Purchases of rental assets (3,712) (1,985) (5,946)
Proceeds on disposal of rental
assets 162 36 82
Interest paid (1,375) (139) (1,645)
Tax paid (725) (1,055) (2,201)
------------------------------------------ ----------- ----------- -------------
Net cash from operating activities 4,758 (993) 7,491
Investing activities
Interest received 46 70 139
Proceeds on disposal of property,
plant and equipment 29 - 1,170
Purchases of property, plant
and equipment (798) (972) (1,400)
Purchases of intangible assets (391) (852) (2,117)
Acquisition, net of cash acquired - (55,177) (56,304)
Acquisition of non-controlling
interests - (1,622) (1,622)
Deferred and contingent consideration
paid - (212) (2,728)
Investment in Joint Venture (2) (435) (566)
Net cash used in investing activities (1,116) (59,200) (63,428)
Financing activities
New bank loans raised (net of
costs) (104) 49,413 51,845
Repayment of bank loans and other
financing (1,715) (5,205) (8,654)
Payment of derivative financial
instruments - - (394)
------------------------------------------ ----------- ----------- -------------
Net cash from financing activities (1,819) 44,208 42,797
Translation differences 65 15 (51)
Net increase/(decrease) in cash
and cash equivalents 1,888 (15,970) (13,191)
Net cash and cash equivalents
at beginning of the period 16,619 29,810 29,810
------------------------------------------ ----------- ----------- -------------
Net cash and cash equivalents
at end of the period 10 18,507 13,840 16,619
------------------------------------------ ----------- ----------- -------------
* See note 2 for details of restatement of prior period
figures
WATERLOGIC PLC
NOTES TO THE INTERIM FINANCIAL INFORMATION
FOR THE SIX MONTHS ENDED 30 JUNE 2014
1. General information
Waterlogic Plc (the "Company") and its subsidiaries (together
the "Group") operate as a vertically integrated business engaged in
the design, assembly, distribution, servicing and sale of point of
use water machines in worldwide markets.
The Company is a Public Limited company which is quoted on the
London Stock Exchange's Alternative Investment Market ("AIM"). The
Company is incorporated in Jersey with registration number 108193.
The address of its registered office is 12 Castle Street, St
Helier, Jersey, Channel Islands, JE2 3RT and the company's
operating activities are based in Ireland.
The financial information set out above for the year ended 31
December 2013 does not constitute the Company's statutory accounts,
but is derived from those accounts. The auditors reported on those
accounts on 4 April 2014 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 2014 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 22 September 2014.
Restatement
The consolidated income statement and the consolidated balance
sheet comparative for the half year ended 30 June 2013 have been
restated to eliminate the effects of intra-group profits generated
upon the sale of POU dispensers between Group entities and held as
property, plant and equipment for rental by the Group under
operating leases at the respective period ends. The amounts
restated are an increase in the cost of sales for the half year
ended 30 June 2013 of $137,000. The impact of the restatement upon
the consolidated balance sheet comparative is a reduction in POU
dispensers cost as at 30 June 2013 of $550,000 and a reduction in
POU dispensers accumulated depreciation as at 30 June 2013 of
$413,000. There has been no impact upon the net movement in cash
and cash equivalents as a result of these restatements. During 2014
the Company discovered an accounting error at one subsidiary. This
error resulted in a restatement of the Balance Sheet of the Group,
including an adjustment to reserves at 30 June 2012 for prior
periods of $1,108,000. The adjustment to reserves is in respect of
the over recognition of revenue and related items that impacted the
Group's reported profit and the related Balance Sheet accounts. As
a result of the findings by the Company, amendments are being made
to both control processes and systems.
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
2014 2013 2013
USD'000 USD'000 USD'000
-------------------- ----------- ----------- -------------
Continuing operations
Direct revenue 15,178 11,468 25,945
Indirect revenue 24,051 22,110 48,259
Rental and service
income 29,059 21,001 49,839
-------------------- ----------- ----------- -------------
Consolidated
revenue 68,288 54,579 124,043
-------------------- ----------- ----------- -------------
4. Segment reporting
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
2014 30 June 2013
USD'000 2013* USD'000
USD'000
----------------------------------------------------------------------------------------- --------- ----------------------------
International Trading
External
revenue 8,705 6,139 16,372
Inter-segment
revenue 5,788 9,003 18,119
---------------- ----------------------------------------------------------------------- --------- ----------------------------
Total revenue 14,493 15,142 34,491
---------------- ----------------------------------------------------------------------- --------- ----------------------------
Segment
operating
profit 454 (237) 944
Scandinavia
External
revenue 17,163 16,926 33,838
Inter-segment
revenue 244 106 206
---------------- ----------------------------------------------------------------------- --------- ----------------------------
Total revenue 17,407 17,032 34,044
---------------- ----------------------------------------------------------------------- --------- ----------------------------
Segment
operating
profit 1,996 2,314 4,501
France
External
revenue 4,282 3,653 7,911
Inter-segment - - -
revenue
---------------- ----------------------------------------------------------------------- --------- ----------------------------
Total revenue 4,282 3,653 7,911
---------------- ----------------------------------------------------------------------- --------- ----------------------------
Segment
operating
profit 440 317 678
Germany
External
revenue 8,740 6,935 15,253
Inter-segment
revenue 7 56 68
---------------- ----------------------------------------------------------------------- --------- ----------------------------
Total revenue 8,747 6,991 15,321
---------------- ----------------------------------------------------------------------- --------- ----------------------------
Segment
operating
profit 1,582 1,196 2,564
USA
External
revenue 13,447 15,301 29,633
Inter-segment - - -
revenue
---------------- ----------------------------------------------------------------------- --------- ----------------------------
Total revenue 13,447 15,301 29,633
---------------- ----------------------------------------------------------------------- --------- ----------------------------
Segment
operating
profit (410) (68) (1,912)
UK
External
revenue 5,080 4,986 9,576
Inter-segment
revenue 322 330 646
---------------- ----------------------------------------------------------------------- --------- ----------------------------
Total revenue 5,402 5,316 10,222
---------------- ----------------------------------------------------------------------- --------- ----------------------------
Segment
operating
profit 543 488 1,083
Australia
External
revenue 10,828 585 11,320
Inter-segment - - -
revenue
---------------- ----------------------------------------------------------------------- --------- ----------------------------
Total revenue 10,828 585 11,320
---------------- ----------------------------------------------------------------------- --------- ----------------------------
Segment
operating
profit 2,262 (239) 1,824
PRC
External
revenue 48 53 180
Inter-segment
revenue 8,111 9,039 21,024
---------------- ----------------------------------------------------------------------- --------- ----------------------------
Total revenue 8,159 9,092 21,204
---------------- ----------------------------------------------------------------------- --------- ----------------------------
Segment
operating
profit (987) (192) (235)
Segment result
External
revenue 68,293 54,579 124,083
Inter-segment
revenue 14,472 18,533 40,063
---------------- ----------------------------------------------------------------------- --------- ----------------------------
Total revenue 82,765 73,112 164,146
---------------- ----------------------------------------------------------------------- --------- ----------------------------
Aggregate
segment
operating
profit 5,880 3,579 9,447
4. Segment
reporting
continued
Six months Six Year
ended months ended
30 June ended 31 December
2014 30 June 2013
USD'000 2013* USD'000
USD'000
----------------------------------------------------------------------------------------- --------- ----------------------------
Eliminations
External
revenue (5) - (40)
Inter-segment
sales (14,472) (18,533) (40,063)
Eliminations
from
operating
profit (304) (959) (818)
---------------- ----------------------------------------------------------------------- --------- ----------------------------
Consolidated
External
revenue 68,288 54,579 124,043
---------------- ----------------------------------------------------------------------- --------- ----------------------------
Aggregate
segment
operating
profit
net of
eliminations 5,576 2,620 8,629
Central
administration
costs (2,869) (2,127) (3,202)
---------------- ----------------------------------------------------------------------- --------- ----------------------------
Operating
profit 2,707 493 5,427
---------------- ----------------------------------------------------------------------- --------- ----------------------------
* See note 2 for details of restatement of prior period
figures
Inter-segment revenue is charged at prevailing market rates.
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 expenses. 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.
Also included within central administration costs is the charge
relating to the share based payment plans of $1,282,000 for the
period ended 30 June 2014 (30 June 2013: $1,202,000).
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 months Year
ended ended ended
30 June 30 June 31 December
2014 2013* 2013
USD'000 USD'000 USD'000
------------------------------------------------------------------------------------------------- ----------- -------------------
Waterlogic Commercial
External sales 67,008 53,793 122,754
Gross profit 43,898 34,466 78,543
---------------- ------------------------------------------------------------------------------- ----------- -------------------
Gross margin 66% 64% 64%
---------------- ------------------------------------------------------------------------------- ----------- -------------------
Waterlogic Consumer
External sales 1,280 786 1,289
Gross profit 328 99 316
---------------- ------------------------------------------------------------------------------- ----------- -------------------
Gross margin 26% 13% 25%
---------------- ------------------------------------------------------------------------------- ----------- -------------------
Consolidated
External sales 68,288 54,579 124,043
Gross profit 44,226 34,565 78,859
Gross margin 65% 63% 64%
---------------- ------------------------------------------------------------------------------- ----------- -------------------
* See note 2 for details of restatement of prior period
figures
5. Adjusted profitability measures
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2014 2013* 2013
USD'000 USD'000 USD'000
------------------------------------------------------------- ------------------------- ----------------------------
Operating profit 2,707 493 5,427
Add depreciation and
amortisation 6,099 4,164 10,645
-------------------------- ------------------------- ----------------------------
EBITDA 8,806 4,657 16,072
Adjusting items:
Share based incentives expense 1,282 1,202 1,709
Costs related to completed
and non-completed acquisitions 770 1,146 1,710
Corporate reorganisation
costs 21 - 44
Amortisation of acquired
intangibles 2,029 1,280 3,368
Total adjusting items 4,102 3,628 6,831
========================== ========================= ============================
Adjusted operating profit 6,809 4,121 12,258
Adjusted EBITDA 10,879 7,005 19,535
-------------------------- ------------------------- ----------------------------
(Loss)/profit for the period
(Net Income) (209) (553) 1,666
Total adjusting items and
related finance costs 4,159 3,628 6,871
Tax effect of adjusting items (455) (78) (933)
-------------------------- ------------------------- ----------------------------
Adjusted net profit for the
period 3,495 2,997 7,604
Less: Non-controlling interest
share of adjusted profit (33) (43) (81)
========================== ========================= ============================
Adjusted profit for the period
attributable to the owners
of the Company 3,462 2,954 7,523
========================== ========================= ============================
* See note 2 for details of restatement of prior period
figures
6. Other gains and losses
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2014 2013 2013
USD'000 USD'000 USD'000
----------------------------------------------- ----------- -------------
Loss on disposal of non-current
assets (24) (46) (253)
Reduction in contingent consideration
for acquired businesses 518 - 41
Gains/(losses) on foreign
exchange movements 559 (7) 1,048
Share of results of joint
ventures (68) - (65)
Other finance income/(costs) 88 (35) 97
1,073 (88) 868
====== =========== =============
7. Finance income
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2014 2013 2013
USD'000 USD'000 USD'000
---------------------------- ----------- -------------
Bank deposit interest 32 50 95
Other finance income 14 20 44
46 70 139
=== =========== =============
8. Finance costs
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2014 2013 2013
USD'000 USD'000 USD'000
-------------------------------------------------- ----------- -------------
Interest on bank overdrafts
and loans 1,577 224 1,926
Other financial expenses 164 76 75
------ ----------- -------------
Total interest expense 1,741 300 2,001
Unwinding of discount effect
on liabilities 57 - 40
Loss arising on derivatives
in a designated fair value
hedge accounting relationship 95 - 64
Financial assets and liabilities
at fair value through profit
and loss - net of change
in fair value:
* designated on initial recognition 152 (47) 111
------ ----------- -------------
2,045 253 2,216
====== =========== =============
9. 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
2014 2013* 2013
USD'000 USD'000 USD'000
--------------------------------------- ----------- -------------
(Loss)/profit attributable
to the owners of the Company (234) (588) 1,601
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2014 2013* 2013
Number Number Number
----------------------------------------------------- ------------ ------------------------
Weighted average number of
shares in issue 77,685,136 77,604,207 77,649,417
Weighted average number of
shares held by the employee
benefit trust (1,149,803) (1,660,000) (1,364,253)
-------------- ------------ ------------------------
Shares used to calculate
basic earnings per share 76,535,333 75,944,207 76,285,164
Dilution due to share based
incentive plans 864,418 1,130,962 929,683
Shares used to calculate
diluted earnings per share 77,399,751 77,075,169 77,214,847
============== ============ ========================
Basic earnings per share
(cents) (0.31) (0.77) 2.10
Diluted earnings per share
(cents) (0.30) (0.76) 2.07
* See note 2 for details of restatement of prior period
figures
10. Notes to the cash flow statement
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2014 2013 2013
USD'000 USD'000 USD'000
---------------------------------------------- ----------- -------------
Movements in working capital
Decrease/(increase) in trade
and other receivables 1,475 (915) 1,268
Decrease/(increase) in inventories 1,892 (1,919) (2,814)
(Decrease)/increase in trade
and other payables (3,649) (1,062) 2,783
Increase/(decrease) in deferred
revenue 1,574 180 (1,046)
-------- ----------- -------------
Net effect of working capital
movements 1,292 (3,716) 191
======== =========== =============
Net Cash
Cash and cash equivalents 18,507 13,840 16,619
Bank overdrafts - - -
-------- ----------- -------------
Net cash and cash equivalents 18,507 13,840 16,619
======== =========== =============
Net 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.
11. Borrowings
As at As at As at
30 June 30 June 31 December
2014 2013 2013
USD'000 USD'000 USD'000
----------------------------------------- --------- -------------
Secured borrowing at amortised
cost
Bank loans (net of unamortised
finance fees) 48,504 49,505 47,460
Securitised advances 77 154 115
Interest accrued 143 - -
Obligations under finance
leases 31 42 56
48,755 49,701 47,631
======= ========= =============
Amounts due for settlement
within twelve months
Bank borrowings 4,410 2,731 3,558
Securitised advances 36 39 73
Interest accrued 143 - -
Obligations under finance
leases 21 20 38
------ ------ ------
4,610 2,790 3,669
------ ------ ------
Amounts due for settlement
after twelve months
Bank borrowings 44,094 46,774 43,902
Securitised advances 41 115 42
Obligations under finance
leases 10 22 18
------- ------- -------
44,145 46,911 43,962
------- ------- -------
48,755 49,701 47,631
======= ======= =======
12. Deferred and contingent consideration
As at As at As at
30 June 30 June 31 December
2014 2013 2013
USD'000 USD'000 USD'000
----------------------------------------- --------- -------------
InnoTech (USA - acquired - 209 -
in 2011)
Aqua Cure (UK - acquired
in 2011) 443 547 398
TaylorMade Water Systems
Inc (USA - acquired in 2012) 474 3,000 967
AquaPerfect LLC (USA - acquired - 350 -
in 2012)
Water Filters Limited (UK
- acquired in 2013) 51 46 49
Eauvell (Germany - acquired
in 2013) 39 - 40
Total 1,007 4,152 1,454
====== ========= =============
Current 90 4,106 40
Non-current 917 46 1,414
Total 1,007 4,152 1,454
====== ====== ======
13. Acquisition of subsidiaries
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 $55.8 million. CCWG is the market leading POU operator
in Australia. The acquisition was a strategic expansion
into a new geographical region which secured a platform
for growth and also strengthened the Group's recurring
contracted revenue. The final purchase price allocation
is set out below.
Final
fair value
$'000
-------------------------------- -----------
Net assets acquired:
- property, plant and equipment 12,288
- trade receivables 3,244
- other monetary assets 1,728
- monetary liabilities assumed (5,393)
- net deferred tax liability (4,646)
- intangible assets recognised 17,613
Total net assets acquired 24,834
Goodwill recognised 30,944
-------------------------------- -----------
55,778
-------------------------------- -----------
Satisfied by:
- cash consideration 54,412
- additional consideration 812
- working capital adjustment 554
55,778
-------------------------------- -----------
Net cash flow on acquisition:
Cash consideration 55,778
Less cash acquired (152)
55,626
-------------------------------- -----------
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR EAFNFADSLEAF
Waterlogic (LSE:WTL)
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