TIDMWTL
RNS Number : 0110O
Waterlogic PLC
12 September 2011
12 September 2011
WATERLOGIC PLC
("Waterlogic", the "Group" or the "Company")
INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2011
(UNAUDITED)
Waterlogic Plc (AIM: WTL.L), a leading manufacturer and global
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 2011.
Financial highlights
-- Group revenue up 29% to USD 39.0 million (H1 2010: USD 30.2
million)
-- EBITDA (1) up 43% to USD 5.6 million (H1 2010: USD 3.9
million)
-- Net income increased to USD 1.5 million (H1 2010: USD 0.3
million)
-- Successful Admission to AIM on 11 July 2011 with accompanying
fundraising of USD 65 million
-- Solid first half performance and well placed to deliver on
market expectations for the full year
Operating highlights
-- Successfully developed new distributor relationships in
several new markets, including orders received from Mexico, Saudi
Arabia and Turkey
-- Waterlogic continues to make earnings accretive acquisitions
and the pipeline of future opportunities remains attractive
-- Completed acquisitions of Innotech in March, Aqua Cure (70%
interest) in April and a portfolio of machines from Best Water
Technology (BWT) in France in July
-- Ongoing commercialisation of its Firewall(TM) UV technology,
which is being introduced into new and existing products. Since the
period end, signed a seven year OEM supply agreement with a leading
consumer products company - Waterlogic's first major supply and
distribution agreement for products incorporating its Firewall(TM)
UV technology into the consumer market
Jeremy Ben-David, Waterlogic, Group CEO, commented:
"Despite a challenging wider macroeconomic environment in
Waterlogic's main markets in Western Europe and the US, Waterlogic
enjoyed a solid performance in the first half of 2011, increasing
revenue 29% and maintaining good profitability, demonstrating the
strength of the Group's offering.
Good progress continues to be made in further developing and
commercialising our innovative Firewall(TM) UV technology. Three
new product ranges will be ready for launch in the coming months
which will be suitable for both the consumer and developing world
markets, which are new areas for growth that Firewall(TM) is
helping the Group expand into.
Waterlogic continues to expand its geographical footprint across
its core markets of the US and Western Europe by making earnings
accretive acquisitions and we successfully completed three during
the year to date. Our pipeline of future opportunities remains
attractive and work is progressing well on these potential
acquisitions.
We continue to invest in our operations, make attractive
acquisitions and deliver growth. These solid results leave the
business well placed to deliver on market expectation for the full
year."
(1). EBITDA is Earnings before Interest, Tax, Depreciation and
Amortisation and is calculated as the Operating Profit for the
period plus the Depreciation and Amortisation charge for the
period. The aggregate depreciation and amortisation charge for each
period presented herein is disclosed on the face of the cash flow
statements.
Enquiries:
Waterlogic Plc
Jeremy Ben-David, Group Chief Email:
Executive Officer waterlogic@kreabgavinanderson.com
Steve Harrison, Group Chief Financial
Officer
Liberum Capital (Nominated Adviser Tel: +44 (0)20 3100 2000
and Broker)
Steve Pearce
Richard Bootle
Kreab Gavin Anderson (PR Adviser) Tel: +44 (0)20 7074 1800
James Benjamin Email:
Natalie Biasin waterlogic@kreabgavinanderson.com
Madeleine Palmstierna
Website: www.waterlogic.com
Registered Office: IFG House, 15 Union Street, St Helier,
Jersey, Channel Islands, JE1 1FG
Notes to editors
Waterlogic Plc (AIM: WTL.L) is a leading manufacturer and global
distributor 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 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 50
countries across five continents.
Waterlogic products are currently being sold in North and South
America, Europe, Asia, Australia and South Africa. Waterlogic's
leading markets are the US and Western Europe in particular,
Germany, France, Norway, Sweden and the UK. Of the 1.5 million new
installations in the business-to-business market between 2005 and
2010, approximately 73% incorporated POU technology of which
Waterlogic had a 26% market share.
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.
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 is the only
technology certified 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.
For the financial year ended 31 December 2010, the Group
generated revenues and adjusted EBITDA of USD 68.3 million and USD
11.4 million, respectively, and had approximately 500,000 machines
installed as at 31 December 2010.
WATERLOGIC PLC
INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2011
(UNAUDITED)
CHIEF EXECUTIVE'S STATEMENT
This is my first statement since Waterlogic Plc's shares
commenced trading on AIM on 11 July. Our growth platform was
reinforced by the Company's successful Admission and fundraising of
USD 65 million, which happened after the period end, which provides
Waterlogic with the financial firepower to capitalise on the
attractive growth opportunities in new and existing markets.
Waterlogic enjoyed a solid performance in the first half of
2011, growing revenue by 29% and maintaining good profitability,
with especially strong performances in May and June. The increase
in net income for the period to USD 1.5 million (H1 2010: USD 0.3
million) was achieved despite significant investments in the
business, which were not incurred in the comparable period last
year. These included medium term business development costs
relating to our innovative Firewall(TM) UV technology and
additional corporate structure in the US.
Waterlogic's units in field rose by over 7% in the first half of
2011, strengthening further our leadership position in the POU
water dispenser market through continued organic and
acquisition-led growth, as well as the expansion of our existing
technologies, especially with our innovative Firewall(TM) UV
technology, into new markets.
We have developed new distributor relationships in several new
markets, including orders received from Mexico, Saudi Arabia and
Turkey. We are continuing to review other market opportunities to
build on Waterlogic's extensive geographic and sector platform that
is already firmly established.
Waterlogic continues to expand its geographical footprint across
its core markets of the US and Western Europe by making earnings
accretive acquisitions and we successfully completed two during the
period, and one in July. Innotech and BWT were both bolt-on
acquisitions, whilst Aqua Cure was a strategic purchase of a
successful distributor of a wide range of water accessories across
Europe. Waterlogic continues to evaluate further acquisitions in
our attractive pipeline of targets. We remain vigilant on
acquisition prices especially given the current wider economic
environment and look forward to reporting on further progress in
due course.
Good progress continues to be made in further developing and
commercialising our Firewall(TM) UV technology. We are introducing
this technology into new products with three new product ranges
being developed and which will be ready for launch in the coming
months. These new ranges will be suitable for both the consumer and
developing world markets, which are new areas for growth that
Firewall(TM) is helping the Group expand into.
Since the period end, the Group signed a seven year OEM supply
agreement with a leading consumer products company. This represents
Waterlogic's first major supply and distribution agreement for
products incorporating its Firewall(TM) UV technology into the
consumer market. We are excited that this is being undertaken with
a significant player that imports, markets, sells and distributes
not only local and well-recognised international brands into its
local market. The agreement includes a minimum volume target of
45,000 for the first three years and all relevant units will
display the Firewall(TM) branding.
Waterlogic is currently working to expand capacity at its state
of the art, wholly owned and operated manufacturing facility in
China. A third production line is expected to be ready in Q1 of
2012. The Group is in the planning stages for a second full-scale
manufacturing facility to increase considerably production capacity
and flexibility.
Waterlogic remains focused on increasing the recurring revenue
element of its sales via acquisition and organic growth and
continues to focus on rental and service contracts, with year on
year growth in rental income of 20% in H1. The Group also continues
to review cost structures across all of its subsidiaries.
Results and Operations
Despite a challenging wider macroeconomic environment in
Waterlogic's main markets in Europe and the US, Waterlogic
delivered solid results for the period ended 30 June 2011,
demonstrating the strength of the Group's offering.
Group revenue increased 29% to USD 39.0 million (H1 2010: USD
30.2 million), including organic growth of 9%. The acquisition of a
70% interest in Aqua Cure in April added USD 2.1 million to the
Group revenue at the half year. Organic revenue growth was
strongest in Scandinavia, Germany and Waterlogic Trading's external
sales business based in Ireland, with all three showing double
digit revenue growth.
For the period ended 30 June 2011, gross profit was USD 22.2
million (H1 2010: USD 19.1 million) with acquisitions contributing
USD 0.8 million.
The Group's combined gross margin for the period was reduced to
57.1% (FY 2010: 61.5%). This was principally due to a significant
increase in national sales contracts in one major market with
correspondingly lower margins and the strategic addition of a
further distribution business, in the UK, Aqua Cure, which had a
significant accessories business with margins appropriate for a
wholesaler. Waterlogic intends to expand this business
internationally including external sales of Waterlogic's own
filters.
The increase in costs year on year fall broadly into growth in
headcount within the business units (USD 1.7 million), additional
corporate structure, particularly in the US, ahead of the Group's
expansion through Firewall(TM) and acquisitions (USD 0.5 million).
These are costs that were not incurred during the same period last
year. Separately, overheads in the businesses we acquired represent
USD 0.7 million of the increase.
The Group generated USD 4.0 million (H1 2010: USD 4.2 million)
of operating cash in the period before the purchase of rental
assets, interest and tax and USD 0.9 million (H1 2010: USD 1.5
million) of operating cash flow. Operating profit for the period
also saw an increase of USD 0.9 million.
Net additions to the Group's POU water dispensers held for
rental, classified as fixed assets, totalled USD 1.3 million in H1
2011 (H1 2010: USD 1.1 million).
Inventory days fell from 149 days at 31 December 2010 to 110
days at 30 June 2011, but seasonality of monthly sales and the
inclusion of acquired businesses led to an overall increase in the
absolute value of inventory.
Trade receivables increased between 31 December 2010 and 30 June
2011 due, in part, to both the non-linearity of monthly revenue and
receivables within the businesses acquired in the period. Other
debtors also rose, following inclusion of costs related to the
Admission to AIM which will largely be treated as reduction in net
proceeds in the accounting for the full year.
The Group's effective tax rate for H1 2011 was 34%, which
reflects a continuing reduction from 41% for the FY 2010, although
both H1 2010 and FY2010 was impacted by tax charges relating to
prior years.
Interest costs, which are included in Finance costs, were higher
in H1 2011 than H1 2010 by USD 0.1 million reflecting the
additional acquisition finance obtained for the Aqua Cure purchase
and the commencement of utilisation of both Waterlogic Trading's
USD 6 million working capital facility and a USD 2 million supplier
finance facility in China.
Subsequent to the IPO, USD 7.2 million of this debt,
representing shareholder loans, was repaid. In 2010, the related
interest on these loans formed the largest component of the Group's
interest cost and the repayment will produce a reduction in the
annual finance costs of approximately USD 0.5 million.
The Group's net debt rose from USD 8.1 million at 31 December
2010 to USD 16.8 million at 30 June 2011 with additional funding
obtained to finance the Aqua Cure purchase (USD 2.5 million) and
draw downs on working capital facilities.
The Market
The water dispenser market in Europe and the US is estimated to
amount to an installed base of approximately 10 million units, of
which 80% are Bottled Water Coolers ("BWC") and the remainder POU
water dispensers. Of the 1.5 million new installations between 2005
and 2010, approximately 73% incorporated POU technology of which
Waterlogic had a 26% market share. According to the latest Zenith
West Europe Coolers Report 2011, the number of plumbed-in mains
water coolers (i.e. POU) units increased by 8% in 2010, topping the
1 million mark and taking POU's share of the cooler market to 38%.
The management of Waterlogic believes that the movement away from
BWC to POU water dispensers is set to continue its current trend as
a result of cost, convenience, health benefits and environmental
considerations.
Outlook
Overall this has been a solid half year performance. The wider
macro economic climate presents challenges to our customers and our
business however these results leave the business well placed to
deliver on market expectations for the full year.
We are also making good progress with the expansion of our
innovative Firewall(TM) UV technology into new and existing
products and markets and we will continue to invest in the Group's
operations and make attractive acquisitions.
The board looks forward to updating shareholders in due
course.
Jeremy Ben-David
Group Chief Executive
12 September 2011
WATERLOGIC PLC
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
FOR THE SIX MONTHS ENDED 30 JUNE 2011
Six months Six months Year
ended ended ended
30 June 30 June 31 Dec
2011 2010 2010
USD'000 USD'000 USD'000
Continuing operations Note
Revenue 2 38,970 30,209 68,268
Cost of sales (16,734) (11,137) (26,261)
Gross profit 22,236 19,072 42,007
Other gains and losses 640 (974) 311
Distribution expenses (422) (361) (714)
Marketing expenses (334) (392) (648)
Administrative expenses (19,101) (15,243) (34,973)
Operating profit 3,019 2,102 5,983
Adjustment for the effect
of:
Long-term incentive plan 140 30 1,196
Adjusted operating profit 3,159 2,132 7,179
-------------------------------------- ---- ---------- ---------- --------
Finance income 224 91 247
Finance costs (971) (725) (361)
Profit before tax 2,272 1,468 5,869
Income tax expense (776) (1,188) (2,397)
Profit for the period from
continuing operations 1,496 280 3,472
Net income for the period 3 1,496 280 3,472
Other comprehensive income,
net of income tax
Exchange differences on translation
of foreign operations 491 168 344
Total comprehensive income
for the period 1,987 448 3,816
Profit attributable to:
Owners of WIL (see note 1) 1,304 138 2,967
Non-controlling interests 192 142 505
1,496 280 3,472
WATERLOGIC PLC
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
FOR THE SIX MONTHS ENDED 30 JUNE 2011
Six months Six months Year
ended ended ended
30 June 30 June 31 Dec
2011 2010 2010
USD'000 USD'000 USD'000
Assets Note
Non-current assets
Goodwill 13,415 5,794 6,325
Other intangible assets 7,867 4,684 4,724
Property, plant and equipment 10,763 9,262 9,784
Deferred tax asset 9 7 68
Total non-current assets 32,054 19,747 20,901
Current assets
Inventories 12,854 10,041 11,621
Trade receivables 16,840 10,846 10,921
Other receivables 5,573 3,029 3,627
Derivative financial instruments - 236 -
Cash and cash equivalents 3,333 5,163 6,495
Total current assets 38,600 29,315 32,664
Total assets 70,654 49,062 53,565
Equity and liabilities
Capital and reserves
Share capital 5 5 5
Share premium account 2,216 600 600
Other reserves (269) - -
Translation reserves 408 (135) 95
Retained earnings 22,850 18,762 21,545
Equity attributable to owners
of WIL 25,210 19,232 22,245
Non-controlling interest 354 866 1,301
Total equity 25,564 20,098 23,546
Non-current liabilities
- Bank and other borrowings 5,795 2,998 4,799
- Convertible loan notes - - 5,679
- Obligations under finance
leases 138 173 172
-
---------- ---------- -------
Total borrowings 4 5,933 3,171 10,650
Derivative financial instruments - - 267
Provisions 77 75 65
Deferred tax liabilities 638 - -
Deferred and contingent consideration 3,583 - -
Total non-current liabilities 10,231 3,246 10,982
Current liabilities
- Bank and other borrowings 8,064 3,932 3,918
- Convertible loan notes 6,003 5,967 351
- Obligations under finance
leases 127 198 167
-
---------- ---------- -------
Total borrowings 4 14,194 10,097 4,436
Trade and other payables 13,462 9,278 9,557
Current tax liabilities 1,399 928 1,296
Provisions 1,545 239 1,788
Derivative financial instruments 519 1,268 -
Deferred revenue 3,676 3,434 1,692
Deferred and contingent consideration 64 474 268
Total current liabilities 34,859 25,718 19,037
Total liabilities 45,090 28,964 30,019
Total equity and liabilities 70,654 49,062 53,565
WATERLOGIC PLC
CONSOLIDATED CASH FLOW STATEMENTS
FOR THE SIX MONTHS ENDED 30 JUNE 2011
Six months Six months Year
ended ended ended
30 June 30 June 31 Dec
2011 2010 2010
USD'000 USD'000 USD'000
Note
Profit after tax for the period 1,496 280 3,472
Adjustments for non-cash items:
Depreciation and Amortisation 2,550 1,805 4,227
Acquisition items - write back
of negative goodwill and contingent
consideration (69) (120) (551)
Movement on LTIP provision 140 30 1,196
Income tax expense 776 1,189 2,397
Net interest expense and changes
in the fair value of derivative
financial instruments 968 719 346
Adjusted operating profit before
working capital movements 5,861 3,903 11,087
Net effect of working capital
movements (1,847) 334 (3,686)
Cash flow before purchase of
rental assets, interest and
tax 4,014 4,237 7,401
Purchases of Rental Assets (1,266) (1,148) (2,731)
Proceeds on disposal of rental
assets 51 66 150
Interest paid (802) (888) (1,044)
Tax paid (1,055) (728) (1,474)
Net cash from operating activities 942 1,539 2,302
Investing activities
Interest received 3 6 15
Proceeds on disposal of property,
plant and equipment 1 27 44
Purchases of property, plant
and equipment (366) (625) (1,474)
Purchases of intangible assets (424) (97) (365)
Acquisition of subsidiaries (4,136) (1,706) (1,706)
Acquisition of businesses (1,036) (3,353) (3,611)
Acquisition of non controlling
interests - (400) (480)
Deferred and contingent consideration
paid (725) (664) (664)
Net cash used in investing
activities (6,683) (6,812) (8,241)
Financing activities
New bank loans raised 3,832 1,853 3,466
Payment of AIM Admission related
expenses (420) - -
Repayment of bank loans and
other financing (1,212) (973) (1,641)
Net cash from financing activities 2,200 880 1,825
Translation differences 132 (208) 17
Net decrease in cash and cash
equivalents (3,409) (4,601) (4,097)
Net cash and cash equivalents
b/f 4,493 8,590 8,590
Net cash and cash equivalents
c/f 1,084 3,989 4,493
WATERLOGIC PLC
NOTES TO THE CONSOLIDATED INTERIM FINANCIAL INFORMATION
FOR THE SIX MONTHS ENDED 30 JUNE 2011
1. General information
The consolidated interim financial information for Waterlogic
International Limited ("WIL"), a company registered in the Bahamas,
has been prepared to enable WIL's parent undertaking, Waterlogic
Plc ("WLI"), to comply with its obligations under the AIM Rules for
Companies. WLI is registered in Jersey and resident in Ireland. It
acquired all of the share capital of WIL through a share for share
exchange on 4 July 2011.
The WIL Group is a vertically integrated business engaged in the
design, manufacture, distribution, servicing and sale of point of
use water machines in worldwide markets.
Basis of preparation
The consolidated interim financial statements include the
results of operations and the financial position of WIL and its
subsidiaries (together the "WIL Group") as at and for the six
months ended 30 June 2011.
The consolidated interim financial statements of the Company
have been prepared in accordance with the recognition and
measurement criteria of IFRS and the disclosure requirements of the
AIM Rules using the accounting policies set out in the WIL Group's
31 December 2010 consolidated financial information which was
included in Part IV of the Admission Document prepared by WLI in
connection with the listing of WLI's shares on AIM. The AIM Rules
do not require compliance with the requirements of IAS 34 "Interim
Financial Statements" and these consolidated interim financial
statements have not been prepared in compliance with the disclosure
requirements of that standard. The consolidated interim financial
statements have not been audited or reviewed and do not constitute
WIL's or WLI's statutory accounts. The consolidated financial
information for the year ended 31 December 2010 presented herein is
derived from the consolidated financial information which was
included in Part IV of the Admission Document.
The Company has not presented Earnings per share information as
following the share for share exchange with WLI and WLI's issue of
new shares as part of the admission to AIM the directors do not
consider WIL's share capital to be relevant information for
investors. Immediately after Admission WLI had 77,604,157 ordinary
shares in issue.
2. Revenue
An analysis of the WIL Group's revenue is as follows:
Six months Six months Year
ended ended ended
30 June 30 June 31 Dec
2011 2010 2010
USD'000 USD'000 USD'000
Continuing operations
Direct sales 5,495 4,323 9,491
Indirect sales 20,973 16,267 36,714
Rental income 7,396 6,185 13,886
Other (including service) 5,106 3,434 8,177
Consolidated revenue 38,970 30,209 68,268
3. Business and geographical segments
The following is an analysis of the WIL Group's revenue and
operating profit by reportable segment in the six months ended 30
June 2011, six months ended 30 June 2010 and year ended 31 December
2010:
Six months Six months
ended ended Year ended
30 June 30 June 31 Dec
2011 2010 2010
USD'000 USD'000 USD'000
International Trading
External Sales 7,460 5,382 14,496
Inter-segment sales 6,017 7,961 16,407
Total revenue 13,477 13,343 30,903
Segment operating profit 2,215 1,955 5,657
Scandinavia
External Sales 10,085 7,768 16,899
Inter-segment sales 17 48 88
Total revenue 10,102 7,816 16,987
Segment operating profit 1,153 217 1,539
France
External Sales 2,814 3,154 6,254
Inter-segment sales - - -
Total revenue 2,814 3,154 6,254
Segment operating profit 59 (143) (414)
Germany
External Sales 5,520 3,743 9,266
Inter-segment sales 85 - 57
Total revenue 5,605 3,743 9,323
Segment operating profit 660 675 1,804
US
External Sales 11,035 10,162 21,324
Inter-segment sales 200 85 184
Total revenue 11,235 10,247 21,508
Segment operating profit (332) 387 191
UK
External Sales 2,056 - -
Inter-segment sales 45 - -
Total revenue 2,101 - -
Segment operating profit 175 - -
China
External Sales - - 29
Inter-segment sales 7,333 7,040 16,931
Total revenue 7,333 7,040 16,960
Segment operating profit (358) 86 286
Eliminations
External Sales - - -
Inter-segment sales (13,697) (15,134) (33,667)
Total revenue (13,697) (15,134) (33,667)
Segment operating profit (92) (418) (1,357)
CONSOLIDATED
External Sales 38,970 30,209 68,268
Inter-segment sales - - -
Total revenue 38,970 30,209 68,268
Segments operating profit 3,480 2,759 7,706
Central administration costs (462) (657) (1,723)
Operating Profit 3,019 2,102 5,983
The accounting policies of the reportable segments are the same
as the WIL Group's accounting policies. 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 WIL 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 WIL and its UK
subsidiary, net of management charges to and from other
subsidiaries, and inter-company commission income. Also included
within central administration costs are other gains and losses and
the charge relating to the LTIP.
4. Borrowings
Six months Six months Year
ended ended ended
30 June 30 June 31 Dec
2011 2010 2010
USD'000 USD'000 USD'000
Unsecured borrowing at amortised
cost
Bank overdrafts 672 564 798
Loans from related parties 1,385 1,186 1,228
Convertible loan notes 6,003 5,967 6,030
8,060 7,717 8,056
Secured borrowing at amortised
cost
Bank overdrafts 1,577 610 1,133
Bank loans 9,335 2,844 4,262
Securitised advances 890 1,726 1,296
Obligations under finance
leases 265 371 339
12,067 5,551 7,030
Total borrowings 20,127 13,268 15,086
Amounts due for settlement
within 12 months:
Bank and other borrowings 8,064 3,932 3,918
Convertible loan notes 6,003 5,967 351
Obligations under finance
leases 127 198 167
14,194 10,097 4,436
Amounts due for settlement
after 12 months:
Bank and other borrowings 5,795 2,998 4,799
Convertible loan notes - - 5,679
Obligations under finance
leases 138 173 172
5,933 3,171 10,650
5. Acquisition of subsidiaries & asset purchases
On 30 March 2011 the WIL Group acquired the assets of Innotech
LLC, a US water cooler business based in Tennessee, for
consideration of USD 1.5 million.
Innotech
(Provisional
fair value)
USD'000
Asset purchases:
Net assets acquired:
Fair value of property, plant and equipment acquired 112
Fair value of net current assets acquired 10
Intangible assets recognised on acquisition 805
Total net assets acquired 927
Goodwill recognised on acquisition 557
Satisfied by:
Cash 1,036
Future contingent consideration 448
Total consideration 1,484
The intangible asset recognised primarily relates to the value
of the customer relationships that existed at the date of
acquisition. This value represents the future discounted cash flows
arising on the customer base projected over 10 years allowing for
customer attrition rates and expected growth in revenue and profits
from these customers.
The WIL Group has an obligation to the vendors to make payments
in the future based upon the revenues and earnings of the Innotech
business over the 2 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 upon the expected timing
of the payment. The present value of the expected payments is USD
0.4 million.
On 13 April 2011 the WIL Group acquired 70% of the shares of
Aqua Cure Holdings Limited, a UK based reseller of consumables for
the water industry for initial consideration of USD 4.2
million.
Aqua Cure
(Provisional
fair value)
USD'000
Equity purchases:
Net assets acquired:
Fair value of property, plant and equipment acquired 795
Fair value of monetary assets acquired 2,656
Fair value of monetary liabilities acquired (4,779)
Intangible assets recognised on acquisition 2,536
Total net assets acquired 1,208
Less net assets attributable to non-controlling
interests (362)
Net assets attributable to WIL 846
Goodwill recognised on acquisition 6,261
Satisfied by:
Cash 4,232
Contingent consideration 3,144
Fair Value of option agreement (269)
Total consideration 7,107
Net cash outflow arising on acquisition
Cash consideration 4,232
Less: cash and cash equivalent balances acquired (96)
4,136
Intangible assets of USD 2.5 million have been recognised
comprising the value of the customer relationships that existed at
the date of acquisition and the trade name "Aqua Cure". The
customer relationship value represents the future discounted cash
flows arising on the customer base projected over 10 years allowing
for customer attrition rates and expected growth in revenue and
profits from these customers. The trade name is being amortised
over a 5 year period. A deferred tax liability has been recognised
in respect of each of these intangible assets with a corresponding
off-set to goodwill. This deferred tax liability is recycled
through profit and loss in line with the amortisation charges of
the related intangible asset.
The WIL Group entered into a put and call option arrangement
with the holders of the minority interest whereby each party can
buy or sell the shares held by the minority shareholders at
specific points in the future by applying the valuation formula
used in determining the price for the current investment. The fair
value of these option agreements is USD 0.3 million and this has
been recorded as a debit to other reserves. The estimated present
value of the future cash flows under the option agreements is USD
3.1 million and this is recorded as a non-current liability as the
first payment is due more than 12 months after the balance sheet
date.
Acquisition-related costs of USD 0.2 million have been expensed
and are included in administrative expenses. Aqua Cure contributed
USD 2.1 million of revenue and USD 0.2 million to the WIL Group's
operating profit for the period between the date of acquisition and
the balance sheet date.
6. Events after the balance sheet date
On 1 July 2011 the Group completed the purchase agreed in April
2011 of a portfolio of rental assets from BWT France SAS for
consideration of EUR 0.3 million (USD 0.4 million).
On 4 July 2011 all of the share capital of WIL was acquired by
Waterlogic Plc in a share for share exchange entered into as part
of the Group reorganisation implemented ahead of Waterlogic Plc's
admission to trading on the AIM market, which occurred on 11 July
2011.
On 27 July 2011 the Group redeemed USD 7.2 million of
shareholders loans (including the convertible loan notes) at par
and paid accrued interest at that date of USD 0.3 million.
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR LLFITASIAIIL
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