Waterlogic Announces 2011 Full Year Results
May 4, 2012
Group revenue for 2011 increased 24.3% to $84.9m (2010: $68.3m). Excluding the net impact of foreign currency effects (down $2.2m) and acquisitions ($9.9m), underlying revenue was higher at $74.8m representing like-for-like growth of 6.2%.
The benefit to gross profit from comparable year on year unit sales growth was offset by price pressures in the first half of the year and the acquisition of Aqua Cure (a wholesale business making consequentially lower margins) so that overall, the gross margin declined to 59.2% (2010: 61.5%) with gross profit of $50.2m.
Group operating profit for the year was $5.3m, 12.2% below 2010 ($6.0m). Operating profit adjusted to eliminate the effect of the share incentive plans, acquisition costs and the capital reorganisation costs associated with our Admission to AIM was $8.3m which reflects annual growth of 13.6%, which has been driven by the aforementioned revenue growth of 24.3%, albeit at the slightly reduced gross margin, and by a lesser growth in operating costs (excluding the above eliminations) of 20.8%.
Segment operating profit rose strongly in Scandinavia (58.2%) and the French business strengthened performance reducing its operating loss to $0.1m compared to an operating loss in 2010 of $0.4m. The US division made a small profit of $0.1m (2010: profit of $0.2m) with increases in gross profit offset by the addition of US-based group business development personnel. The operating subsidiaries in the US, CoolerSmart and Innowave, made a combined operating profit of $1.1m.
Growth of 9.7% in the external sales of the International Wholesale division was predominantly from established customers, although new distributors did add a further 1,140 units in the year. The acquisition of Aqua Cure Limited during the year added a new business segment for the UK.
Group operating costs increased by $9.0m to $45.0m in the year reflecting headcount increases from both newly acquired businesses and in response to organic growth needs, as well as a $0.7m higher charge on the share based incentive plan compared to prior year and $0.6m of capital reorganisation costs mentioned above.
Finance costs for 2011 were $1.6m compared to $0.4m in 2010. The increase was partly due to additional borrowings taken prior to the Admission in order to fund 2011 acquisitions and more significantly due to the revaluation of the derivative option on the German controlling interest acquired in 2010. The 2011 charge includes $0.1m in respect of interest rate swaps taken out during the year to secure the Group's long term borrowing at an attractive average rate of 4.5% until 2016.
Group profit before tax for the year was $3.8m, $2.1m below 2010 profit before tax, but inclusive of the share incentive plan costs, acquisition costs and capital reorganisation costs ($3.0m combined value).
Taxation was $1.0m for the year, $1.4m below 2010 reflecting the lower profit before tax achieved and benefits of the post Admission Group structure. The effective tax rate for the Group reduced to 26.7% (2010: 40.8%).
Basic earnings per share for the year were 4.12 cents, compared with 6.5 cents in 2010. Diluted earnings per share were 4.1 cents, compared with 6.5 cents for 2010.
The Group expensed $0.3m in the year on research and development, and invested a further $0.9m within capital expenditure. There were two major elements to this expenditure. The first was further development of new products, in particular those incorporating Firewall™ and the second, development of the Group's own filter line.
Balance sheet
Net assets increased to $86.6m (2010: $23.5m). The main movements in the balance sheet items were property plant and equipment (relating mainly to the addition of water dispensers for rental of $3.8m), goodwill and other intangible fixed assets increasing by $10.0m (of which $5.2m was goodwill arising from acquisitions during the year) and the change in net funds following the successful fund raising.
Cash and treasury
The Group continues to be cash generative from its operating activities, with net cash inflow from operating activities for 2011 of $3.5m, $1.2m above 2010. The Group closed the year with a net cash balance of $50.6m (2010: $4.5m) including $58.2m net proceeds received from the Group's Admission on the London Stock Exchange AIM market. These higher inflows were then offset by higher cash outflows in support of acquisitions ($6.0m) and net repayment of financing arrangements ($7.4m). Interest received and paid resulted in a net outflow of $1.8m which was $0.8m higher than 2010, due predominantly to interest payments on debt prior to Admission. Investing activities for 2011 resulted in an outflow of $8.1m in total which was $0.1m lower than the corresponding outflow in 2010.
In broad terms, the Group's net funds are notionally allocated for future acquisition opportunities and working capital requirements, the development and commercialisation of Firewall™ technology and creating new manufacturing capacity.
Statements
Jeremy Ben-David, Group Chief Executive Officer, said: “2011 was an extraordinary year for the Group. We changed from being a privately owned business, following 19 years of successful profitable growth, to becoming a public company admitted to trading on the London Stock Exchange AIM market.
Waterlogic revenue for the year was $84.9m, a growth of 24.3% over 2010. Adjusted operating profit was $8.3m. I am very pleased with this solid, first set of results following our Admission to AIM, especially considering the general economic environment.
During 2011, we added 65,000 units to our MIF base, which is now approximately 565,000 units.”
On his side, Group Non-Executive Chairman Ariel Recanati, stated: “We expect 2012 to be another year of progress with a combination of organic growth, contributions from new acquisitions and the on-going commercialisation of our Firewall™ UV technology. We are continuing with our development of new products, which we believe will open additional opportunities for the Group.”
Directly released from Waterlogic