Waterlogic Plc - Annual Results Presentation 2013

Report
2013
Annual Results
Management Team
Jeremy Ben-David
o Founded Waterlogic Plc in 1992
Group Chief Executive
o Responsible for the overall strategic development of the Group
o Heads Waterlogic Consumer (business-to-consumer) worldwide
Peter Cohen
o Joined the Group in August 2012
Chief Executive
o
– Waterlogic Commercial o
Robert Bell
Chief Financial Officer
Previously, CEO of PHS Group
Heads Waterlogic Commercial (business-to-business) worldwide
o Joined the Group in January 2012, appointed as CFO in Oct 2013
o Previous experience includes Barclays, Bank of America and the
debt-backed purchase of a major rolling stock company from RBS
o Previously Director of Accounting
2
Group Highlights
Summary
o Progress in further strengthening our position as a leader in quality POU water dispensers
enhancing future quality of earnings through increasing recurring revenues.
o Rental and service revenue increased to 40.2% of total revenue (2012: 38.6%)
o Parts & consumable sales account for a further 25% of revenue
Overview
o New Group CFO, Robert Bell, appointed October 18th 2013
o Acquisition of CCW in Australia backed by c.$60m facility with HSBC and Clydesdale
o Growth in units placed outpaces general market growth (17% over 11%)
o International trading business delivered healthy growth of 9.9%
o Revenue increasing by 22.9% from $101.0m to $124.0m
o Gross margin improving from 60.7% to 63.6%
Financial
Highlights
o Organic revenue grew by 4.1%, which was 3.5% on a constant currency basis.
o Adjusted EBITDA grew 41.3% to $19.5m (2012: $13.8m)
o Adjusted operating profit increased 38.4% to $ 12.3m (2012: $ 8.9m)
o Adjusted net income for the year increased 2.8% to $ 7.6m (2012: $ 7.4m)
3
Operational Highlights
o Installed base grew by 17.2% to 750,000 MIF (2012: 640,000)
o Successful international roll out of the WL3 Firewall
Commercial
o 9.9% revenue growth in Trading, new distributors in Bulgaria, Italy, Lithuania and Chile
o Several key reference accounts were acquired in Germany, France, Scandinavia & US
o Outstanding organic growth 21.9% in Germany
o Strong performance recovery in France, led by a focus on Firewall technology products
o $1.3m revenue in 2013 (2012: $0.5m)
o Indesit launch in Turkey, Italy. 2000 units sold in 2013
Consumer
o Signing of Japanese agreement with ALCONIX and E-Commerce launch with Costco
Canada
o Commencement of production at AquaIgnis
Acquisitions
o Strategic acquisition of Australian market leader in POU with 24% market share
o Plus two further ‘bolt-on’ acquisitions
Waterlogic has continued its international growth through a number of
acquisitions and new supply and distribution agreements in 2013.
4
Financials
Financial highlights
Recurring Revenue ($m); % of total revenue
Revenue ($m)
•
•
2013 acquisition
growth (full year
basis) - $11.8m in
revenue
2013 Organic
growth of 4.1%
•
•
Recurring rental &
service revenues
grew 27.9% in 2013
recurring revenues
run rate now over
42% of total revenue
Adjusted EBITDA ($m)
•
•
•
USA improvement
off-set by one off
costs
Scandinavia up
$0.5m
2013 acquisition of
CCWG added
$4.6m
Adjusted Operating Profit ($m)
Amortisation of
acquired intangibles
up $1.6m
•
Group revenue increased by 22.9% to
$124.0m
•
Gross Margin increased to 63.6%
•
Organic growth 4.1% whilst growing
recurring revenues which now stands
at over 40% of revenue
•
New acquisitions in 2013 contributed
$11.8m in revenue
Summary Financials
2013
2012
Change
124.0
101.0
↑ 22.9%
Gross profit ($’m)
78.9
61.3
↑ 28.7%
Adjusted EBITDA ($’m)
19.5
13.8
↑ 41.3%
Adjusted operating profit ($’m)
12.3
8.9
↑ 38.4%
Adjusted profit for the year ($’m)
Gross margin
7.6
63.6%
7.4
60.7%
↑ 2.8%
↑ 2.9 bps
Adjusted EBITDA margin
15.7%
13.7%
↑ 2.0 bps
9.9%
8.8%
↑ 1.1 bps
Group revenue ($’m)
Adjusted Operating Profit margin
o
o
o
o
Group Revenue growth of 3.5% at constant currencies
Direct revenue grew by 62.1% from $16.0m to $25.9m
Indirect revenue grew by 4.9% from $46.0m to $48.3m
Rental and service revenue grew by 27.9% to 40.2% of total revenue (2012: 38.6%)
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 years
under review, “Adjusted” measures include adjustments for the share based incentives expense, capital reorganisation related costs, acquisition & integration related costs, amortization of
acquired intangibles and corporate reorganisation costs. Further details and reconciliations to statutory measures are included in note 5 to the financial information.
7
Revenue & Operating Profit bridge
Revenue
2012 Revenue restated to 2013 FX
Adjusted Operating Profit
Revenue Model Analysis
Rental &
Service
Leasing
Filter &
Consumable
Parts
Units
Consumer
Other
Total
Revenue
FY13
49.8
6.9
23.6
7.0
32.6
1.3
2.8
124.0
FY12
37.0
6.2
18.2
7.4
29.6
0.5
1.9
101.0
+34.6 %
+11.3%
+29.6%
-5.4%
+10.1%
+160%
+47.4%
+22.9%
FY13
40.2%
5.6%
19.1%
5.7%
26.3%
1.0%
2.3%
FY12
36.6%
6.2%
18.0%
7.4%
29.3%
0.5%
1.9%
Change
+3.6%
-0.6%
+1.1%
-1.7%
-3.0%
+0.5%
0%
Change
% of
Revenue
9
Consolidated Balance Sheet
2013
2012*
2011*
2013
2012*
2011*
$’m
$’m
$m
$’m
$’m
$’m
90.0
89.3
85.5
44.0
2.8
4.3
Capital and reserves
Non-current assets
Non-current liabilities
Goodwill
55.2
24.9
11.2
Other intangible assets
35.1
20.3
8.8
Derivative financial instruments
0.2
0.1
0.1
Property, plant & equipment
26.3
14.7
9.1
Deferred tax liability
5.6
1.5
0.3
Deferred tax asset
1.2
1.3
0.5
Provisions
0.1
0.1
0.1
Investment in joint venture
0.8
0.0
0.0
Deferred consideration
1.4
1.3
1.9
Financial instruments
0.2
0.0
0.0
118.8
61.2
29.6
51.3
5.8
6.6
24.9
19.4
13.8
Borrowings
3.7
2.9
3.5
Current tax liabilities
1.6
1.5
1.1
Total non-current assets
Borrowings
Total non-current liabilities
Current liabilities
Trade and other payables
Current assets
Inventories
18.2
13.4
12.5
Provisions
0.3
0.1
0.1
Trade and other receivables
25.0
23.3
19.4
Deferred revenue
6.7
5.5
2.1
Cash and cash equivalents
16.6
30.2
51.1
Deferred consideration
0.0
3.6
0.0
Total current assets
59.8
66.8
83.1
Total current liabilities
37.2
33.0
20.6
Total liabilities
88.5
38.7
27.2
178.5
128.0
112.7
Total assets
178.5
128.0
112.7
Total equity and liabilities
* restated prior period figures.
10
Consolidated Cash Flow
Year ended 31
December
In $ millions
2013
2012*
Adjusted operating profit before working capital movements
17.0
10.5
0.2
1.9
Net effect of working capital movements
Cash flow before purchase of rental assets, interest and tax
17.2
12.4
Purchases of rental assets
(5.9)
(3.1)
Proceeds on disposal of rental assets
0.1
0.1
Interest paid
(1.6)
(0.5)
Tax paid
(2.2)
(2.0)
7.5
6.9
0.1
0.2
Net cash from operating activities
Investing activities
Interest received
Proceeds on disposal of property, plant and equipment
Purchases of property, plant and equipment
Purchases of intangible assets
1.2
0.0
(1.4)
(2.2)
(2.1)
(1.4)
Acquisitions including investment in JV and deferred consideration
(61.2)
(21.1)
Net cash used in investing activities
(63.4)
(24.4)
New bank loans raised
51.8
1.3
Repayment of bank loans and other financing
(8.7)
(4.6)
Payment of derivative financial instruments
(0.4)
—
Net cash from financing activities
42.8
(3.3)
Financing activities
Translation differences
(0.1)
0.0
(13.2)
(20.8)
Net cash and cash equivalents at beginning of year
29.8
50.6
Net cash and cash equivalents at end of year
16.6
29.8
Net (decrease) in cash and cash equivalents
11
The Business
Commercial Operational Update
7 Key Business Drivers for 2013 and 2014 Business Plans
o
o
o
o
o
o
o
Growth through new product innovation and creativity
Professional procurement
Invest in IT
Focus on training and recruitment
Acquisitions in key existing markets and one new geographic market
Develop e-commerce marketing
Develop appropriate pricing strategies







13
Commercial Review
Germany
New
Products
New
Contracts
o WL3 successfully established
o Cube sparkling in development for 2014 launch
o Major new accounts
Expansions for 2014 install
Marketing
o Certification from German Assn for Hospital Hygiene (DGKH) will support sales in 2014
o Continued growth in Austria through selected dealer and FM partners
o New call centre in Düsseldorf from 2014 for tele-appointing, telesales
Operations
o Enhanced CRM improving sales pipeline management and administration
o Acquisition of Eauvell wasserspender service in Kiel / leading bottle cooler company in
North Germany in September 2013
Profitability
o 28% revenue growth, implemented a price increase and outpaced market growth
14
Commercial Review
France
New
Products
o Transition to Firewall products to drive margins and market share
o Max product has sold over 1000 units by YE 2013
o New WL3 launched in Q1 2014
New
Contracts
o Major new accounts
and key workplace
service partners
Marketing
o Investment in search engine optimisation
o Outside agency being used to generate and qualify leads
Profitability
o A turnaround year for WLF. c.7% revenue growth, 29% profit growth
15
Commercial Review
Scandinavia
New
Products
New
Contracts
o Launch of WL3 Firewall
o Launch of Cube Firewall in online sales channel (web-shop) in Norway & Denmark
o Re-branded Swedish operation to Waterlogic
o Major new accounts
Marketing
o On-line site achieving consistent sales of USD 120 000 per month
o Supporting the coffee and water cross selling initiative
o Scientific report and certification confirms Firewall 99.9999% bacteria reduction
Operations
o New CRM and ERP systems making dramatic improvements
o Recruited more experienced sales people
Profitability
o Aqua Service Norway achieved 10 million NOK ($1,67M) in synergies (representing 26%
of their 2011 revenue of 38,1 M NOK).
o Focus on lower margin bottled water customers increasing price or converting to POU
o Sale of AquaService water source.
16
Commercial Review
USA
New
Products
New
Contracts
o WL3 launch providing new sparkling water solution for US markets
o New Culligan range due for roll-out in Q2 2014
o Major new accounts
Marketing
o Increased investment in customer prospect data
o Newly staffed business development centre
Operations
o Reorganised direct selling business units under one national team
o Completed integration of three companies into the West Coast hub
o New initiatives include coffee cross selling, new sales productivity measures and
incentives and proactive machine upgrade program
Profitability
o Operating loss in the US $1.9m (2012: $1.1m) included one off costs relating to product recall $1.0m
and Debtors $0.7m
17
Commercial Review
Australia
New
Products
o Re-branding to Waterlogic
o Launching a selected Waterlogic range as an additional upgrade to the existing
coolers
Marketing
o Developing new market channels (Food service, facility management)
o Launch of Purezza in the HORECA market
o Promoting the Culligan brand in the residential sector
Operations
o Outperforming acquisition budget with revenue of $11.3m and operating profit of $1.8m
o Distribution agreement secured with Pentair to supply the Food Service sector
Profitability
o Six months contribution as acquired 20 Jun 2013
18
Commercial Review
Aqua Cure
New
Products
New
Contracts
o Launched range of coffee machine cleaning products and water softeners
o Increasing bakery machine filtration / maintenance offerings
o Major new accounts
Bakery sector contracts
Marketing
o Developed and launched several new websites
o Successfully sold 500 tap systems via QVC shopping channel
Operations
o Loss of 3M contract replaced by a deal with Pentair allowing us to market a
competitive range
Profitability
o E-commerce producing good volume, in new channels and at a lower cost per sale
19
Commercial Review
Trading
New
Products
o WL3 successfully established in key markets
o Made first sales of WL2 Firewall with reverse osmosis
o Rolling out Waterlogic manufactured filter range to international partners
Marketing
o Progress in South America with new distributors to be appointed
o Key growth opportunities for 2014 in Puerto Rico, Costa Rica, Mexico, Chile and
Southern and Eastern Europe
Operations
o Continued strong growth in UK, Ireland, Benelux, Russia, Czech Republic, Iberia
o Growth in 2013 from tier 2 and 3 partners improving our customer concentration risk
Profitability
o Product mix improvement (Firewall) and sales growth improves profitability
20
Manufacturing update
o
o
o
o
o
o
110K machines produced and shipped in 2013
o Nov @11K units set an all time record
Enhancing production (due to commence ‘phase in’ from mid May 2014) to R600a
environmental gas for chilling compressors (where market requirements dictate)
New Senior R&D Manager recruited
First CUBE and EDGE production (container load) confirmed for shipment to Israel end Q1 2014
Firewall met WHO standard for highly protective waters - full certification considered for 2014
Production commenced in India (Aquaignis)
Waterlogic Filters
Assembly Operation
Water Testing
Detailed QC Testing
21
Acquisitions Completed in 2013
Aqua Cure
Scotland
(UK)
o Water
equipment
vendor (Perth,
Scotland)
acquired for
$0.5m
o Profitable, highly
complementary
ideal ‘bolt-on’
Cool Clear Water Group
(Australia)
Eauvell
(Germany)
o Market leader in the Australian POU market with
over 26,000 POU coolers installed
o Only Australian POU provider with a presence in
all states
o Predominantly a rental business
o Initial Consideration AUD $60.0m (USD $58.5m)
o Eauvell
Wasserspender
Service GmbH
acquired for
$0.4m
o Acquired
customers,
brand and
operating
assets of the
business
NCI in Aqua
Cure (UK)
o Acquired noncontrolling
interests
2013
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sept Oct
Nov
Dec
22
Indesit
o
Sales growth in Italy and Turkey
o
Plan to expand to additional markets in Europe
(to be mutually agreed)
o
Bundling with SodaStream
Promotional
material (TR)
Ecommerce (IT, TR)
23
Japan
o
Currently in 45 department stores + 3
catalogues
o
Plan to be in 60 locations by end of April
o
Launch to mass distributors planned for Q3
POS materials
In-store
demonstrations
Packaging
Draft on-product
‘swing tag’
Draft point of sale display
24
Aquaignis
o Initial factory pilot test runs
completed
o Eterniti production underway
o Expected initial volumes to be
of 2 to 2.5k per month
o Launching the Edge and Tap in
other SE Asia and Mid East markets
with Forbes International
Eterniti
Infiniti
Aquaignis
25
Costco Canada
•
In Feb. 2014 we launched the Hybrid in Canada,
exclusively for Costco members, on www.costco.ca
•
Supporting with a national PR campaign
•
Costco initially indicated sales of 3-5 units per week so far we have sold over 50 units units in about 5
weeks
Middle East
•
Agreed commercial terms with a leading electronics
retailer (dominating about 70% of the country’s retail
space)
•
Plan to ship over 2,800 Cubes and 1,300 Edges plus
other products in Q2 2014
EMEA
•
Plan to commence product distribution in Southern & Eastern Europe
and Middle East in Q2 2014 with selected distributors and specialist
high end consumer products companies.
26
Summary
o Group revenues increased by 23%
Overview
o Continued increase in direct sales and recurring revenues
o Waterlogic Consumer business still in development
Products /
Markets /
Customers
o Successful launch of WL3 Firewall
o Focus on the introduction of the new Max Firewall™ technology product in France
o New commercial distributors in Bulgaria, Italy, Lithuania and Chile
o Continued development with strategic partners
o Strong contribution from the Australian acquisition, six months drag through
2014
Outlook
o Targeting organic growth in 2014, with contributions from acquisitions and Waterlogic
Consumer product launches
o Q1 generally strong and in line with budgets. Trading order book looking very healthy
We expect 2014 to be another year of progress through a combination of organic
growth, drag through contributions from acquisitions in our core Commercial Division,
supported by continued growth in the Consumer Division.
27
Appendix
About Waterlogic
Example customers
o A leading manufacturer and global operator of Point
of Use (“POU”) water purification systems
o Founded in 1992, the Group predominantly serves the
Commercial market and is developing into the
Consumer segment
o An experienced management team with a strong
track record of profitable growth through acquisitions
and organic growth driven by product and service
innovation
o A 100% owned state of the art manufacturing facility
o Over 750,000 machines installed globally
o A market and product innovator, using market
Key commercial partners
Key facts
o
o
o
o
o
834 employees
Sales in over 50 countries worldwide
Low customer churn rate
Market leader in the USA, Australia,
Norway, Sweden, Germany and the UK
40.2% recurring revenue
leading technology including the in-house
development of Firewall™
29
Commercial Revenue Model
Contracted Customers is Core Strategy, Distributor Partnerships Provide Critical Mass
Representative
Customers
Waterlogic Manufacturing
and Distribution
Waterlogic
subsidiaries
Direct sales
channel
Rental and
service
income
o
o
o
o
c.70% margin
$35-$80 per month
Average contract is 4 years
95% renewal rate
o c.60%-65% margin
Sales and
service
Indirect sales
channel
Indirect
sales
channel
o $800-$1,000 per unit
+$15 per month
(12 month rolling contract)
40% of
2013
Revenue
21% of YTD
2013
Revenue
o $400-$700 per unit
o c.30% margin
39% of
2013
Revenue
Country
distributors
Third parties o $200-$500 per unit
representing
o 25% to 40% margin
Waterlogic
Waterlogic owned
Third Parties
30
Supply chain – B2C
Waterlogic
Trading
Waterlogic
Germany
Direct
sales
Waterlogic China
(100% exporter)
Online sales direct to customers and staff
(pilot study yet to commence)
Indirect
sales
Distributors
1.
Alconix (Japan)
2.
CostCo (Canada)
3.
Other distributors in pipeline
1.
Indesit (Italy, Turkey, plus other
European countries being explored)
2.
Forbes International (Middle East &
Africa)
3.
Etc.
Third party
sales
OEM
Partners
Waterlogic owned
Third Parties
31
Supply chain – Aquaignis
10% of Net Income in P&L gets distributed to the JV Partners.
Direct
sales
Indirect
sales
Aquaignis JV
Aquamall
(JV partner)
Waterlogic
Trading
Eureka
Forbes
(parent)
India
Forbes
International
Africa and
Middle East
(most likely end
of 2014 or 2015)
Waterlogic
subsidiaries
Rest of world
(most likely
2015)
Waterlogic owned
Third Parties
32
The Market
USA
o 5.48 million water coolers in US (2013)
o 79% bottled coolers, but in decline.
o Growth in mains water point-of-use coolers has accelerated to over 10% a year.
o Waterlogic growth is just over 11%*
o “Water coolers are now an essential service for staff in many businesses, but bottled water coolers have
lost out to mains water point-of-use coolers due to a combination of cost, convenience and perceptions
of environmental impact,”
Zenith Regional Research Co-ordinator Cecilia Martínez.
Europe
* Zenith US Coolers Report 2013
o 2.78 million coolers in West Europe and 1.7million in East Europe
o 58% in W. Europe are bottled coolers but in decline (66% in E. Europe)
o Overall market growth is 6% in W. Europe and 5% in E. Europe
o Waterlogic growth is 11%*
* Zenith West Europe and East Europe
Coolers Report 2013
* Internal data confirmed in Zenith report.
33
Market overview
o The global water cooler market is estimated to be worth
$14 billion annually
o Prior to creation of Waterlogic Commercial, the
company competed in the $2 billion Commercial
(Europe / US) segment of this
o Significant trend away from bottled water coolers to
POU; c.77% of new installations between 2005-2012 were
POU**. In the same period:
o The overall market grew 26%
o The POU market grew 175%
o Further market shift from bottled water to POU expected.
Driven by cost and environmental concerns
Source: Zenith International, Director estimates
2009 Global RWT Market
Waterlogic Consumer
o The consumer market is estimated to be worth $12bn
with a c.11% CAGR
o Water quality is an additional driver for the consumer
o Developing countries (in particular China and
India) demand driven by distrust of tap and
bottled water
o Developed world (in particular the US) significant
questions over tap water quality reflected in the
high-prevalence of water filters
**Source: Zenith International, Director estimates
Source: Piper Jaffray POU Research Report February 2010
*POU = “Point of entry” where water is purified where the mains supply enters a property
Source: F&S markets research, trigger foresight analysis
34
Waterlogic’s Market Position
Market Leadership
o Between 2005 and 2012*
o The Group’s installed base grew by 255%
o The Group’s share of the POU market grew from 22% to 29%
o Globally the POU market is fragmented on a country by country basis
o The Group is in a market-leading position in most of its key territories.
Waterlogic’s market position in its key territories*
Country
Market ranking
USA
1st
Norway
1st
Sweden
1st
UK
1st
Germany
1st
Australia
1st
* Source: Zenith International, Director estimates
35
Global Presence
Factory
Support / Trading Offices (UK & Ireland)
Operational Businesses (Australia, US, Germany, France, Norway, Sweden, Denmark and UK)
Core markets – existing strong business
Developing markets – new distributors / strong prospects in development
Undeveloped markets
Operations in over 50 countries across the world
36
Major Moments in Waterlogic History
1992
Company established
1993
First UK sales
1995
Production commences in Korea
1999
US Market entry
2000
WL UK sold to PHS
Waterlogic launches in Russia
‘92-2000
2001-’03
2004
China manufacturing operation
commences
Two (NOR) acquisitions
Waterlogic Denmark commenced
operation
2005
Acquisition of Innowave, (USA),
CoolerSmart (USA), Elan (NOR)
2004-’05
2001
Acquired Korean manufacturing facilities from JV
partner
Waterlogic launches JV in Germany
2002
Acquisition of NewTech (NOR),
Water Pure (FRA)
Key
Highlig
hts
2010
Firewall Launch
Acquisition of,
NewTech (DEN),
Cool Chili (NOR),
Frangart (GER)
and
Health Concepts (USA)
2006-’09
2006
Acquired Water Works (DEN)
2007
Acquired ESCOWA (SWE)
2009
Major Factory Expansion
2010
Admission
to AIM
2011
2011
Launch of own filters line
Acquisition of AquaCure (UK),
InnoTech (USA) and coolerbase of BWT (FRA)
2012
Acquisition of, DSK (NOR), Prisme (FRA),
Aqua Service (Nor & Swe),
Taylor Made (USA),
Aqua Prix (USA)
Creation of Waterlogic Commercial and
Waterlogic Consumer. Appointment of
Peter Cohen as CEO Commercial.
Supply agreement with Indesit
JV with Eureka Forbes
2012
2013
2013
Acquisition of Cool Clear Water
in Australia
Plus Aqua Cure Scotland (UK)
and Eauvell (GER)
o Manufacturing operations commenced in 1995 with Korean partner
o Sold UK subsidiary to PHS Group in 2000, entering 25 year distribution agreement. Disposal provided
capital to expand manufacturing facilities and enter expanding markets including US
o Manufacturing operations in PRC trebled expansion between 2004 to 2009. In 2009, the Group
undertook a major factory expansion increasing production by a further 30% p.a.
o 2011/2012 acquisitions and contracts with Indesit and Eureka Forbes
o Acquisition of Cool Clear Water in Australia in 2013
37
Drinking Water Evolution
Technology
Evolution
Bottles
Converted
Bottles
Filtration Only
Filtration & UV
Firewall™
2014
1980
Growth
Drivers
Consumer
Branding
Cost
Taste,
Convenience
Health Benefits & Environmental
38
What is Firewall™?
Until now, advanced POU water dispensers have utilised UV technology to kill bacteria and
pathogens in the tank. Whilst very effective, this was not designed to eliminate back
contamination via the tap from outside the machine affecting the water dispensed
In 2010, Waterlogic unveiled a
technology to address this issue
which delivers a level of water
purification previously unseen
in POU
In the time taken for the water to
flow through the spiral (0.8 seconds)
the water dispensed is 99.9999% pure
Interior view of Firewall™ chamber
showing UV effect at all points
Waterlogic WL4 ‘Firewall’ model water dispenser
5,000 independent tests prove water is 99.9999% pure 100% of the time
39
Firewall Developments
o
Strategic positioning of the Edge:
o
o
Firewall
o
o
Hybrid
Drink Pure
Messaging:
o
Crowded markets:
o
o
Natural/ Healthy
Un-crowded markets:
o
Purity + Safety
Ghost image of the Waterlogic Edge Hybrid Purifier showing the Firewall
o
Dr. Gerba – renowned expert, currently testing Firewall against other taps and specifically
the efficacy of Firewall against the WHO standard for “Highly Protective Waters” (results to
go public later in 2013)
o
Initial report states that: “The Waterlogic WL 250 easily met the removal requirements for the USEPA
and NSF for a microbiological water purifier, and the WHO requirements for “protective”.”
“…all of the oocysts observed in the effluent were inactivated achieving the WHO classification of
the system as “highly protective”.”
Charles P. Gerba, Ph.D. is an internationally recognized environmental microbiologist and Professor of Environmental Microbiology in the Departments of Microbiology and Immunology, and Soil,
Water and Environmental Science, at the University of Arizona Dr. Gerba has authored more than 400 articles including several text books in environmental microbiology and pollution science He is
a member of the U.S. EPA's Science Advisory Board Committees on Drinking Water and Research Strategies
40
Technology (pre-Firewall™)
Filtration
In-tank UV
BioCote

Removes most contaminants, insecticides and pesticides

Removes chlorine and water borne tastes and odours

Improves water taste

WQA Gold Seal approved

Options to suit local water conditions

Harnesses the power of ultra violet light for water purification – no chemicals
added to water

Features a UV lamp in the centre of the cold tank

Destroys the growth of bacteria by destroying its DNA core

Effective against all bacteria and pathogens

Waterlogic technology incorporates unique Automatic Purification Monitoring
System which triggers an alarm should UV lamp fail

Protects the plastic surfaces and surrounding the dispensing of Waterlogic units

A second defence hygiene mechanism after Filtration and UV

Bacteria which come into contact with BioCote® protected surfaces,
breakdown rendering them unable to reproduce and further causing them to
die

Exclusive to Waterlogic
The problem still remains … back contamination
41
Patents and Certifications
o
Patent pending technology: published on 5
May 2011 means technology is “prior art”
o
International certifications prove the highest
levels of quality and safety at Waterlogic
and create a market barrier to entry
o
Waterlogic is recognised by the US Water
Quality Association as being able to use the
term “water purifier” in connection with its
products (WQA NSF P231)
o
The Company’s technology is the only one
certified as able to guarantee 99.9999%
pure water 100% of the time (WQA
NSF/ANSI)
Highest levels of quality and certification provide a barrier to entry
and give Waterlogic a competitive advantage
42
Product Line-up
Commercial
Consumer
43
Waterlogic Hybrid PurifierExcellent Design & Colour Range
3 litre reservoir
44
Waterlogic revenue model
o
Rental and service revenue
o Waterlogic rents water dispensers and other products, often with a service
contract, direct to end-user businesses
o This channel represented 40.2% of Group Revenue in 2013, 2012: 38.6%
o
Direct revenue
o Waterlogic makes an outright sale of its water dispensers and other products
(typically signing an additional maintenance contract) direct to similar end-user
businesses
o This channel represented 20.9% of Group Revenue in 2013, 2012: 15.9%
o This includes direct sales of units, parts, consumables, filters and leasing
o
Indirect revenue
o Waterlogic sells to dealers and distributors who then supply products to the end
customer
o Sales are made either to sub-dealers in direct markets, or direct to partners in other
countries (some of whom Waterlogic may produce an OEM product)
o This channel represented 38.9% of total Group Revenue in 2013, 2012: 45.5%
o This includes indirect sales of units, parts, consumables, filters and Consumer Division
45
Financial summary - 2013
o
Revenue grew by 22.9% to $124.0m (2012: $101.0m) and 41.3% adjusted EBITDA growth
to $19.5m (2012: $13.8m)
o
This was achieved through:
o Launching new products based on its proprietary Firewall technology
o Achieving organic growth of 3.5%
o Acquisitions, including CCWG in Australia, Aqua Cure in Scotland and Eauwell in
Germany
o Securing consumer distribution agreements with ALCONIX in Japan and an Ecommerce launch with Costco in Canada
o Adding commercial distribution channels in Bulgaria and Italy and entering new
territories in Lithuania and Chile, with International Trading revenue growing by
13.9%
o
Delays in launching the Consumer Division - specifically with roll-out delays with Indesit,
our Latin American partner, and our partner in the Middle East. These delays are being
resolved and should provide significant additional revenue in 2014, providing further
upside
One-off costs relating to the USA, including debtor impairment costs of $0.7m and
product related issues of $1.0m
o
46
Multi-Currency Credit Facility
o
Arranged with HSBC and Clydesdale banks
o
5 year committed amortising term loan
o AUD 16.6m (AUD 0.8m repaid in Dec 13)
o NOK 51.6m (NOK 2.6m repaid in Dec 13)
o
5 year committed revolving credit facility
o AUD $38.0m
o
Uncommitted incremental facility
o USD $15.0m
o
Leverage margin up to 2.75%
47
Disclaimer
The materials being provided to you in connection with this presentation are strictly confidential and intended only for informational purposes and convenient reference
and should not be copied or reproduced in any way.
These materials do not constitute or form part of any offer or invitation to sell or issue or any solicitation of any offer to purchase or subscribe for any securities of
Waterlogic in any jurisdiction, nor shall it (or any part of it) or the fact of its distribution form the basis of, or be relied upon in connection with, or act as any inducement
to enter into, any contract or investment decision in relation thereto. Recipients of these materials who intend to purchase or subscribe for shares in Waterlogic are
reminded that any such purchase or subscription must only be made solely on the basis of information contained in a formal offer document or circular relating to
Waterlogic or an RNS announcement.
The distribution of these materials in jurisdictions other than the United Kingdom may be restricted by law and persons into whose possession these materials come
should inform themselves about and observe any relevant restrictions. In particular, these materials are not for publication or distribution, directly or indirectly, in, into
or from the United States of America, Canada, Australia, the Republic of South Africa or Japan. Any failure to comply with the above restrictions may constitute a
violation of such securities laws.
Neither Waterlogic nor any of its affiliates or advisers, makes any representation or warranty, express or implied as to the accuracy, completeness or verification of the
information contained herein, and nothing contained herein shall be relied upon as a promise or representation whether as to past or future performance. In giving this
presentation, neither Waterlogic nor its respective advisers and/or agents undertake any obligation to provide the recipient with access to any additional information or
to update this presentation or any additional information or to correct any inaccuracies in any such information which may become apparent.
These materials are only addressed to and directed at persons in member states of the European Economic Area who are “qualified investors” within the meaning of
Article (2)(1)(e) of the Prospectus Directive (Directive 2003/71/EC). This document is for distribution in the United Kingdom only to persons who are authorised or
exempt persons within the meaning of the Financial Services and Markets Act 2000 or to persons who have professional experience in matters relating to investments
falling within Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, (all such persons together being referred to as, "relevant
persons"). This document is directed only at relevant persons. Other persons should not act or rely on this document or any of its contents.
These materials include statements that are, or may be deemed to be, “forward-looking statements” which are based on current expectations and projections about
future events. In some cases, these forward-looking statements may be identified by the use of forward-looking terminology, including the terms “targets”, “believes”,
“estimates”, “anticipates”, “expects”, “intends”, “may”, “will” or “should” or, in each case, their negative or other variations or comparable terminology. They appear in a
number of places throughout these materials and include statements regarding the intentions, beliefs or current expectations of Waterlogic and/or its directors
concerning, among other things, the trading performance, results of operations, financial condition, liquidity, prospects and dividend policy of Waterlogic. By their
nature, these forward-looking statements involve risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the
future. Forward-looking statements are not guarantees of future performance. A number of important factors could cause actual results or outcomes to differ materially
from those expressed, projected or implied in any forward-looking statements. No one undertakes publicly to update or revise any such forward-looking statement. As a
result of these risks, uncertainties and assumptions, you should not place undue reliance on these forward-looking statements as a prediction of actual results or
otherwise.
The information and opinions contained in this presentation are provided as at the date of this presentation and are subject to verification, completion and change
without notice.
By attending the presentation you agree to be bound by the foregoing limitations.
48

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