2Management Team Jeremy Ben-David Peter Cohen Robert Bell –Management TeamJeremy Ben-DavidGroup Chief ExecutiveFounded Waterlogic Plc in 1992Responsible for the overall strategic development of the GroupHeads Waterlogic Consumer (business-to-consumer) worldwidePeter CohenChief Executive– Waterlogic CommercialJoined the Group in August 2012Previously, CEO of PHS GroupHeads Waterlogic Commercial (business-to-business) worldwideJoined the Group in January 2012, appointed as CFO in Oct 2013Previous experience includes Barclays, Bank of America and the debt-backed purchase of a major rolling stock company from RBSPreviously Director of AccountingRobert BellChief Financial Officer
3Group Highlights Summary Overview Financial Highlights Progress in further strengthening our position as a leader in quality POU water dispensers enhancing future quality of earnings through increasing recurring revenues.SummaryRental and service revenue increased to 40.2% of total revenue (2012: 38.6%)Parts & consumable sales account for a further 25% of revenueNew Group CFO, Robert Bell, appointed October 18th 2013Acquisition of CCW in Australia backed by c.$60m facility with HSBC and ClydesdaleGrowth in units placed outpaces general market growth (17% over 11%)International trading business delivered healthy growth of 9.9%OverviewRevenue increasing by 22.9% from $101.0m to $124.0mGross margin improving from 60.7% to 63.6%Organic revenue grew by 4.1%, which was 3.5% on a constant currency basis.Adjusted EBITDA grew 41.3% to $19.5m (2012: $13.8m)Adjusted operating profit increased 38.4% to $ 12.3m (2012: $ 8.9m)Adjusted net income for the year increased 2.8% to $ 7.6m (2012: $ 7.4m)Financial Highlights
4Operational Highlights Installed base grew by 17.2% to 750,000 MIF (2012: 640,000)Successful international roll out of the WL3 Firewall9.9% revenue growth in Trading, new distributors in Bulgaria, Italy, Lithuania and ChileSeveral key reference accounts were acquired in Germany, France, Scandinavia & USOutstanding organic growth 21.9% in GermanyStrong performance recovery in France, led by a focus on Firewall technology productsCommercial$1.3m revenue in 2013 (2012: $0.5m)Indesit launch in Turkey, Italy units sold in 2013Signing of Japanese agreement with ALCONIX and E-Commerce launch with Costco CanadaCommencement of production at AquaIgnisConsumerAcquisitionsStrategic acquisition of Australian market leader in POU with 24% market sharePlus two further ‘bolt-on’ acquisitionsWaterlogic has continued its international growth through a number of acquisitions and new supply and distribution agreements in 2013.
6Financial highlights Group revenue increased by 22.9% to $124.0m Revenue ($m)Recurring Revenue ($m); % of total revenue2013 acquisition growth (full year basis) - $11.8m in revenue2013 Organic growth of 4.1%Recurring rental & service revenues grew 27.9% in 2013recurring revenues run rate now over 42% of total revenueCAGR + 19%CAGR + 29%Adjusted EBITDA ($m)USA improvement off-set by one off costsScandinavia up $0.5m2013 acquisition of CCWG added $4.6mGroup revenue increased by 22.9% to $124.0mGross Margin increased to 63.6%Organic growth 4.1% whilst growing recurring revenues which now stands at over 40% of revenueNew acquisitions in 2013 contributed $11.8m in revenueCAGR + 19%Adjusted Operating Profit ($m)Amortisation of acquired intangibles up $1.6mCAGR + 18%
7Summary Financials 2013 2012 Change Group revenue ($’m) 124.0 101.0 ↑ 22.9%Gross profit ($’m)78.961.3↑ 28.7%Adjusted EBITDA ($’m)19.513.8↑ 41.3%Adjusted operating profit ($’m)12.38.9↑ 38.4%Adjusted profit for the year ($’m)7.67.4↑ 2.8%Gross margin63.6%60.7%↑ 2.9 bpsAdjusted EBITDA margin15.7%13.7%↑ 2.0 bpsAdjusted Operating Profit margin9.9%8.8%↑ 1.1 bpsGroup Revenue growth of 3.5% at constant currenciesDirect revenue grew by 62.1% from $16.0m to $25.9mIndirect revenue grew by 4.9% from $46.0m to $48.3mRental and service revenue grew by 27.9% to 40.2% of total revenue (2012: 38.6%)The Directors use adjusted measures to judge the profitability of the Group to provide them with a consistent basis for comparison of the Group’s results, on a year on year basis. During the years under review, “Adjusted” measures include adjustments for the share based incentives expense, capital reorganisation related costs, acquisition & integration related costs, amortization of acquired intangibles and corporate reorganisation costs. Further details and reconciliations to statutory measures are included in note 5 to the financial information.
9Revenue Model Analysis Rental & ServiceLeasingFilter & ConsumablePartsUnitsConsumerOtherTotalRevenueFY1349.86.923.67.032.61.32.8124.0FY1237.06.218.27.418.104.22.16801.0Change+34.6 %+11.3%+29.6%-5.4%+10.1%+160%+47.4%+22.9%% of RevenueFY1340.2%5.6%19.1%5.7%26.3%1.0%2.3%FY1236.6%6.2%18.0%7.4%29.3%0.5%1.9%Change+3.6%-0.6%+1.1%-1.7%-3.0%+0.5%0%
10Consolidated Balance Sheet 20132012*2011*$’m$mCapital and reserves90.089.385.5Non-current assetsNon-current liabilitiesGoodwill55.224.911.2Borrowings44.02.84.3Other intangible assets22.214.171.124Derivative financial instruments0.20.1Property, plant & equipment26.314.79.1Deferred tax liability126.96.36.199Deferred tax asset188.8.131.52ProvisionsInvestment in joint venture0.80.0Deferred consideration1.41.9Financial instrumentsTotal non-current assets118.861.229.6Total non-current liabilities184.108.40.206Current liabilitiesTrade and other payables19.4220.127.116.11.5Current assetsCurrent tax liabilities1.61.1Inventories18.213.412.5Trade and other receivables25.023.3Deferred revenue18.104.22.168Cash and cash equivalents16.622.214.171.124Total current assets59.866.883.1Total current liabilities37.233.020.6Total liabilities88.538.727.2Total assets178.5128.0112.7Total equity and liabilities* restated prior period figures.
11Consolidated Cash Flow Year ended 31 DecemberIn $ millions20132012*Adjusted operating profit before working capital movements17.010.5Net effect of working capital movements0.21.9Cash flow before purchase of rental assets, interest and tax17.212.4Purchases of rental assets(5.9)(3.1)Proceeds on disposal of rental assets0.1Interest paid(1.6)(0.5)Tax paid(2.2)(2.0)Net cash from operating activities7.56.9Investing activitiesInterest receivedProceeds on disposal of property, plant and equipment1.20.0Purchases of property, plant and equipment(1.4)Purchases of intangible assets(2.1)Acquisitions including investment in JV and deferred consideration(61.2)(21.1)Net cash used in investing activities(63.4)(24.4)Financing activitiesNew bank loans raised51.81.3Repayment of bank loans and other financing(8.7)(4.6)Payment of derivative financial instruments(0.4)—Net cash from financing activities42.8(3.3)Translation differences(0.1)Net (decrease) in cash and cash equivalents(13.2)(20.8)Net cash and cash equivalents at beginning of year29.850.6Net cash and cash equivalents at end of year16.6
13Commercial Operational Update 7 Key Business Drivers for 2013 and 2014 Business PlansGrowth through new product innovation and creativityProfessional procurementInvest in ITFocus on training and recruitmentAcquisitions in key existing markets and one new geographic marketDevelop e-commerce marketingDevelop appropriate pricing strategies
14Commercial Review Germany New Products New Contracts Marketing WL3 successfully establishedCube sparkling in development for 2014 launchNew ContractsMajor new accounts Expansions for 2014 installCertification from German Assn for Hospital Hygiene (DGKH) will support sales in 2014Continued growth in Austria through selected dealer and FM partnersNew call centre in Düsseldorf from 2014 for tele-appointing, telesalesMarketingEnhanced CRM improving sales pipeline management and administrationAcquisition of Eauvell wasserspender service in Kiel / leading bottle cooler company in North Germany in September 2013OperationsProfitability28% revenue growth, implemented a price increase and outpaced market growth
15Commercial Review France New Products New Contracts Marketing Transition to Firewall products to drive margins and market shareMax product has sold over 1000 units by YE 2013New WL3 launched in Q1 2014New ProductsNew ContractsMajor new accounts and key workplace service partnersMarketingInvestment in search engine optimisationOutside agency being used to generate and qualify leadsProfitabilityA turnaround year for WLF. c.7% revenue growth, 29% profit growth
16Commercial Review Scandinavia New Products New Contracts Marketing Launch of WL3 FirewallLaunch of Cube Firewall in online sales channel (web-shop) in Norway & DenmarkRe-branded Swedish operation to WaterlogicNew ContractsMajor new accountsOn-line site achieving consistent sales of USD per monthSupporting the coffee and water cross selling initiativeScientific report and certification confirms Firewall % bacteria reductionMarketingOperationsNew CRM and ERP systems making dramatic improvementsRecruited more experienced sales peopleAqua Service Norway achieved 10 million NOK ($1,67M) in synergies (representing 26% of their 2011 revenue of 38,1 M NOK).Focus on lower margin bottled water customers increasing price or converting to POUSale of AquaService water source.Profitability
17Commercial Review USA New Products New Contracts Marketing Operations WL3 launch providing new sparkling water solution for US marketsNew Culligan range due for roll-out in Q2 2014New ContractsMajor new accountsMarketingIncreased investment in customer prospect dataNewly staffed business development centreReorganised direct selling business units under one national teamCompleted integration of three companies into the West Coast hubNew initiatives include coffee cross selling, new sales productivity measures and incentives and proactive machine upgrade programOperationsProfitabilityOperating loss in the US $1.9m (2012: $1.1m) included one off costs relating to product recall $1.0m and Debtors $0.7m
18Commercial Review Australia New Products Marketing Operations Re-branding to WaterlogicLaunching a selected Waterlogic range as an additional upgrade to the existing coolersDeveloping new market channels (Food service, facility management)Launch of Purezza in the HORECA marketPromoting the Culligan brand in the residential sectorMarketingOperationsOutperforming acquisition budget with revenue of $11.3m and operating profit of $1.8mDistribution agreement secured with Pentair to supply the Food Service sectorProfitabilitySix months contribution as acquired 20 Jun 2013
19Commercial Review Aqua Cure New Products New Contracts Marketing Launched range of coffee machine cleaning products and water softenersIncreasing bakery machine filtration / maintenance offeringsNew ContractsMajor new accounts Bakery sector contractsMarketingDeveloped and launched several new websitesSuccessfully sold 500 tap systems via QVC shopping channelOperationsLoss of 3M contract replaced by a deal with Pentair allowing us to market a competitive rangeProfitabilityE-commerce producing good volume, in new channels and at a lower cost per sale
20Commercial Review Trading New Products Marketing Operations WL3 successfully established in key marketsMade first sales of WL2 Firewall with reverse osmosisRolling out Waterlogic manufactured filter range to international partnersNew ProductsProgress in South America with new distributors to be appointedKey growth opportunities for 2014 in Puerto Rico, Costa Rica, Mexico, Chile and Southern and Eastern EuropeMarketingOperationsContinued strong growth in UK, Ireland, Benelux, Russia, Czech Republic, IberiaGrowth in 2013 from tier 2 and 3 partners improving our customer concentration riskProfitabilityProduct mix improvement (Firewall) and sales growth improves profitability
21Manufacturing update 110K machines produced and shipped in 2013 units set an all time recordEnhancing 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 recruitedFirst CUBE and EDGE production (container load) confirmed for shipment to Israel end Q1 2014Firewall met WHO standard for highly protective waters - full certification considered for 2014Production commenced in India (Aquaignis)Waterlogic FiltersAssembly OperationWater TestingDetailed QC Testing
22Acquisitions Completed in 2013 Aqua Cure Scotland (UK)Water equipment vendor (Perth, Scotland) acquired for $0.5mProfitable, highly complementary ideal ‘bolt-on’NCI in Aqua Cure (UK)Acquired non-controlling interestsCool Clear Water Group(Australia)Market leader in the Australian POU market with over 26,000 POU coolers installedOnly Australian POU provider with a presence in all statesPredominantly a rental businessInitial Consideration AUD $60.0m (USD $58.5m)Eauvell (Germany)Eauvell Wasserspender Service GmbH acquired for $0.4mAcquired customers, brand and operating assets of the business2013JanFebMarAprMayJunJulAugSeptOctNovDec
23Promotional material (TR) IndesitSales growth in Italy and TurkeyPlan to expand to additional markets in Europe (to be mutually agreed)Bundling with SodaStreamPromotional material (TR)Ecommerce (IT, TR)
24Japan Currently in 45 department stores + 3 catalogues Plan to be in 60 locations by end of AprilLaunch to mass distributors planned for Q3POS materialsIn-store demonstrationsPackagingDraft on-product ‘swing tag’Draft point of sale display
25Aquaignis Initial factory pilot test runs completed Eterniti production underwayExpected initial volumes to be of 2 to 2.5k per monthLaunching the Edge and Tap in other SE Asia and Mid East markets with Forbes InternationalInfinitiEternitiReminder of market sizeLowering bills of material for group and risk mitigation elements of factory.Aquaignis
26Costco Canada Middle East EMEA In Feb we launched the Hybrid in Canada, exclusively for Costco members, onSupporting with a national PR campaignCostco initially indicated sales of 3-5 units per week - so far we have sold over 50 units units in about 5 weeksMiddle EastAgreed 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 2014This is the first time we’ve ventured into a relationship with a retailer, and our first attempt at online salesWe intend to begin selling the Countertop as well later this year on Costco.caEMEAPlan to commence product distribution in Southern & Eastern Europe and Middle East in Q with selected distributors and specialist high end consumer products companies.
27Products / Markets / Customers SummaryGroup revenues increased by 23%Continued increase in direct sales and recurring revenuesWaterlogic Consumer business still in developmentOverviewSuccessful launch of WL3 FirewallFocus on the introduction of the new Max Firewall™ technology product in FranceNew commercial distributors in Bulgaria, Italy, Lithuania and ChileContinued development with strategic partnersProducts / Markets / CustomersStrong contribution from the Australian acquisition, six months drag throughTargeting organic growth in 2014, with contributions from acquisitions and Waterlogic Consumer product launchesQ1 generally strong and in line with budgets. Trading order book looking very healthy2014 OutlookWe need t consider outlook statements and whether or not we are going to make forecasts.I think we still need an acquisition slide that shows the prospects and the two LOIs we have signed. We can explain that we will only pursue these when the timing is right from a BS perspective. Not having anything on future acquisitions is a negative statement in itself.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
29–About WaterlogicExample customersA leading manufacturer and global operator of Point of Use (“POU”) water purification systemsFounded in 1992, the Group predominantly serves the Commercial market and is developing into the Consumer segmentAn experienced management team with a strong track record of profitable growth through acquisitions and organic growth driven by product and service innovationA 100% owned state of the art manufacturing facilityOver 750,000 machines installed globallyA market and product innovator, using market leading technology including the in-house development of Firewall™Key commercial partnersKey facts834 employeesSales in over 50 countries worldwideLow customer churn rateMarket leader in the USA, Australia, Norway, Sweden, Germany and the UK40.2% recurring revenue
30–Commercial Revenue Model Contracted Customers is Core Strategy, Distributor Partnerships Provide Critical MassRepresentative CustomersWaterlogic Manufacturing and DistributionRental and service incomec.70% margin$35-$80 per monthAverage contract is 4 years95% renewal rate40% of RevenueWaterlogic subsidiariesDirect sales channelSales and servicec.60%-65% margin$800-$1,000 per unit +$15 per month (12 month rolling contract)21% of YTD 2013 RevenueIndirect sales channelIndirect sales channel$400-$700 per unitc.30% margin39% of RevenueCountry distributorsThird parties representing Waterlogic$200-$500 per unit25% to 40% marginWaterlogic ownedThird Parties
31Waterlogic China (100% exporter) –Supply chain – B2CWaterlogic China (100% exporter)Waterlogic TradingWaterlogic GermanyOnline sales direct to customers and staff (pilot study yet to commence)Direct salesIndirect salesDistributorsAlconix (Japan)CostCo (Canada)Other distributors in pipelineThird party salesOEM PartnersIndesit (Italy, Turkey, plus other European countries being explored)Forbes International (Middle East & Africa)Etc.Waterlogic ownedThird Parties
32Supply chain – Aquaignis 10% of Net Income in P&L gets distributed to the JV Partners.Aquaignis JVAquamall (JV partner)Eureka Forbes (parent)IndiaIndirect salesAfrica and Middle East (most likely end of 2014 or 2015)Forbes InternationalWaterlogic TradingWaterlogic subsidiariesRest of world (most likely 2015)Direct salesWaterlogic ownedThird Parties
33The Market USA 5.48 million water coolers in US (2013) 79% bottled coolers, but in decline.Growth in mains water point-of-use coolers has accelerated to over 10% a year.Waterlogic growth is just over 11%*“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.Europe2.78 million coolers in West Europe and 1.7million in East Europe58% in W. Europe are bottled coolers but in decline (66% in E. Europe)Overall market growth is 6% in W. Europe and 5% in E. EuropeWaterlogic growth is 11%** Zenith US Coolers Report 2013* Zenith West Europe and East Europe Coolers Report 2013* Internal data confirmed in Zenith report.
34Market overviewThe global water cooler market is estimated to be worth $14 billion annuallyPrior to creation of Waterlogic Commercial, the company competed in the $2 billion Commercial (Europe / US) segment of thisSignificant trend away from bottled water coolers to POU; c.77% of new installations between were POU**. In the same period:The overall market grew 26%The POU market grew 175%Further market shift from bottled water to POU expected. Driven by cost and environmental concernsWaterlogic ConsumerThe consumer market is estimated to be worth $12bn with a c.11% CAGRWater quality is an additional driver for the consumerDeveloping countries (in particular China and India) demand driven by distrust of tap and bottled waterDeveloped world (in particular the US) significant questions over tap water quality reflected in the high-prevalence of water filtersSource: Zenith International, Director estimates2009 Global RWT MarketSource: Piper Jaffray POU Research Report February 2010*POU = “Point of entry” where water is purified where the mains supply enters a property**Source: Zenith International, Director estimates34Source: F&S markets research, trigger foresight analysis
35Waterlogic’s Market Position Market LeadershipBetween 2005 and 2012*The Group’s installed base grew by 255%The Group’s share of the POU market grew from 22% to 29%Globally the POU market is fragmented on a country by country basisThe Group is in a market-leading position in most of its key territories.Waterlogic’s market position in its key territories*CountryMarket rankingUSA1stNorwaySwedenUKGermanyAustralia35* Source: Zenith International, Director estimates
36Operations in over 50 countries across the world Global PresenceFactorySupport / Trading Offices (UK & Ireland)Operational Businesses (Australia, US, Germany, France, Norway, Sweden, Denmark and UK)Core markets – existing strong businessDeveloping markets – new distributors / strong prospects in developmentUndeveloped marketsOperations in over 50 countries across the world36
37Major Moments in Waterlogic History 1992Company established1993First UK sales1995Production commences in Korea1999US Market entry2000WL UK sold to PHSWaterlogic launches in Russia2004China manufacturing operation commencesTwo (NOR) acquisitionsWaterlogic Denmark commenced operation2005Acquisition of Innowave, (USA), CoolerSmart (USA), Elan (NOR)2012Acquisition 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 IndesitJV with Eureka Forbes2010Firewall LaunchAcquisition of,NewTech (DEN),Cool Chili (NOR),Frangart (GER) and Health Concepts (USA)Admission to AIM2001-’032004-’052006-’0920102011‘201220132001Acquired Korean manufacturing facilities from JV partnerWaterlogic launches JV in Germany2002Acquisition of NewTech (NOR), Water Pure (FRA)2006Acquired Water Works (DEN)2007Acquired ESCOWA (SWE)2009Major Factory Expansion2011Launch of own filters lineAcquisition of AquaCure (UK), InnoTech (USA) and cooler-base of BWT (FRA)2013Acquisition of Cool Clear Water in AustraliaPlus Aqua Cure Scotland (UK) and Eauvell (GER)Manufacturing operations commenced in 1995 with Korean partnerSold UK subsidiary to PHS Group in 2000, entering 25 year distribution agreement. Disposal provided capital to expand manufacturing facilities and enter expanding markets including USManufacturing operations in PRC trebled expansion between 2004 to In 2009, the Group undertook a major factory expansion increasing production by a further 30% p.a.2011/2012 acquisitions and contracts with Indesit and Eureka ForbesAcquisition of Cool Clear Water in Australia in 2013KeyHighlights
39What 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 dispensedIn 2010, Waterlogic unveiled a technology to address this issue which delivers a level of water purification previously unseen in POUIn the time taken for the water to flow through the spiral (0.8 seconds) the water dispensed is % pureInterior view of Firewall™ chamber showing UV effect at all pointsWaterlogic WL4 ‘Firewall’ model water dispenser5,000 independent tests prove water is % pure 100% of the time
40Firewall Developments Strategic positioning of the Edge:HybridFirewallDrink PureMessaging:Crowded markets:Natural/ HealthyUn-crowded markets:Purity + SafetyDr. 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)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”.”Ghost image of the Waterlogic Edge Hybrid Purifier showing the FirewallCharles 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
41The problem still remains … back contamination Technology (pre-Firewall™)Removes most contaminants, insecticides and pesticidesRemoves chlorine and water borne tastes and odoursImproves water tasteWQA Gold Seal approvedOptions to suit local water conditionsFiltrationHarnesses the power of ultra violet light for water purification – no chemicals added to waterFeatures a UV lamp in the centre of the cold tankDestroys the growth of bacteria by destroying its DNA coreEffective against all bacteria and pathogensWaterlogic technology incorporates unique Automatic Purification Monitoring System which triggers an alarm should UV lamp failIn-tank UVProtects the plastic surfaces and surrounding the dispensing of Waterlogic unitsA second defence hygiene mechanism after Filtration and UVBacteria which come into contact with BioCote® protected surfaces, breakdown rendering them unable to reproduce and further causing them to dieExclusive to WaterlogicBioCoteThe problem still remains … back contamination41
42Patents and Certifications Patent pending technology: published on 5 May 2011 means technology is “prior art”International certifications prove the highest levels of quality and safety at Waterlogic and create a market barrier to entryWaterlogic 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)The Company’s technology is the only one certified as able to guarantee % pure water 100% of the time (WQA NSF/ANSI)Highest levels of quality and certification provide a barrier to entryand give Waterlogic a competitive advantage
45Waterlogic revenue model Rental and service revenueWaterlogic rents water dispensers and other products, often with a service contract, direct to end-user businessesThis channel represented 40.2% of Group Revenue in 2013, 2012: 38.6%Direct revenueWaterlogic makes an outright sale of its water dispensers and other products (typically signing an additional maintenance contract) direct to similar end-user businessesThis channel represented 20.9% of Group Revenue in 2013, 2012: 15.9%This includes direct sales of units, parts, consumables, filters and leasingIndirect revenueWaterlogic sells to dealers and distributors who then supply products to the end customerSales 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)This channel represented 38.9% of total Group Revenue in 2013, 2012: 45.5%This includes indirect sales of units, parts, consumables, filters and Consumer Division
46Financial summaryRevenue grew by 22.9% to $124.0m (2012: $101.0m) and 41.3% adjusted EBITDA growth to $19.5m (2012: $13.8m)This was achieved through:Launching new products based on its proprietary Firewall technologyAchieving organic growth of 3.5%Acquisitions, including CCWG in Australia, Aqua Cure in Scotland and Eauwell in GermanySecuring consumer distribution agreements with ALCONIX in Japan and an E-commerce launch with Costco in CanadaAdding commercial distribution channels in Bulgaria and Italy and entering new territories in Lithuania and Chile, with International Trading revenue growing by 13.9%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 upsideOne-off costs relating to the USA, including debtor impairment costs of $0.7m and product related issues of $1.0m
47Multi-Currency Credit Facility Arranged with HSBC and Clydesdale banks5 year committed amortising term loanAUD 16.6m (AUD 0.8m repaid in Dec 13)NOK 51.6m (NOK 2.6m repaid in Dec 13)5 year committed revolving credit facilityAUD $38.0mUncommitted incremental facilityUSD $15.0mLeverage margin up to 2.75%
48DisclaimerThe 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.