Announcement
ANNREP: JLG: Annual Results and Dividend Announcement
08:31am
JLG
29/08/2019 08:31
ANNREP
PRICE SENSITIVE
REL: 0831 HRS Just Life Group Limited
ANNREP: JLG: Annual Results and Dividend Announcement
Chair and Chief Executive Officer's Review
We would like to take this opportunity to thank all shareholders for your
continued support of our company during the last 12 months.
The directors present the audited financial results of the Just Life Group
Ltd for the year ended 30 June 2019. This has been a challenging year of
consolidation following the acquisition of Hometech which was a major step
forward towards our diversification and growth strategy.
The financial result represents the first full year of trading with 100%
ownership of Hometech Ltd and consolidation of its trading results. The
previous year included equity earnings of the 51% of Hometech acquired on 3
January 2018 through to 29 June 2018 when the balance of 49% was acquired
resulting in 100% ownership going forward.
Company debt levels have increased as a result of the Hometech and Unovent
acquisitions. The directors are comfortable with the current debt : equity
ratio and also intend to make further reduction in debt during the coming
year. All bank covenants have been met during the year and are forecast to be
met during the next year.
The Company changed its name from Just Water International Ltd to Just Life
Group Ltd on the 1st March 2019 to reflect the change in its operations
following the Hometech acquisition, and to coincide with the migration of the
Company listing from the NZAX to the NZX Main Board.
Steve Bootten was appointed to the board on 1st January 2019 and was
appointed as chair of the board on 2nd May 2019, following the resignation of
Hilary Poole. On the 1st March 2019 Richard Carver was appointed to the
board, having previously served on the board of Hometech Ltd. Both new
directors were considered to be independent directors under the NZX Listing
Rules.
Steve resigned effective 22nd August 2019 due to personal circumstances.
Steve has been a high contributor to the board and all the directors wish to
thank him for his tireless hard work and wish him all the best for the
future. The board intends to appoint another independent director to take the
position of chair and are planning to have that appointment in place in time
for the Annual Meeting scheduled for the 6th December 2019.
The directors have also taken this opportunity to review the composition of
the board. The IOD Future Directors' programme is about developing the next
generation of directors, and with this programme in mind, the directors have
much pleasure in announcing the appointment of Jing Jing Luo as a new
independent director on the board of Just Life Group. Jing Jing has a
conjoint BCom/LLB degree from the University of Auckland, with 6 years' post
graduate work experience. Jing Jing's CV is detailed on our website
(www.justlifegroup.co.nz).
In accordance with the NZX Listing Rules Richard Carver will stand for
election at the annual meeting scheduled for 6th December 2019. Tony
Falkenstein and Ian Malcolm both retire by rotation and each will also stand
for re-election to the board.
We have achieved several milestones during a busy year, some of which are not
reflected in the annual result:
Just Water New Zealand
o We appointed Lynne Banks as General Manager of Just Water New Zealand to
enable the CEO to focus on growth opportunities for the Group. Lynne brings
a new perspective to Just Water, after a career in fast moving consumer
goods. She has already instituted initiatives which will bring excellent
cost savings in the 2020 year.
o We maintained our leadership in the water cooler industry. Our research
tells us we are clearly the number one operator in the market and continue to
earn the ongoing trust from a majority of the Top 100 New Zealand Companies
for their bottled water and water cooler solutions, plus of course a massive
number of SME businesses that trust having Just Water in their business
workplaces.
o Our ownership of the Auckland property where the Just Water head office and
bottling plant are located. This year we recognised an unrealised gain on
the value of the land and buildings of Just Water New Zealand's Head Office
in Penrose, Auckland of $0.8 million within other comprehensive income. This
was after receiving an independent registered valuation in June 2019. The
directors have taken 95% of the registered valuation undertaken in June 2019,
giving a valuation of this property in the balance sheet of $5.13 million.
The total gain since acquisition of the property in September 2015 is $1.1
million.
Hometech Ltd
o We increased our ownership of Hometech Ltd to 100% in June 2018. Hometech
continues our mission of "enhancing lives", and we believe has excellent
growth prospects.
o Hometech has held the distribution rights for the premium Solatube natural
daylighting product for 27 years. Quite simply this is the leading product in
the market, manufactured in California, USA with an ongoing research and
product development pipeline second to none.
o Hometech installs the Solatube product range via a dedicated team of 16
Licensees across New Zealand. Customers cannot believe the difference it
makes to internal areas such as kitchens, bathrooms and hallways.
o There is unlikely to be any town in New Zealand that doesn't have a
"Hometech Home" in them. Our marketing team believes that 1 in 10 homes in
New Zealand is a Hometech Home with either a Solatube or one of our
ventilation products installed in them. Lots of potential in the market yet!
o We moved Hometech's head office and main warehouse from Wellington to
Auckland in August 2019. The majority of business is in the Auckland region,
so this is a short term cost we have recognised in full in 2019 with expected
savings in freight and travel going forward.
o We also moved the Hometech Auckland office to one central office, to become
neighbours with Just Water New Zealand. Like Just Water, all employees are on
one floor, which offers a more conducive environment to work in.
o We acquired the business of Unovent in January 2019 and have integrated it
into the Hometech umbrella
o The Unovent patented ductless ventilation product was invented in New
Zealand with a focus on reducing "weeping windows" which is common in many
New Zealand homes and does away with expensive ducting, and high running
costs. It is less expensive than competing brands, and a householder can do
just one room at a time if they wish.
o We are in the middle of an extensive Unovent advertising campaign across
TV, radio and social media - we are sure you will have seen it! If not -
please visit www.unovent.com.
Free cash flow for the year was $2.8 million. The directors are pleased to
recommend that a fully-imputed dividend of 2.2 cents per share be declared
for the current year. The record date for the dividend will be 22nd November
2019 and the payment date will be the 6th December 2019.
The company operates a dividend reinvestment plan. The Harvard Group, being
the major shareholder in Just Life Group, has committed to partaking in this
plan.
Looking to 2020 we are now positioned to benefit from the stable earnings and
cash flow generated by our water business while we focus on the growth
opportunities presented by the Hometech and Unovent acquisitions - we look
forward to the challenges and opportunities that lie ahead.
Key highlights extracted from the Statement of Comprehensive Income:
[Refer to the attachment for table]
Group revenue has increased by 91% as a result of the Hometech acquisition.
EBITDA has increased by 26%. The percentage increase in the EBITDA margin is
less than the percentage increase in revenue, is because the operating
margins of Hometech are lower than Just Water New Zealand.
Net profit after tax shows a decrease of 8% over the previous year,
principally because of the increased interest cost associated with the
Hometech acquisition, restructuring costs and the $0.25 million accrual cost
for the relocation of the Head Office from Wellington to Auckland. In
addition, the 2019 amortisation of intangible assets expense includes a
non-recurring customer contract amortisation charge of $0.8 million for the
year incurred through the Hometech acquisition in June 2018. This was a
non-cash expense.
It is pleasing to note that 93% of the Just Water New Zealand revenue for the
year was derived from existing customers - a real vote of confidence in our
successful partnership with our customers. The ongoing loyalty of the Just
Water base continues to be an ongoing strategic advantage in respect of
future earnings for the Group and management will continue to ensure that
focus on exceeding our customers' expectations remains a fundamental part of
the culture of the Company.
[Refer to the attachment for graph]
As a result of the acquisition of the remaining 49% of the shares in Hometech
in June 2018 the revenue is now consolidated into the Group results. This has
resulted in revenue increasing by 91% during 2019. Just Water New Zealand
revenue continues to be consistent reflecting the more medium-term nature of
revenue growth with a contracted customer base.
[Refer to the attachment for graph]
EBITDA continues to show a steady increase over the past 5 years, with the
jump in 2019 being attributed to the acquisition of Hometech Ltd. EBITDA is a
key measurement metric for management.
Debt
Net interest-bearing liabilities include cash and cash equivalents. The graph
below details the net interest-bearing liabilities for the Group over the
past 5 years. Interest bearing debt increased during 2018 as a result of the
acquisition of Hometech and Dolphin Water Products.
[Refer to the attachment for graph]
Interest-bearing liabilities decreased by $0.7 million during the year
despite the $0.2 million paid as part of the acquisition price for Unovent.
[Refer to the attachment for graph]
The debt to equity ratio was 50.9% : 49.1% as at 30 June 2019. The directors
believe that the Group is appropriately geared relative to its scale of
operations and is continuing a programme of debt repayment.
Shareholder returns
[Refer to the attachment for graph]
Earnings per share decreased from 2.4 cents per share to 2.2 cents per share.
[Refer to the attachment for graph]
Shareholder equity has steadily increased from $11.2 million to $15.8 million
over the last 5 years. This is a pleasing trend as during the past two years
a dividend of 2.0 cents per share (2018) and 2.2. cents per share (2019) was
paid to the shareholders.
Management and Team
It is important to take this opportunity to acknowledge the commitment and
loyalty of all our team members without whom we simply could not operate to
the high standards for which we strive. The Company is all about "enhancing
lives", and the team works every day to achieve that vision.
Tony Falkenstein
Chair and Chief Executive Officer
End CA:00339994 For:JLG Type:ANNREP Time:2019-08-29 08:31:38
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