18th Jun 2014 10:57
LONDON (Alliance News) - Water Intelligence PLC Wednesday said it has started increasing spending to drive growth from 2015, after it reported an increase in profit and revenue in 2013 and said it had refinanced an existing term loan agreement with Liberty Bank.
The company, which makes products that detect and remedy water leaks in pipes and operates mainly in the US, posted pretax profit of USD611,894 for 2013, up from USD530,515 in 2012, as revenue rose to USD6.8 million, from USD6.7 million.
The company has two businesses, its US-based American Leak Detection unit and UK-based Qonnectis.
Water Intelligence said American Leak Detection revenue rose 9% in 2013, with royalty income, a measure of the health of its franchise system, rising to USD4.6 million compared with USD4.4 million in 2012. However, corporate stores revenue was flat at USD1.5 million and will be an area of attention during 2014-15, the company said.
"Together, our corporate store sales and royalty level implied that our system-wide sales footprint reached approximately USD60 million - a significant improvement over our three-year cycle," Water Intelligence said.
It said equipment sales were led by a new product, Leakfinder, which it developed in the US for its franchisees. Water Intelligence said Leakfinder sales partially offset the lack of Leakfrog sales in the UK.
The company was disappointed by the slow pace of testing of its Domestic Reporter product among UK utilities. Combined with the lack of Leakfrog sales, group "other activities" sales, which predominantly comprise product and equipment sales, dropped to USD757,990, from USD941,764 a year earlier.
Qonnectis provides a managed service to water and energy utilities through a variety of traditional and wireless automated meter reading products. However, Water Intelligence focused on growing its US business in 2013 while deciding on the right sales approach for Qonnectis.
Water Intelligence said it has begun to revamp its UK sales approach, relying more on strategic relationships to engage in re-sale activities.
Under its refinancing deal with Liberty Bank, Water Intelligence has increased the size of the loan to USD2.75 million, giving it about USD1 million of new cash net of costs.The term of the loan has been rest to five years ending in 2019, and interest on the loan is fixed for the first three years at 5.75%.
Water Intelligence said it has also renewed its line of credit agreement with Liberty Bank. The line is equal to USD250,000 and carries with it an interest rate equal to the Wall Street Journal Prime, plus 2.75%. It said it is not drawing on the line of credit at this time.
The new financing will allow it to push ahead with its growth plans, it said. It is doing more business with insurance companies in the US, and has already starting increasing headcount to build out its insurance sales channels.
In addition, the company said it is spending resources to address areas where it "can do a lot better".
"Because of an existing franchise footprint across the US, we have a great opportunity to fill market demand in open spaces among our franchisees with corporate-run trucks that will add directly to revenue and earnings," the company said.
"We will also begin to focus on alternative ways to increase our critical mass, such as with franchise buybacks, to take advantage of our existing USD60 million in profitable sales across the franchise system," it said.
Water Intelligence said it hopes to see additional sales growth in 2015 after making these investments this year.
Water Intelligence shares were up 2.4% at 43.50 pence Wednesday morning.
By Anthony Tshibangu; [email protected]; @AnthonyAllNews
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