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09 Feb 2021 | 11:22

Water Intelligence sees strong revenue growth in 2020

(Sharecast News) - Water Intelligence said on Tuesday that its revenue grew "strongly" in 2020, by 17% year-on-year to $37.9m. The AIM-traded firm said that of its core business units, American Leak Detection (ALD) and Water Intelligence International (WII), each grew "strongly", enabling a broader mix of residential, commercial and municipal offerings for both clean water and wastewater problems.

Implied total sales to customers surpassed $130m, the board said, providing critical mass, while ALD revenue grew 15% to $33.6m.

Royalty income from franchisees grew in absolute terms by 3% to $6.7m, despite continued franchise reacquisitions that reduced the available pool of royalty income.

Franchise-related sales, being national accounts, parts and equipment, and franchise territory sales, grew 18% to $9.5m.

Water Intelligence said the key insurance business-to-business channel grew 20% to $8.5m, while corporate location sales grew 21% year-on-year to $17.4m.

The company said selective franchise reacquisitions were continuing, increasing corporate presence for working with franchisees under one ALD brand.

Revenue in the WII division grew 27% to $4.3m.

Its statutory profit before tax grew "very strongly", by 78% to $4.2m, wit corporate locations profit margins continuing to scale to 23% in 2020 from 14% in 2019.

Water Intelligence profits before tax adjusted for non-core costs, non-cash amortisation expense and share-based payments grew 49% to $5.1m.

The board said the company's balance sheet was "strong" as at 31 December, with cash standing at $6.8m, and net debt totalling $2m.

Since year-end, Water Intelligence said it had expanded its credit facility by $3.2m on 3 February, resulting in cash of $10m and net debt of $2m.

"We faced the challenges of navigating a Covid-influenced marketplace across the UK, US, Australia and Canada," said executive chairman Dr Patrick DeSouza.

"We executed well and, consistent with our track-record over the last five years, delivered very strong results in terms of revenue and profits growth.

"Our results are ahead of market expectations, despite Covid, which makes a very positive statement regarding shareholder value and our execution."

Dr DeSouza said the company's results, and reinvestment for further growth, had enhanced the company's capital markets profile.

"First, as an 'essential service provider', we are acyclical.

"We grow revenue and profits in both good times and bad times.

"Second, we have a global addressable market for water infrastructure services to tap into that itself is growing."

Third, Dr DeSouza said the firm was a "prime example" of unlocking shareholder value through "technology-enabled services", which he described as an important emerging investment thesis.

"Finally, we are delighted to receive the Green Economy Mark from the London Stock Exchange and to be included in various MSCI indices.

"Hence, we are well-positioned as it is expected that environmental, social and governance (ESG) institutional investment will be applied to drive the 'green economy' over the next decade."

At 1104 GMT, shares in Water Intelligence were up 2.04% at 500p.
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