Aussie losses drag NZ water firm down

Just Water International, reporting a $19 million full year loss, says it has taken its Australian business off the market and after reform of the subsidiary's cost structure expects a turnaround in 2011.

The trans-Tasman water cooler provider posted a loss before tax of $19.4m after writing down $18.3m in goodwill on its Australian subsidiary Clearwater Filter Systems, following an unsuccessful sale negotiation. The impairment cost was in line with earlier market guidance.

Revenue was down 3 per cent on the previous year at $35.4m. The net loss after tax was $19.2m and earnings before interest, tax, depreciation and amortisation at $6m were 34 per cent down on 2009.

Chief executive and company founder Tony Falkenstein said Just Water was offered around NZ$10m for the business, which was on its books for NZ$28m.

"The $18m was all goodwill so we took the hit on it."

Buying Clearwater Filter Systems was Just Water's passport to the Australian market in 2005.

With "strategic buyers out there" the company thought it could get a good price, Mr Falkenstein said.

"But they reduced their offer down to a price [where] we thought we were better off holding it. The company has turned around over there, so we will keep it."

Another drain on Just Water's profit was a new computer system for the New Zealand operation installed in March last year, Mr Falkenstein said.

"We lost a lot of customers. We couldn't get invoices out on time, the call centre was overloaded, we couldn't answer calls properly, and on top of that was all the time spent on it."

The system is still not producing the results expected, the company said.

Chairman Sir Don McKinnon and Mr Falkenstein said while ebitda had increased in the second half of the year, the full year results were "unacceptable".

The New Zealand business had revenues of $23.9m, down 1 per cent on 2009 and a net loss after tax of $773,000.

The Australian operation posted a net loss after tax of $18.4m on revenues of $11.4m, 8 per cent down on 2009's $12.4m.

- © Fairfax NZ News