REG - Water Intelligence - Audited Results for Year Ended 31 December 2024
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RNS Number : 9964O Water Intelligence PLC 30 June 2025
Audited Results for Year Ended 31 December 2024
Launch of Next 50 Growth Plan
Water Intelligence plc (AIM: WATR.L) ("Water Intelligence" or the "Group"), a
leading multinational provider of precision, minimally-invasive leak detection
and remediation solutions for both potable and non-potable water, is pleased
to present its full, audited results for the year ended 31 December 2024.
2024 Financial Overview and Next 50 Growth Plan
Financial Performance. During 2024 Water Intelligence continued to perform
solidly with revenues increasing by 10% to $83.3 million, statutory profit
before tax growing 2% to $6.4 million and statutory EBITDA growing by 11% to
$13.1 million. Basic EPS grew by 6% to 26.9 cents. PBT and EBITDA margins
remained constant at 8% and 15% respectively despite persistent inflation in
labor and materials as ALD adjusted its prices. The Group's balance sheet
remained strong and under-levered which enables the Group to pursue its Next
50 Growth Plan as discussed in the Chairman's Statement to the Accounts
("Chairman's Statement"). As of 31 December 2024, cash was $12.1 million
and the Group's Total Net Debt to EBITDA Adjusted ratio was 1.1. Network
sales (direct corporate sales and indirect gross sales to third parties from
which royalty is derived) grew 3% to approximately $175 million. The Group's
critical mass of sales across the US and in the UK, Ireland, Australia and
Canada and its technology DNA establishes a foundation that is scalable as a
Technology Enabled Services Platform ("TES") as described in the Chairman's
Statement.
Corporate Development. Between Q4 2024 and Q1 2025, the Group completed three
strategic transactions upon which it is launching its previously announced
Next 50 Growth Plan. First, the Group reacquired its sizeable Dallas franchise
and appointed the former owner - Will Knell - as CEO of the Group's core
American Leak Detection business (ALD). As part of this process, the Group is
establishing the headquarters of ALD in Dallas. The Dallas operation with
its 30%+ margins will serve as a "Template," as explained in the Chairman's
Statement to raise the Group's organic revenue and profit growth trajectory.
Second, the Group set up a robust partnership with Chubb insurance and its
StreamLabs Water business. StreamLabs produces leading wireless water
monitoring devices, enabling the Group to aggressively drive its TES business
model. The partnership covers the resale of StreamLabs' products at
preferred prices, the white labeling of its products alongside ALD leak
detection and repair services, as well as data rights for ALD aftercare
subscriptions. Third, the Group reaffirmed its capital allocation guidance
with the acquisition of both a plumbing company and a highly scalable and
profitable franchise location in the Southeast US. These three transactions
provide for the Next 50: (i) corporate leadership and an operating template
to grow revenue and profits across all locations; (ii) an extraordinary
product partnership that enables the Group to participate seamlessly in its
customers' needs from monitoring to leak detection and repair to aftercare and
recurring sales; and (iii) reinforcement of its strategy of acquisition-led
growth to supplement organic growth.
2025 Outlook. The Group's TES platform enables it to be a leader in providing
recurring Preventive Maintenance solutions as opposed to reactive one-off
Restoration solutions for water loss. The Group is now able to efficiently
offer to all customers - residential, commercial, residential - proprietary,
technology-driven solutions to wirelessly monitor pipes, collect and analyze
data, schedule and dispatch via Salesforce its trained professionals to deploy
proprietary minimally invasive leak detection and repair solutions and then
provide subscription-based aftercare and follow-on products via video
commerce. Based on its Next 50 competitive strategy of Preventive Maintenance
and application of its Dallas Template to operations, the Group is excited to
deliver for its shareholders a higher organic revenue and profit trajectory.
Financial Performance
2024 - Financial Performance
· Group Revenue increased by 10% to $83.3 million (2023: $76 million)
American Leak Detection subsidiary
v Franchise royalty declined 3% to $6.5 million (2023: $6.7 million) (without
franchise acquisitions reducing pool of royalty income franchise royalty would
have grown 1%)
v Franchise Related Activities (including insurance channel) declined 4% to
$10.7 million (2023: $11.2 million)
v US Corporate locations grew 11% to $55.9 million (2023: $50.5 million)
o US same store sales grew 4% to $50.1 million (2023: $48 million)
Water Intelligence International subsidiary
v International corporate locations grew 35% to $10.3 million (2023: $7.6
million)
· Statutory EBITDA grew 11% to $13.1 million (2023: $11.8 million)
· EBITDA Adjusted** grew 6% to $14.2 million (2023: $13.4 million)
· Statutory PBT grew by 2% to $6.4 million (2023: $6.2 million)
· PBT Adjusted** decreased 4% to $8.4 million (2023: $8.7 million)
· Basic EPS grew by 6% to 26.9 cents (2023: 25.3 cents)
· Fully diluted EPS grew by 6% to 26.3 cents (2023: 24.7 cents)
** EBITDA Adjusted - adjusted for Net non-core costs/gains based on IFRS
treatment and non-cash expense of share-based payments; PBT Adjusted -
adjusted for Net non-core costs/gains based on IFRS treatment and non-cash
expense of share-based payments and amortization.
· Balance Sheet at 31 December 2024
v Cash at $12.1 million
v Total Net Debt to EBITDA Adjusted Ratio: 1.1
YTD through April - Financial Performance
· For 2025, the Group continues to grow consistently as communicated in
the Q1 Trading Update
· Balance Sheet strong at 30 April with Cash of $7.4 million and Total
Net Debt to EBITDA Adjusted Ratio of 1.37 (including debt for Q1 acquisitions
but not including the associated EBITDA increase)
· Group has available cash resources for further Corporate Development
to accelerate growth
2024 - Corporate Development
v Refinancing and Expansion of Credit Facilities with M&T Bank
v Franchise Acquisitions: Fresno, California; High Desert, California;
Lafayette, Louisiana; Dallas, Texas; Feakle County, Ireland
YTD through April - Corporate Development
v Strategic partnership with Chubb and StreamLabs Water
v Acquisitions: Effective Plumbing; Georgia and South Carolina Franchise
Commenting on the Group's performance, Executive Chairman, Dr. Patrick DeSouza
remarked:
"We are excited by our Next 50 Growth Plan and our competitive strategy of
leading the Preventive Maintenance revolution for the water infrastructure
sector with its residential, commercial and municipal customers. Our two
recent transactions - the Dallas franchise reacquisition and the
Chubb/StreamLabs Water partnership - will drive our Next 50 plan in
straightforward fashion. With Dallas, we have added a leadership team for
ALD that has built a $6 million revenue business at 30%+ margin. Applying
that "Dallas Template" to all 45 corporate units and our franchise system will
create significant upside for our organic growth trajectory. With StreamLabs
products linked to our prior technology investments, the Group has all the
pieces of a scalable Technology Enabled Services platform that can drive
recurring income and shape the future of water management and the Smart Home.
As always, we appreciate our shareholders who have supported our vision and
our investments to create a defining market leader. We are focused on
delivering revenue and profit results from our Next 50 Plan."
Enquiries:
Water Intelligence plc
Patrick DeSouza, Executive Chairman
Tel: +1 203 654 5426
Laura Bass, Director of Strategic Finance
Tel: +1 203 584-8240
Grant Thornton UK LLP - Nominated Adviser Tel:+44 (0)20
7383 5100
Philip Secrett
Harrison Clarke
Ciara Donnelly
RBC Capital Markets - Joint Broker
Tel: +44 (0)207 653 4000
Jill Li
Elizabeth Evans
Daniel Saveski
Dowgate Capital Ltd - Joint Broker
Tel: +44 (0)20 3903 7721
Stephen Norcross
Chairman's Statement
Overview
As highlighted in last year's Chairman's Statement, we pointed to October's
50th Anniversary celebration of our core business - American Leak Detection
(ALD) - as the jumping-off point for our strategic growth plan labelled the
Next 50. With approximately $175 million in network sales (direct sales and
indirect sales from franchisees under the same brand), Water Intelligence has
critical mass, diversified multinational operations and a differentiated
technology profile around which to scale as a market leader. Between October
and Q1 2025, we executed three sets of transactions that put into place the
final pieces of our "next level up" business model and kick into gear the Next
50 plan.
One key feature of our Next 50 plan is its competitive strategy of Preventive
Maintenance as opposed to Restoration of failing water infrastructure. Put
another way, especially given our AI future and the evolution of the smart
home, our customers - residential, commercial (especially insurance and
property management) and municipal - all seek recurring proactive solutions as
opposed to one-off reactive responses. We have now built a multinational
platform company or a "One Stop Shop" driven by technology to lead the
Preventive Maintenance revolution for the water sector the way the preventive
care concept captured the health care sector a decade ago. As described
below, by leveraging our technology-driven platform for the Next 50, we have a
prime example of what financial analysts are now identifying as "Tech-Enabled
Services" or a valuable TES business model because of its scalability.
It is important to note that our corporate development builds upon a strong
financial foundation. During our trailing five-year investment cycle
(2019-2024) - despite volatility induced by shocks such as Covid and
stagflation - we achieved compounded annual growth of +21% in terms of revenue
and +20% in terms of adjusted profits before tax. As set forth in the
Strategic Report, during 2024 we have focused on increasing operating
efficiencies with respect to franchise royalty and corporate stores. Moreover,
as discussed below, our leadership team has launched new operating initiatives
during Q1 2025 based on a "Dallas Template" and leveraging our TES model to
raise our organic revenue trajectory and to further improve profit margins.
Our balance sheet remains strong and under-levered with a ratio of Total Net
Debt to EBITDA Adjusted of 1.1 as of 31 December 2024 enabling us to allocate
capital to meet expectations of sustained growth. As a post year-end update,
our credit capacity remains high. As of 30 April, the Total Net Debt to EBITDA
ratio is 1.37 for the trailing 12 months with the rise reflecting Q1
acquisitions noted below. To be sure, both ratios are overstated because
each includes debt from recent transactions but not the pro forma associated
EBITDA. These ratios contain deferred consideration, but not contingent
payments based on earn-outs.
We have received very favorable investor and partner feedback on our TES model
as we have begun to communicate our Next 50 plan at the Planet Microcap
Investor Conference in Las Vegas in April and in videos that are provided on
the Water Intelligence website. Our execution and capital allocation plan for
2025 and 2026 is simply to scale our TES distribution platform with organic
growth and accretive acquisitions and partnerships. In terms of free cash
flow, we need no significant new technology investments. Very exciting for our
team and shareholders as we communicate our robust value proposition. As
always, we have appreciated their support as we built out our TES vision of a
scalable "One Stop Shop".
Our Multinational TES Platform. Over the last decade, we have invested in
various technologies (proprietary acoustic leak detection solutions,
proprietary sewer diagnostics devices, Salesforce operating system, SEEEN
video commerce) and acquisitions (franchisee and plumbing) with the strategic
objective of transforming a leading US technology-inspired water leak
detection franchise (ALD) into a technology-driven, multinational distribution
platform for water infrastructure solutions that can leverage business to
business channels and a network of product partners. We seek to deploy
services and products more efficiently than any competition as a "One Stop
Shop".
Our TES platform grows cash and acquires recurring customers all along a water
value chain through: (i) proprietary and wireless acoustic devices for
pinpointing leaks, gathering data and providing follow-on plumbing repair
capabilities; (ii) a matrix of proprietary solutions for a full array of
customers - residential, commercial, municipal, clean water, non-potable
water; (iii) not only an operating footprint across the US with scheduling and
delivery of service professionals connected by Salesforce but also fast
growing Water Intelligence International (WII) operations in the UK, Ireland,
Canada and Australia for diversification; (iv) regional corporate hubs for
managing scale as we execute organically and through acquisition; (v) a
critical mass of customers, serving approximately 200,000 households annually
in the US, directly and through national business-to-business channels; (vi)
data and AI analytics from service visits stored securely in the Salesforce
cloud and (vii) continuous secure customer engagement leveraging such data to
anticipate and address customer needs via our Salesforce system and SEEEN
video moments. For the Next 50 plan, we will scale this model efficiently to
capture a growing share of a global addressable market with hundreds of
billions of dollars of needed market spend in the coming decade.
Q4 2024 / 1H 2025 Transactions. As noted above, since last October, we have
executed three sets of transactions to bring together the final pieces of the
puzzle for our Next 50 business plan. First, we added an organizational
booster shot to lay the operational foundation for the Next 50. Coincident
with our 50th anniversary celebration last October, we reacquired one of our
biggest franchises - Dallas. This transaction is quite strategic. We
combined the Dallas franchise operation with our corporate Fort Worth
operation not only for scale but also to create the go-forward corporate
headquarters for ALD. The Dallas-Fort Worth metroplex is centrally located
in the US and is projected to be the largest metroplex in the US by 2030. We
named Will Knell, former owner of the Dallas franchise, as CEO of our core ALD
business. We are enthusiastic about the leadership team that Will has put in
place as we promote from within. As identified below, the team has already
launched new partnerships to drive organic revenue and profit growth. We are
also excited that various strategic business partners such as insurance
companies and even public exchanges, such as Nasdaq, have announced their
intent to add significant operations in Dallas.
Second, in February, we announced a strategic partnership with StreamLabs
Water, a subsidiary of Chubb, a global insurance company and one of our
national channels for service jobs. After much diligence, we believe that
StreamLabs has the most effective wireless water monitoring technology in the
market. Further, StreamLab's emphasis on quality is important for both the
Chubb and Water Intelligence / ALD brands and for ensuring the best customer
experience. With this partnership, we can now proactively provide end-to-end
solutions to customers throughout their life cycle: from effective monitoring
to minimally-invasive leak detection and repair to tier-one after-care for
preventive maintenance by leveraging data from the monitoring device and the
consultative advice of our trained service professionals. Moreover, based on
the data, we can provide follow-on product recommendations of partners using
AI and video moments to connect with customers.
Third, we sought to demonstrate that we could continue to execute on our
announced capital allocation strategy of acquiring and operationally
integrating franchisees and plumbers to add scale while executing the broader
Next 50 corporate development of deepening organizational structure and
integrating our set of technology offerings. During Q1 2025, we acquired
both a strategic regional franchise that would reinforce execution in the
southeast of the US and a plumbing company to further deepen our offerings in
the northeast of the US. Both would accelerate our Go to Market plan with
StreamLabs.
These three sets of transactions: (1) establishing through acquisition a
central corporate headquarters with a strong leadership team; (2) launching a
strategic "Insurtech" partnership to connect effective, high quality,
real-time monitoring of pipes with our leading minimally invasive solutions
for detection, repair and aftercare; and (3) executing additional accretive
franchise and plumbing acquisitions that continue to put capital to work all
thus reinforce our confidence in realizing our the Next 50 plan.
The Next 50: Technology-Enabled Services Recently, financial market
analysts have begun to communicate the value of an investment category called
"Technology-Enabled Services". TES companies are valuable because they
deliver products and services faster and more efficiently than traditional
methods by leveraging software and human expertise. TES companies have
certain characteristics: technology integration, automation for efficiencies,
scalability, cost-effectiveness, improved quality and accuracy and data-driven
insights.
The Water Intelligence platform embodies these characteristics for
transforming a sleepy water infrastructure industry. Most importantly, because
ALD pioneered the use of minimally invasive technologies for water leaks, a
TES business model is more of an evolution as opposed to a radical break with
respect to the training of our service professionals. Moreover, given our
critical mass of 200,000 household visits annually and ALD's reputation in
communities for over 50 years, we have data from which to professionally
analyze problems at scale and to provide proper diagnostics. Our competitors
do not have this built-in advantage. To be sure, over the last few years, we
have invested significant sums for additional training for our professionals
with data-centric technologies such as Salesforce and SEEEN. And we have
invested in new proprietary wireless technologies such as Leakvue 2, Pulse and
LS1 that could integrate data capture with our Salesforce and SEEEN
technologies. Our team regularly uses Salesforce and integrated analytic web
forms to capture and exploit data to help customers and insurance companies,
especially through Service Level Agreements and associated delivery targets.
We can, better than our competitors, provide solutions more efficiently as a
"first responder" and produce more value-add recommendations. As we link video
moments with products from partners, we can enhance the customer experience
with continuous engagement in outfitting the smart home ahead of problems -
Preventive Maintenance through a TES. And we can readily extend our TES
model to our existing business-to-business partners in insurance and property
management given our track record of execution integrating such channels with
our operations. Our StreamLabs partnership will extend our data-driven
approach to provide end-to-end preventive maintenance from the start of
monitoring to aftercare.
In April, as we were integrating our TES platform with StreamLabs, we began to
communicate our Next 50 Plan. We spoke with business and financial partners
at Planet Microcap in Las Vegas and were energized by their response. We are
now planning for 2H 2025 to have regular update videos posted on our website
about our technology leadership for the water infrastructure sector.
2024 Financial Performance; 2025
Operating Initiatives. Against implementing this TES model and executing
strategic transactions, as noted above, we continued to deliver operating
results. For 2024, Group revenue increased 10% to $83.3 million (2023: $76
million). Statutory profit before tax (PBT) grew 2% to $6.4 million (2023:
$6.2 million). Earnings before interest, taxes, depreciation and amortization
(EBITDA) grew by 11% to $13.1 million (2023: $11.8 million). As a result,
statutory basic earnings per share (EPS) grew 6% to 26.9 cents (2023: 25.3
cents) and fully diluted EPS grew 6% to 26.3 cents (2023: 24.7 cents). Group
PBT and EBITDA margins remained the same at 8% and 15% respectively, with
EBITDA margins slightly improving. As noted below, franchise royalty and
U.S. corporate store margins have improved and management will build upon such
advances for the Group with the "Dallas Template" discussed in the next
section.
EBITDA Adjusted (earnings before interest, taxes, depreciation and
amortization adjusted for non-cash and Net Non-core costs/gains) grew by 6% to
$14.2 million (2023: $13.4 million). Profit before Tax Adjusted (adjusted
for non-cash, Net Non-core costs/gains and amortization) decreased 4% to $8.4
million (2023: $8.7 million).
Four KPIs reflect our execution through franchise-operated and
corporate-operated locations. Our franchise System sales should be
considered against the backdrop that the number of reacquisitions of franchise
locations during 2023 and 2024 reduces the pool of franchisee sales. KPI #1
- ALD royalty income - is a proxy for System-wide franchise sales. Franchise
royalty declined 3% to $6.5 million (2023: $6.7 million). Had those same
locations remained as franchises instead of being converted to corporate
stores, royalty income would have grown 1%. Despite the decline in the
absolute amount of royalty, we have increased profitability of royalty income
through operating efficiencies. KPI #2 - Franchise-related Activity -
measures the sale of equipment and additional territory and the development of
channel sales such as insurance for franchisees. Franchise-related Activity
declined 4% to $10.7 million (2023: $11.2 million).
Our corporate operations grew both in the US and internationally even after
one adjusts for franchise reacquisitions. KPI #3 - US Corporate sales - grew
11% to $55.9 million (2023: $50.5 million). If we exclude those acquired
locations in 2023 and 2024 and just consider "same store" corporate sales,
same store locations grew modestly by 4% to $50.1 million (2023: $48
million). Much like franchise royalty amounts, we have increased
profitability through operating efficiencies. KPI #4 - International
Corporate sales - grew by 35% to $10.3 million (2023: $7.6 million).
International sales are led by our wholly-owned subsidiary Water Intelligence
International (WII). WII, though smaller today than ALD in terms of sales,
is leading the way in new product development, commercializing our wastewater
solutions technology with UK water utilities. Market capture of the demand
for wastewater solutions is expected to grow strongly in the US in 2025 and
2026 especially as we commercialize our proprietary Pulse technology for the
residential market.
2025 Operating Initiatives. As noted above, ALD management has launched four
operating initiatives starting in Dallas during Q1 to raise the trajectory of
organic revenue and profits and reap the benefits of our TES model. First,
underscoring the strategic nature of the Dallas reacquisition, we are using
Dallas operations as a template for all other corporate locations (the "Dallas
Template"). Dallas was not only one of the fastest growing franchises in the
System with approximately $6 million in annual sales, it also maintains
strong profit margins typically above 25%; post-acquisition approximately 34%
despite Will taking on broader responsibilities as CEO of ALD. As we
implement the Dallas Template nationwide, leveraging common data extracted
from our Salesforce operating system, we will be able to improve corporate
store performance and accelerate the pace of acquisitions and the efficiency
of integrations. Second, management has also launched an AI initiative in
Dallas called "RevenueMax" with our partner Scorpion Internet Marketing.
This AI initiative links to our Salesforce and Video Moments technologies.
Early results are quite strong in driving marketing leads and new job
conversions. RevenueMax will be rolled out to all locations during 2H as part
of the Dallas Template. Third, we have launched our StreamLabs product
partnership with sales and installations of StreamLabs devices. During Q1,
we have focused on training of staff and ensuring a strong customer experience
starting with our new Dallas ALD headquarters and our Connecticut technology
and training facility. Dashboards for data analytics and aftercare sales
opportunities are currently being implemented as part of our Salesforce
operating system. Finally, management has set up a strategic partnership
with Holman Corporation to drive operating efficiencies with respect to
management of our fleet of service vehicles. Various web-based Holman
applications are tied to our Salesforce operating system from fuel card
monitoring to geo-tracking of vehicles to "preventive care" maintenance for
our own assets. Since service vehicles represent a significant part of
operating costs, we expect that this initiative will add to EBITDA margin.
Our balance sheet is strong and supports the above operating initiatives and
any reinvestment to sustain our organic growth trajectory and to increase
market share. Cash on our balance sheet at year-end was $12.1 million. Coupled
with 2024 EBITDA Adjusted of $14.2 million, the Group has significant
non-dilutive credit capacity with which to execute its growth plan.
Outlook We appreciate the
support of our stakeholders over the years. We have focused on building a
multinational growth platform that could transform the delivery of water
services through technology and provide world-class solutions for failing
water infrastructure. Today we have such a platform that is scalable and a
leadership team that is driven to exploit our competitive strategy.
Based on discussions with current shareholders and prospective investors at
events such as Planet Microcap, we recognize that our share price is
undervalued. Now that we have made the investments to achieve our TES model,
we will be communicating more frequently with the market and introducing KPIs
that more fully reflect our competitive differentiation and scalability.
We are pleased to launch our Next 50 plan led by operating initiatives from
our Dallas Template. We are confident that by leveraging our Dallas Template
and scalability of our TES platform, we can deliver enhanced organic growth
and supplement such organic growth with faster integrations from acquisitions.
Dr. Patrick DeSouza
Executive Chairman
Strategic Report
Business Review and Key Performance Indicators
Evaluation of Strategic Plan Drawn From 6 KPIs:
i. Royalty income is a measure of the health of the ALD franchise System
which represents the majority of gross sales under the ALD brand. The change
in royalty income must be evaluated against the number of franchise
reacquisitions in any given year which reduces the pool of available royalty
income for the subsequent year.
ii. Franchise-related Activities are a measure of the services and
products sold by Corporate to its franchises to fuel growth in the franchise
System. ALD's Business-to-Business Channel leverages for customers our
national execution presence under one brand and is led by insurance companies.
iii. ALD Corporate-operated locations add to critical mass of Group
revenue and profits. Selective reacquisitions from our franchise System
further unlock equity value for the Group in two ways. First, reacquisitions
set up corporate regional hubs from which corporate may help grow both
franchise and corporate units. Second, reacquisitions add growing revenue
and profits directly onto the accounts of the Group.
iv. WII complements our ALD brand which is focused largely on residential
and commercial customers, by contributing municipal sales to the Group's
overall sales presence in the US and international geographies.
v. Non-core costs (transactions costs and non-recurring costs) should be
taken into account in evaluating on-going operating performance.
vi. Credit facilities enable the Group to fuel expansion and preserve
shareholder equity. Because of the quality of monthly recurring royalty
income, the Group is attractive to banks enabling the Group to optimize
capital formation.
(i) Franchise Royalty Income.
ALD receives royalty income from franchisees based on a percentage of gross
sales to third parties. During 2024 approximately $96 million of such gross
sales may be attributed to the franchise System. The Group derived
approximately $6.5 million in royalty income from such gross sales. There are
currently 74 franchises operating in over 100 locations across 46 states of
the US, with additional locations in Australia and Canada. Some franchisees
operate multiple locations in their territory. Despite lower royalty income as
a result of acquisitions, we have introduced efficiencies to make remaining
royalty more profitable.
Part of the Group's growth strategy is to unlock shareholder value by
selectively reacquiring franchises and operating the business as a corporate
location. By executing such conversions, the Group is trading off a portion of
the pool of available royalty income to directly aggregate and grow the
underlying revenue and profits from those locations. Royalty income in 2024
remained constant in comparison with 2023. It is important to note that this
is attributable to a number of reacquisitions during 2023 which had the effect
of reducing the eligible pool of royalty income for 2024. Without such
reacquisitions in 2023, royalty income would have grown 1%..
Performance from royalty income is as follows:
Year ended Year ended Change
31 December 2024
31 December 2023
%
$'000
$'000
Total USA 6,408 6,638 (3)%
International 95 101 (5)%
Total Group Royalty Income 6,503 6,739 (3)%
Profit before tax (see note 4) 2,296 2,156
6%
(ii) Franchise-related Activities.
US franchise-related activities capture what corporate management
("Corporate") does to grow the franchise System.
Parts and equipment sold to franchisees by Corporate enables franchisees to
further grow their respective operations.
Business-to-Business channels, such as insurance, capture the market demands
of national customers. These customers place significant value on ALD's
nationwide brand, service standardization and delivery footprint - an
important aspect of competitive strategy when one considers that the market
for service providers is fragmented. Jobs for franchisees are sourced by
Corporate from insurance companies using a centralized processing system.
Important to note is that national channel jobs executed by Corporate
locations are not counted in the Group's Business-to-Business sales. Hence
the 5% decline of Business-to-Business sales understates the contribution of
insurance relationships for Network Sales, especially as the number of
corporate stores increase.
Finally, Sales of Franchise Units represent the decision to develop a new
territory through a franchisee as opposed to corporate operations. It should
be noted that the Group's current priority is to add corporate-operated
locations as opposed to franchisee-operated locations. Given the rising
value of franchise territory because of franchise reacquisitions, demand for
additional territory is rising among franchisees. The Group reviews annually
its priority on establishing new corporate locations as opposed to selling new
franchise territories.
Revenue from franchise-related activities in 2024 declined by 4% compared to
2023. Profits before tax decreased 6% in 2024 compared with 2023.
Performance from franchise-related activities are as follows:
Year ended Year ended Change
31 December 2024
31 December 2023
%
$'000
$'000
Parts and equipment sales 593 670 (12)%
Business-to-Business sales 9,959 10,480 (5)%
Sales of Franchise Units 114 13 780%
Total Revenue Franchise Activities 10,666 11,163 (4)%
Profit before tax (see note 4) 870 925 (6)%
(iii) US Corporate Operated Locations (ALD).
Corporate-run locations, both greenfield and initiated after reacquisition of
franchise locations, contribute revenue and profits to the Group. In
addition, such operations also support the franchise System with strategy,
marketing and execution support in further developing territories. Performance
of US corporate-run locations after reacquisition is also an indication of the
success of the Group's strategy to capture more market demand for our
minimally invasive leak detection and repair solutions. The Group directly
operates 48 locations, an increase of 4 locations (2023: 44).
As set forth below, ALD Corporate-operated revenue grew 11% to $55.9 million
(2023: $50.5 million). Meanwhile profits before tax increased by 19% to $10
million (2023: $8.4 million). Revenue growth was adversely affected by the
sharp rise in US interest rates leading to write-offs with respect to the new
construction market. $700,000 of non-recurring costs are identified in the
table of Non-core Costs below. However, there were additional expense
amounts not placed in non-core costs because we do expect the housing market
to rebound and we have kept some staff available. That said, we are making
operations more profitable through efficiencies such as regional hubs.
Much like the pro forma adjustment for royalty income in KPI #1 based on the
number of franchisees reacquired in the prior year, so also we can separate
out corporate locations owned prior to January 2023 so that a comparison may
be made for "same store sales" as a measure of organic growth post franchise
reacquisition. Corporate-operated "same store" revenue grew 4% to $50
million (2023: $48 million) and profit before tax increased 9% to $8.9 million
(2023: $8.2 million) as we continue to create more efficient operations.
Performance from corporate-operated locations is as follows:
Year ended Year ended Change
31 December 2024
31 December 2023
%
$'000
$'000
Revenue 55,855 50,460 11%
Locations owned prior to 1 January 2023 49,789 48,017 4%
Profit before tax (see note 4) 10,006 8,412 19%
Locations owned prior to 1 January 2023 8,883 8,200 8%
(iv) International Corporate Operated Locations
The Group continues to strengthen its multinational presence through its
UK-based WII subsidiary. WII focuses largely on municipal solutions while
maintaining core residential and commercial offerings. In the UK, WII executes
municipal work for all major utilities and residential and commercial projects
through its Wat-er-Save subsidiary. In this way, WII has multinational
operating scope by managing corporate locations established in Ireland and in
Australia and Ontario, Canada after ALD franchisee reacquisitions.
International sales grew 35% during 2024 to $10.3 million. (2023: $7.6
million) and profits decreased by 236% to ($0.6) million (2023: $0.44 million
profit). Two factors led to a decrease in reported profits. First, IFRS 3
requires that certain amounts of the contingent consideration be treated as a
compensation expense (deemed remuneration) because of the requirement that the
seller remains in the business until the earn-out period is completed. This
treatment as discussed in note 12 does not change the cash flow position of
Water Intelligence. Second, poor execution in Australia led to losses and is
expected to be remedied in 2025 as personnel changes have been made.
Performance from international activities is as follows:
Year ended Year ended Change
31 December 2024
31 December 2023
%
$'000
$'000
UK 4,238 3,952 7%
Ireland 2,328 - 100%
Australia 2,575 2,611 (1)%
Canada 1,127 1,050 7%
Total Revenue from International Corporate Activities 10,268 7,613 35%
(Loss)/Profit before tax (see note 4) (602) 443 (236)%
(v) Net Non-Core Costs / Gains.
During 2024, the Group incurred non-core costs relating to transactions,
non-underlying items, (acquisition consideration accounted for as deemed
remuneration in accordance with IRFS 3) and non-recurring expenses. The Group
also had non-recurring gains from acquisitions. As discussed herein,
understanding "Net Non-Core Costs/Gains", as distinct from continuing
operating costs, helps the Board evaluate capital allocation choices made to
accelerate operations organically and to scale through acquisition. In 2024,
there were $529,000 of Net Non-core costs/gains (2023: $1,069,000).
Please see table below for details: Year ended Year ended
31 December 2024 31 December 2023
$'000 $'000
New construction industry related costs 700 325
Technology upgrades 310 368
Transaction-related legal and other costs 575 376
Gain from reversal of contingent consideration (700) -
Gain on bargain purchase (356) -
Total Net Non-Core Costs 529 1,069
(vi) Net Bank Borrowings.
Management of financial resources is important for making various decisions
regarding the reinvestment rate for the growth of operations. As noted
herein, the monthly recurring income from franchise royalty provides the Group
with attractive attributes for using bank debt to complement equity sources of
capital. The Group's objective for risk management purposes is to be prudent
with respect to bank financial covenants. Net cash after Bank Borrowings is
positive and amortisation of such debt extends through 2029.
Group
Year ended Year ended
31 December
31 December
2024
2023
$'000
$'000
Lines of credit: acquisition and working capital - -
Bank borrowings 23,272 14,461
23,272 14,461
Less: Cash and cash investments
Held in US Dollars 10,621 13,512
Held in £ Sterling 709 1,479
Held in € Euros 248 -
Held in CDN Dollars 478 451
Held in AU Dollars 80 316
12,136 15,758
Total Net Bank Borrowings/(Cash) 11,136 (1,297)
*Bank debt plus deferred consideration as at December 31, 2024 was $27.9
million (2023 $22.8 million). Net total debt to EBITDA Adjusted in 2024 was
1.1. This figure includes deferred consideration, but not contingent payments
based on earn-outs.
(vii) Adjusted PBT and EBITDA
Year ended Year ended
31 December 2024 31 December 2023
$'000 $'000
Profit before tax 6,356 6,239
Non-cash 379 572
Net Non-core costs/gains 529 1,069
Deemed remuneration - Irish acquisition (note 12) 288 -
Amortization 855 842
Profit before tax adjusted 8,407 8,722
Interest 1,295 944
Depreciation 4,568 3,746
EBITDA adjusted 14,270 13,412
Principal Risks and Uncertainties
The Group's objectives, policies and processes for measuring and managing risk
are described in note 23. The principal risks and uncertainties to which the
Group is exposed include:
Foreign Currency Risk
The Group's activities expose it to the financial risk of changes in foreign
currency exchange rates as it undertakes certain transactions denominated in
foreign currencies. There has been no change to the Group's exposure to market
risks. The Group monitors exposure to foreign exchange rate changes on a daily
basis by a daily review of the Group's cash balances in the US, UK, Canada and
Australia.
Interest Rate Risk
The Group's interest rate risk arises from its working capital and term loan
borrowings.
Whilst borrowing issued at variable rates would expose the Group to cash flow
risks, as at year-end, the Company is only subject to a variable rate on its
working capital line of credit. As of the report date, all other credit
facilities in use are at fixed interest rates.
Credit Risk
The Group's credit risk is primarily attributable to its cash and cash
equivalents and trade receivables. The credit risk on other classes of
financial assets is considered insignificant.
Liquidity Risk
The Group manages its liquidity risk primarily through the monitoring of
forecasts and actual cash flows.
Other Risks
There is a risk that existing and new customer relationships and R&D will
not lead to sales growth and increased profits. The Group is reliant on a
small number of skilled managers. The Group is reliant on effective
relationships with its franchisees, especially in the US. Finally, there are
continuing risks given the sharp rise in interest rates during 2023 and the
existence of persistent inflation. The Group is monitoring risks associated
with stagflation or recession for 2024 and 2025.
Corporate Governance statement S172 of the UK's Companies Act
Each director must act in a way that, in good faith, would most likely promote
the success of the Group for the benefit of its stakeholders. The Board of
Directors consider, both individually and together, that they have acted in
the way they consider, in good faith, would be most likely to promote the
success of the company for the benefit of its members as a whole (having
regard to the stakeholders and matters indicated in S172) in the decisions
taken during the year ended 31 December 2024. Following is an overview of how
the Board performed its duties during 2024.
Shareholders and Banking Relationships
The Executive Chairman, Chief Financial Officer, members of the Board and
senior executives on the management team have regular contact with major
shareholders and banking relationships. The Board receives regular updates
on the views of shareholders which are taken into account when the Board makes
its decisions. During August 2024, the Group refinanced and expanded its
credit facilities. The Group received feedback during each process.
Employees
The Board recognizes the importance of skilled human capital for a technology
and services-led business. The Board works through its human resources
director to provide on-going training and benefits. It also provides
advancement opportunities in its various corporate-operated locations. The
Group takes a variety of steps to ensure health and safety in terms of its
employees and stakeholders.
Franchisees
The Group holds an annual convention for its franchisees which includes
education and training sessions. During October 2024, the Group held its
annual convention in Los Angeles, California. Franchisees have an Advisory
Committee that provides input to the Board with quarterly meetings.
Customers
ALD has a reputation for high quality service delivery across the United
States for over fifty years. Given the importance of our reputation with
customers, especially insurance companies, the Board pays significant levels
of attention to the quality of our service delivery. Management gathers data
that it shares with the Board on customer satisfaction.
Community and Environment
The Group's brand stands for the conservation of water and the importance of
providing solutions to potable and non-potable water leaks. Through our
advertising and marketing the Group seeks to communicate to the public both
the importance of sustainability, particularly with respect to water loss
through leakage, and the importance for public health of remediating sewer
blockages. The Group took an active role not only in providing leak
detection services to local government in Flint, Michigan - a community known
for its lead in the water crisis - but also in working to educate community
members on the importance of on-going water monitoring. During 2023 and
2024, the Group donated to a non-profit group that is providing water and
water infrastructure to rural villages in India. The Board has also sought to
be active with respect to education and water. During 2019 and 2020, members
of the Board have worked with Columbia University to contribute to its "Year
of Water" education campaign.
By order of the Board
Patrick DeSouza
Executive Chairman
Director's Report
The Directors present their report on the affairs of Water Intelligence plc
and its subsidiaries, referred to as the Group, together with the audited
Financial Statements and Independent Auditors' report for the year ended 31
December 2024.
Principal Activities
The Group is a leading provider of minimally invasive leak detection and
remediation services for potable and non-potable water. The Group's strategy
is to be a "One-stop Shop" for services and product solutions for residential,
commercial and municipal customers.
Results
The financial performance for the year, including the Group's Statement of
Comprehensive Income and the Group's financial position at the end of the
year, is shown in the Financial Statements.
2024 was marked by sustained multinational growth for both ALD and WII. Total
revenue for Water Intelligence grew 10% to $83.3 million (2023: $76
million). ALD revenue grew 7% to $73 million (2023: $68.4 million). WII
revenue grew 35% to $10.3 million (2023: $7.6 million). The splits between ALD
and WII revenue remained consistent during 2024 when compared with 2023 with
WII's percentage of total revenue increasing slightly. ALD's proportion of
sales was approximately 87.5% of total revenue (2023: 90%) with approximately
12.5% of total revenue attributable to WII (2023: 10%).
Statutory profit before taxes (PBT) increased by 2% to $6.4 million (2023:
$6.2 million). When profit before taxes is adjusted for amortization, non-cash
share-based payments and Net Non-core costs/gains, PBTA decreased by 4% to
$8.4 million (2023: $8.7 million). Statutory earnings before interest, taxes
and depreciation (EBITDA) grew 11% to $13.1 million (2023: $11.8 million).
When EBITDA is adjusted for non-cash expenses of share-based payments and Net
Non-Core Costs/Gains (see Strategic Report) EBITDA Adjusted increased by 6% to
$14.2 million (2023: $13.4 million).
Going Concern
The Directors have prepared a business plan and cash flow forecast for the
period to December 2026. The forecast contains certain assumptions about the
level of future sales and the level of margins achievable. These assumptions
are the Directors' best estimate of the future development of the business.
The Group generates increasing levels of cash driven by its profitable and
growing US-based business, ALD. The Directors also note that the Group has
diversified its operations with growth in WII. Moreover, given the Group's
strong cash position at year-end and after oversubscribed capital raises in
2021 and expansion of its credit facilities in August 2024, the Directors
believe that funding will be available on a case-by-case basis for additional
initiatives.
Cash and cash investments at 31 December 2024 was $12.1 million. On 31
December 2024, total debt (borrowings and deferred consideration from
franchise acquisitions) was $32.4 million with amortisation of such amount
through 2029. Meanwhile, (EBITDA) in 2024 increased by 11% to $13.1 million
(2023: $11.8 million). Cash on the balance sheet plus an ability to generate
significant cash relative to the amount of debt that comes due in any one year
between 2025 and 2029 are important variables for Director considerations.
Moreover, the Directors consider various scenarios that may influence cash
availability such as inflationary pressures, the threat of recession from
rising interest rates and the use of cash for investments, such as
Salesforce.com and related software applications, geared to create operational
efficiencies that enhance future organic cash generation.
The Directors conclude that the Group will have adequate cash resources both
to pursue its growth plan and to accelerate execution if it so chooses. The
Directors are satisfied that the Group has adequate resources to continue in
operational existence for the foreseeable future and accordingly, continue to
adopt the going concern basis in preparing the financial statements.
Research & Development; Commercialization
The Group's focus is currently on reinvestment for commercialization of
technology and technology-based products not pure R&D. Expenditure on pure
research, all of which is undertaken by third parties not related to the
Group, was $0 (2023: $0). The Group has relationships at various leading
universities such as Columbia and Yale to assist with pure research. The Group
remains committed to anticipate market demands and has spent money on product
development during the year which has been capitalised.
Dividends
The Directors do not recommend the payment of a dividend (2023: $nil).
Share Price
On 31 December 2024, the closing market price of Water Intelligence plc
ordinary shares was 412.5 pence. The highest and lowest prices of these shares
during the year to 31 December 2024 were 427.5 pence and 317.5 pence
respectively.
Capital Structure
Details of the authorised and issued share capital are shown in Note 21. No
person has any special rights of control over the Company's share capital and
all issued shares are fully paid.
Future Developments
Future developments are outlined throughout the Chairman's Statement.
Financial Risk Management
Financial risk management is outlined in the principal risks and uncertainties
section of the Strategic Report.
Subsequent Events
In January 2025, the Group through its ALD franchise business, completed the
acquisition of Effective Plumbing a fast growing plumbing company in
Connecticut. The purchase price was $1.2 million and is based on 2024 pro
forma financials of $1.2 million in sales and $0.3 million in profits.
Effective Plumbing builds on ALD's 2022 acquisition of Shanahan Plumbing. Both
plumbing companies service high-end residential homes also useful for
advancing ALD's StreamLabs Partnership.
In February 2025, The Group completed the reacquisition of its franchise
covering parts of Georgia and South Carolina within the Group's ALD franchise
business. The purchase price was $3 million and is based on $1.55 million of
sales and $0.55 million of profits for 2024. Its operating area includes a
significant number of resorts and high-end second homes in South Carolina also
useful for advancing ALD's StreamLabs Partnership.
In February 2025, the Group announced a strategic partnership with StreamLabs
Water, Inc., a Chubb company. StreamLabs Water makes various leading water
monitoring devices. The partnership involves the resale of products by the
Group's American Leak Detection business as well as installations and
aftercare based on data managed by American Leak Detection.
Directors
The Directors who served the Company during the year and up to the date of
this report were as follows:
Executive Directors
Patrick DeSouza - Executive Chairman
Non-Executive Directors
Laura Hills
Bobby Knell
C. Daniel Ewell
Phil Meckley
The biographical details of the Directors of the Company are set out on the
Corporate Governance section of the report and on the Company's website
www.waterintelligence.co.uk (http://www.waterintelligence.co.uk)
Directors' emoluments
2024 Salary, Fees & Bonus Benefits Redundancy Total
$ $ $ $
Executive Directors
P DeSouza 645,250 32,425 - 677,675
Non-Executive Directors
L Hills - - - -
D Ewell - - - -
B Knell 20,000 - - 20,000
P Meckley - - - -
665,250 32,425 - 697,675
* In lieu of cash compensation, to be added to the above table, the directors
will be issued Ordinary Shares out of treasury shortly after the release of
these results.
2023 Salary, Fees & Bonus Benefits Redundancy Total
$ $ $ $
Executive Directors
P DeSouza 595,000 28,000 - 623,000
Non-Executive Directors
L Hills - - - -
D Ewell - - - -
B Knell 40,000 - - 40,000
M Reisman (retired 06/11/2023) - - - -
P Meckley (appointed 06/11/2023) - - - -
635,000 28,000 - 663,000
* In lieu of cash compensation, to be added to the above table, as announced
on 15 February 2024, certain directors were issued fully paid-up Ordinary
Shares and the value of these Ordinary Shares issued were: P DeSouza $37.5k, L
Hills $37.5K, D Ewell $37.5k, P Meckley $10k.
Directors' interests
The Directors who held office at 31 December 2024 and subsequent to year end
had the following direct interest in the voting rights of the Company at 31
December 2024 and at the date of this report, excluding the shares held by
Plain Sight Systems, Inc.
Number of shares at 31 December 2024 % held at 31 December 2024 Number of shares at 30 June 2025(1) % held at 30 June 2025
Patrick DeSouza(2) 4,874,760 25.0 4,874,760 25.0
Laura Hills 130,373 0.7 130,373 0.7
Bobby Knell 27,000 0.1 27,000 0.1
Dan Ewell 41,320 0.2 41,320 0.2
Phil Meckley 2,050 0.0 2,050 0.0
1 Director compensation for 2024 is accrued. Each director chose to receive
their director fees in ordinary shares in lieu of cash; such shares will be
issued after the publication of this annual report and the number will be
added to the above table.
2 Included in the total above, Patrick DeSouza has (i) 180,000 Partly Paid
Shares (2016), (ii) 750,000 (March 2018) (iii) 850,000 (May 2019) and (iv)
300,000 Partly Paid Shares (October 2020). These will not be admitted to
trading or carry any economic rights until fully paid. Patrick DeSouza is also
a director and shareholder in Plain Sight Systems, Inc and his interests
include 1,965,000 shares held by The Patrick J. DeSouza 2020 Irrevocable Trust
U/A Dtd 11/23/2020 and 605,936 shares held in The Patrick J. DeSouza GRAT #1
U/T/A Dtd 11/23/2020.
Share option schemes
To provide incentive for the management and key employees of the Group, the
Directors award stock options. Details of the current scheme are set out in
Note 7.
Substantial Shareholders
As well as the Directors' interests reported above, the following interests of
3.0% and above as at the date of this report were as follows:
Number of shares % held
Plain Sight Systems, Inc. 2,430,410 12.5
Canaccord Genuity Group Inc. 1,470,081 6.7
Maven Capital Partners 1,055,810 5.4
George D. Yancopoulos 880,920 4.5
Herald Investment Trust 642,526 3.3
Corporate Responsibility
The Board recognises its employment, environmental and health and safety
responsibilities. It devotes appropriate resources towards monitoring and
improving compliance with existing standards. An Executive Director has
responsibility for these areas at Board level, ensuring that the Group's
policies are upheld and providing the necessary resources.
Employees
The Board recognises that the Group's employees are its most important asset.
The Group is committed to achieving equal opportunities and to complying with
relevant anti-discrimination legislation. It is established Group policy to
offer employees and job applicants the opportunity to benefit from fair
employment, without regard to their sex, sexual orientation, marital status,
race, religion or belief, age or disability. Employees are encouraged to train
and develop their careers.
The Group has continued its policy of informing all employees of matters of
concern to them as employees, both in their immediate work situation and in
the wider context of the Group's well-being. Communication with employees is
effected through the Board, the Group's management briefings structure, formal
and informal meetings and through the Group's information systems.
Independent Auditors
Crowe U.K. LLP has expressed their willingness to continue in office. In
accordance with section 489 of the Companies Act 2006, resolutions for their
re-appointment and to authorise the Directors to determine the Independent
Auditors' remuneration will be proposed at the forthcoming Annual General
Meeting.
Statement of disclosure to the Independent Auditor
Each of the persons who are directors at the time when this Directors' report
is approved has confirmed that:
· so far as that Director is aware, there is no relevant audit
information of which the Company and the Group's auditor is unaware; and
· that Director has taken all the steps that ought to have been taken
as a director in order to be aware of any relevant audit information and to
establish that the Company and the Group's auditor is aware of that
information.
By order of the Board
Patrick DeSouza
Executive Chairman
Corporate Governance Statement
As a Board, we believe that practicing good Corporate Governance is essential
for building a successful and sustainable business in the long-term interests
of all stakeholders. Water Intelligence's shares are listed on AIM, a market
operated by the London Stock Exchange.
With effect from September 2018, Water Intelligence has adopted the QCA
Corporate Governance Code. The Company has adopted a share dealing code for
the Board and employees of the Company which is in conformity with the
requirements of Rule 21 of the AIM Rules for Companies. The Company takes
steps to ensure compliance by the Board and applicable employees with the
terms of such code.
The following outlines the structures, processes and procedures by which the
Board ensures that high standards of corporate governance are maintained
throughout the Group.
Further details can be found on our website at
www.waterintelligence.co.uk/corporate-Board-and-governance
Takeovers and Mergers
The Company is subject to The City Code on Takeovers and Mergers.
Board
The Board, chaired by Patrick DeSouza, comprises one executive and four
non-executive directors and it oversees and implements the Company's corporate
governance program. As Chairman, Dr. DeSouza is responsible for the Company's
approach to corporate governance and the application of the principles of the
QCA Code. Dan Ewell, Bobby Knell and Phil Meckley are the Company's
independent directors. The Board is supported by two committees: audit and
remuneration. The Board does not consider that it is of a size at present to
require a separate nominations committee, and all members of the Board are
involved in the appointment of new directors.
Each Board member commits sufficient time to fulfil their duties and
obligations to the Board and the Company. They are required to attend at least
4 Board meetings annually and join regular Board calls that take place between
formal meetings and offer availability for consultation when needed.
Board papers are sent out to all directors in advance of each Board meeting
including management accounts and accompanying reports from those responsible.
Meetings held during the period between 1 January 2024 and 31 December 2024
and the attendance of directors is summarized below:
Board meetings Audit committee Remuneration committee
Possible (attended) Possible (attended) Possible (attended)
Patrick DeSouza 6/6
Bobby Knell 5/6 2/2
Dan Ewell 6/6 2/2
Laura Hills 6/6 2/2 2/2
Phil Meckley 6/6
Board Committees
The Board has established an Audit Committee and a Remuneration Committee with
delegated duties and responsibilities.
(a) Audit Committee
Dan Ewell, Non-Executive Director, is Chairman of the Audit Committee. The
other member of the Committee is Laura Hills. The Audit Committee is
responsible for ensuring that the financial performance, position and
prospects for the Company are properly monitored, controlled and reported on
and for meeting the auditors and reviewing their reports relating to accounts
and internal controls.
(b) Remuneration Committee
Bobby Knell, Non-Executive Director, is Chairman of the Remuneration
Committee. The other member of the Committee is Laura Hills. The Remuneration
Committee is responsible for reviewing performance of Executive Directors and
determining the remuneration and basis of service agreement with due regard
for the Combined Code. The Remuneration Committee also determines the payment
of any bonuses to Executive Directors and the grant of options.
The Company has adopted and operates a share dealing code for directors and
senior employees on the same terms as the Model Code appended to the Listing
Rules of the UKLA.
Board Experience
All five members of the Board bring complementary skill sets to the Board. One
director is female and four are male. The Board believes that its blend of
relevant experience, skills and personal qualities and capabilities is
sufficient to enable it to successfully execute its strategy. In addition, the
Board receives regular updates from, amongst others, its nominated adviser,
legal counsel and company secretary in relation to key rule changes and
corporate governance requirements, as well as regular liaison with audit firms
both in the UK and the US in respect of key disclosure and accounting
requirements for the Group, especially as accounting standards evolve. In
addition, each new director appointment is required to receive AIM rule
training from the Company's nominated adviser at the time of their
appointment.
Patrick J. DeSouza, Executive Chairman
Term of office: Appointed as Executive Chairman in July 2010.
Background and suitability for the role: Dr. DeSouza has been Chairman of
American Leak Detection since 2006 and Executive Chairman since its reverse
merger to create Water Intelligence plc in 2010. He has 25 years of operating
and advisory leadership experience with both public and private companies in
the defence, software/Internet and asset management industries. Over the
course of his career, Dr. DeSouza has had significant experience in corporate
finance and cross-border mergers and acquisition transactions. He has
practised corporate and securities law as a member of the New York and
California bars. Dr. DeSouza has also worked at the White House as Director
for Inter-American Affairs on the National Security Council. He is the author
of Economic Strategy and National Security (2000). He is a graduate of
Columbia College, the Yale Law School and Stanford Graduate School.
Laura Hills, Non-Executive Director
Term of office: Appointed 7 June 2021 as Executive Director but returned to
non-executive director which she originally was appointed since 6 March 2018.
Background and suitability for the role: Laura has more than 30 years'
experience as a legal professional, having spent 10 years working for Overseas
Private Investment Corporation (OPIC), where she served as Associate General
for the agency's finance program, supervising a team of lawyers on all finance
transactions ranging from micro-lending and small business to multi-creditor
infrastructure project financing in emerging market countries. In 2002, Ms.
Hills founded Hills, Stern & Morley LLP, an emerging markets legal firm
based in Washington D.C. Laura sits on the Board of the Gerald Ford
Presidential Foundation. Laura brings considerable expertise in negotiating on
infrastructure and renewables related transactions globally. Moreover, Ms.
Hills experience with non-profits assists the Board in fulfilling its
responsibility to advance the mission of Water Intelligence to support
underserved communities globally. Laura holds undergraduate, graduate and law
degrees from Stanford University.
Bobby Knell, Independent Non-Executive Director
Term of office: Appointed 7 June 2021, having previously been an executive
director, non-executive director since 12 March 2019.
Background and suitability for the role: The ALD franchise business is
central to the operations and value proposition of Water Intelligence. Bobby
has served as a managing director at Water Intelligence responsible for
franchise relations for the last four years. Prior to this role, Bobby
founded and grew the Dallas franchise of American Leak Detection into a
multi-million dollar operation, an operation now run by his son. His
appointment furthers the alignment of strategy and interests between corporate
operations and the core American Leak Detection franchise business.
C. Daniel Ewell, Independent Non-executive Director
Term of office: Appointed as a non-executive director on 8 April 2021
Background and suitability for the role: Dan Ewell is currently a Senior
Advisor at Morgan Stanley, where he has worked as an investment banker for
over 33 years. Prior to assuming his current role, Mr. Ewell served as Vice
Chairman and Head of Western Region Investment Banking for Morgan Stanley. Dan
has extensive experience in advising companies and helping them grow through
capital raising and strategic transactions. His experience spans a range of
sectors including consumer/retails, industrial, healthcare and
media/technology, and included companies with franchised business models. As
the Group continues to scale its operations internationally, it has a need to
broaden its institutional and strategic activity in capital markets. Mr. Ewell
brings considerable expertise in this area. He is a graduate of University
of California, Berkeley, Yale Law School and Yale School of Management.
Phillip Meckley, Independent Non-executive Director
Term of office: Appointed as a non-executive director on 6 November 2023
Background and suitability for the role: Mr. Meckley currently owns
fast-growing franchises in California and Texas. He brings over twenty-five
years of operating experience in growing ALD locations and has provided
significant leadership to the entire franchise System. In addition, Phil and
his wife Robin have provided leadership with respect to ALD's charitable
efforts to help disadvantaged communities in various parts of the world solve
water infrastructure issues, most recently in rural India.
The Group has a non-Board Chief Financial Officer, Pat Lamarco Jr., who
attends all Board meetings and reports regularly to the Board and assists in
the preparation of Board materials and in reviewing the budget and ongoing
performance.
The Company Secretary is responsible for ensuring that Board procedures are
followed and that all applicable rules and regulations are complied with.
Adrian Hargrave currently performs the role of Company Secretary, providing an
advisory role to the Board. The Company Secretary is supported and guided in
this role by the Company's legal advisors.
The Directors have access to the Company's CFO, NOMAD, Company Secretary,
lawyers and auditors as and when required and are able to obtain advice from
other external bodies when necessary.
Board Performance and Effectiveness
The performance and effectiveness of the Board, its committees and individual
Directors is reviewed by the Chairman and the Board an ongoing basis. Training
is available should a Director request it, or if the Chairman feels it is
necessary. The performance of the Board is measured by the Chairman and Dan
Ewell, one of the non-executive directors, with reference to the Company's
achievement of its strategic goals.
Risk Management
The Directors recognise their responsibility for the Group's system of
internal control and have established systems to ensure that an appropriate
and reasonable level of oversight and control is provided. The Group's systems
of internal control are designed to help the Group meet its business
objectives by appropriately managing, rather than eliminating, the risks to
those objectives. The controls can only provide reasonable, not absolute,
assurance against material misstatement or loss.
The Executive Chairman with the assistance of the Company Secretary and the
Chief Financial Officer manages a risk register for the Group that identifies
key risks in the areas of corporate strategy, financial, clients, staff,
environmental and the investment community. The Board is provided with a copy
of the register. The register is reviewed periodically and is updated as and
when necessary.
Within the scope of the annual audit, specific financial risks are also
evaluated in detail, including in relation to foreign currency, interest
rates, debt covenants, taxation and liquidity.
The annual budget is reviewed and approved by the Board. Financial results,
with comparisons to budget and latest forecasts are reported on a monthly
basis to the Board together with a report on operational achievements,
objectives and issues encountered. Significant variances from plan are
discussed at Board meetings and actions set in place to address them.
Approval levels for authorisation of expenditure are at set levels throughout
the management structure with any expenditure in excess of pre-defined levels
requiring approval from the Executive Chairman and the Chief Financial
Officer.
Measures continue to be taken to review and embed internal controls and risk
management procedures into the business processes of the organisation and to
deal with areas of improvement which come to the management's and the Board's
attention. We expect the internal controls for the business to change as the
business expands both geographically and in terms of product development.
The Company's auditors are encouraged to raise comments on internal control in
their management letter following their audit, and the points raised and
actions arising are monitored through to completion by the Audit Committee.
Corporate Culture
Corporate Responsibility
The Board recognises its employment, environmental and health and safety
responsibilities. It devotes appropriate resources towards monitoring and
improving compliance with existing standards. There is a professional Human
Resources Director. Laura Hills is responsible for oversight at the Board
level. Ms. Hills ensures that the Group's policies are upheld and providing
the necessary resources. All members of the Board have significant experience
in matters of public policy.
Employees
The Board recognises that the Group's employees are its most important asset.
The Group is committed to achieving equal opportunities and to complying with
relevant anti-discrimination legislation. It is established Group policy to
offer employees and job applicants the opportunity to benefit from fair
employment, without regard to their sex, sexual orientation, marital status,
race, religion or belief, age or disability. Employees are encouraged to train
and develop their careers. The Group has an employee handbook that is provided
to all employees upon starting their employment within the Group.
The Group has continued its policy of informing all employees of matters of
concern to them as employees, both in their immediate work situation and in
the wider context of the Group's well-being.
In addition, all directors and senior employees are required to abide by the
Group's share dealing code, which was updated in 2016 to reflect changes made
to legislation following the introduction of the Market Abuse Regulation.
Audit Committee Annual Review
The role of the Audit Committee is to monitor the quality of internal controls
and check that the financial performance of the Group is properly assessed and
reported on. It receives and reviews reports from the Chief Financial Officer,
other members of management and external auditors relating to the interim and
annual accounts and the accounting and internal control systems in use
throughout the Group. The members of the Audit Committee are Dan Ewell
(Chairman) and Laura Hills.
The Executive Chairman and Chief Financial Officer are invited to attend parts
of meetings, with other senior financial managers required to attend when
necessary. The external auditors attend meetings to discuss the planning and
conclusions of their work and meet with the members of the Committee. The
Committee is able to call for information from management and consults with
the external auditors directly as required.
The objectivity and independence of the external auditors is safeguarded by
reviewing the auditors' formal declarations, monitoring relationships between
key audit staff and the Company and tracking the level of non-audit fees
payable to the auditors.
The Committee met twice during the year, to review the 2023 annual accounts
and the interim accounts to 30 June 2024. The Committee reviewed with the
independent auditor its judgements as to the acceptability of the Company's
accounting principles.
Remuneration Committee Annual Review
The Remuneration Committee convenes not less than once a year and during the
year it met on two occasions. The Committee comprises Laura Hills and Bobby
Knell, with Bobby Knell as Chairman. The Remuneration Committee is responsible
for reviewing the performance of Executive Directors and determining the
remuneration and basis of service agreement. The Remuneration Committee also
determines the payment of any bonuses to Executive Directors and the grant of
options. Where appropriate the Committee consults the Executive Chairman
regarding its proposals. No Director plays a part in any discussion regarding
his or her own remuneration.
Relations with Shareholders
The Company is available to hold meetings with its shareholders to discuss
objectives and to keep them updated on the Company's strategy, Board
membership and management.
The Board also welcome shareholders' enquiries, which may be sent via the
Company's website www.waterintelligence.co.uk
(http://www.waterintelligence.co.uk) .
Statement of Directors' Responsibilities
The Directors are responsible for preparing the Annual Report and the
Financial Statements in accordance with the Companies Act 2006 and for being
satisfied that the Financial Statements give a true and fair view. The
Directors are also responsible for preparing the Financial Statements in
accordance with UK adopted International Accounting Standards.
Company law requires the Directors to prepare Financial Statements for each
financial period which give a true and fair view of the state of affairs of
the Company and the Group and of the profit or loss of the Group for that
period. In preparing those Financial Statements, the Directors are required
to:
· select suitable accounting policies and then apply them
consistently;
· make judgments and estimates that are reasonable and prudent;
· state whether applicable accounting standards have been followed,
subject to any material departures disclosed and explained in the Financial
Statements; and
· prepare the Financial Statements on the going concern basis unless
it is inappropriate to presume that the Company and the Group will continue in
business.
The Directors confirm that they have complied with the above requirements in
preparing the Financial Statements. The Directors are responsible for keeping
adequate accounting records that are sufficient to show and explain the
Company's transactions, disclose with reasonable accuracy at any time the
financial position of the Company and the Group, and to enable them to ensure
that the Financial Statements comply with the Companies Act 2006.
They are also responsible for safeguarding the assets of the Company and hence
for taking reasonable steps for the prevention and detection of fraud and
other irregularities.
Website publication
The Directors are responsible for ensuring the Annual Report and Financial
Statements are made available on a website. Financial Statements are published
on the Group's website (www.waterintelligence.co.uk
(http://www.waterintelligence.co.uk) ) in accordance with legislation in the
United Kingdom governing the preparation and dissemination of Financial
Statements, which may vary from legislation in other jurisdictions. The
maintenance and integrity of the Group's website is the responsibility of the
Directors. The Directors' responsibility
Independent Auditors' report to the members of Water Intelligence plc
Opinion
Opinion
We have audited the financial statements of Water Intelligence plc (the
"Company") and its subsidiaries (the "Group") for the year ended 31 December
2024, which comprise:
· the Consolidated statement of comprehensive income for the year
ended 31 December 2024;
· the Consolidated and Company statements of financial position as
at 31 December 2024;
· the Consolidated and Company statements of changes in equity for
the year then ended;
· the Consolidated statement of cash flows for the year then ended;
and
· the notes to the financial statements, including material
accounting policies.
The financial reporting framework that has been applied in the preparation of
the financial statements is applicable law and UK-adopted international
accounting standards.
In our opinion the financial statements:
· give a true and fair view of the state of the Group's and of the
Company's affairs as at 31 December 2024 and of the Group's profit for the
year then ended;
· have been properly prepared in accordance with UK-adopted
international accounting standards;
· have been prepared in accordance with the requirements of the
Companies Act 2006.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing
(UK) (ISAs (UK)) and applicable law. Our responsibilities under those
standards are further described in the Auditor's responsibilities for the
audit of the financial statements section of our report. We are independent of
the Group and the Company in accordance with the ethical requirements that are
relevant to our audit of the financial statements in the UK, including the
FRC's Ethical Standard as applied to listed entities, and we have fulfilled
our other ethical responsibilities in accordance with these requirements. We
believe that the audit evidence we have obtained is sufficient and appropriate
to provide a basis for our opinion.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the directors'
use of the going concern basis of accounting in the preparation of the
financial statements is appropriate. Our evaluation of the directors'
assessment of the Group's and Company's ability to continue to adopt the going
concern basis of accounting included:
· We reviewed management's business plan and cash
flow forecast for the Group (which includes the Company) for a period of more
than 12 months from the date of approval of the financial statements;
· We checked the numerical accuracy of management's
cash flow forecast;
· We challenged management on the assumptions
underlying those projections;
· Performed stress tests on managements forecasts
and assessed that the Group has sufficient liquidity headroom;
· We obtained the latest management results post
year end to assess how the Group is performing compared to the forecasts;
· Considered the terms of the external borrowing
and deferred consideration and the impact on the future cash flows; and
· Assessed the completeness and accuracy of the
matters described in the going concern disclosures within the significant
accounting policies as set out in Note 3.
Based on the work we have performed, we have not identified any material
uncertainties relating to events or conditions that, individually or
collectively, may cast significant doubt on the Group's and Company's ability
to continue as a going concern for a period of at least twelve months from
when the financial statements are authorised for issue.
Our responsibilities and the responsibilities of the directors with respect to
going concern are described in the relevant sections of this report.
Overview of our audit approach
Materiality
In planning and performing our audit we applied the concept of materiality. An
item is considered material if it could reasonably be expected to change the
economic decisions of a user of the financial statements. We used the concept
of materiality to both focus our testing and to evaluate the impact of
misstatements identified.
Based on our professional judgement, we determined overall materiality for the
Group financial statements as a whole to be $370,000 (2023: $370,000), based
on approximately 6% of Group profit before tax (2023: 6% of Group profit
before tax).
Materiality for the stand-alone Company financial statements was $700,000
(2023: $716,000) based on 2% of total assets and this was restricted to
$140,000 (2023: $100,000) for the Group.
We use a different level of materiality ('performance materiality') to
determine the extent of our testing for the audit of the financial
statements. Performance materiality is set based on the audit materiality as
adjusted for the judgements made as to the entity risk and our evaluation of
the specific risk of each audit area having regard to the internal control
environment. This is set at £259,000 (2023: $259,000) for the Group, $490,000
(2023: $501,200) for the stand-alone Company financial statements and this was
restricted to $98,000 (2023: $84,000) for the Group.
Where considered appropriate performance materiality may be reduced to a lower
level, such as, for related party transactions and directors' remuneration.
We agreed with the Audit Committee to report to it all identified errors in
excess of $18,500 (2023: $18,500). Errors below that threshold would also be
reported to it if, in our opinion as auditor, disclosure was required on
qualitative grounds.
Overview of the scope of our audit
Our audit was scoped by obtaining an understanding of the Group and its
environment, including the Group's system of internal control, and assessing
the risks of material misstatement in the financial statements. We also
addressed the risk of management override of internal controls, including
assessing whether there was evidence of bias by the Directors that may have
represented a risk of material misstatement.
We performed full scope audits for the following components, being the
Company, its principal US operating subsidiary American Leak Detection and US
holding company American Leak Detection Holding Company. Targeted specified
procedures were performed over the UK and Irish entities by the Group audit
team and by the US component team for the remaining US, Canadian and
Australian entities.
Further, the Group audit team performed audit procedures over the Group
consolidation, financial statement disclosures and analytical procedures on
all non-full scope audit components
The Group, Company and UK subsidiaries are accounted for from a location in
the UK, whilst its material US subsidiary and Australian subsidiary are
accounted for from the US. Our audit was conducted from the UK and component
auditors were used to perform the audit work in the US. We have planned,
controlled, and reviewed the group audit and are satisfied it was performed
under our direction. We have remotely reviewed the US work to carry out our
review of component auditor working papers and have met with group management
virtually.
Key Audit Matters
Key audit matters are those matters that, in our professional judgement, were
of most significance in our audit of the financial statements of the current
period and include the most significant assessed risks of material
misstatement (whether or not due to fraud) that we identified. These matters
included those which had the greatest effect on the overall audit strategy,
the allocation of resources in the audit; and directing the efforts of the
engagement team. These matters were addressed in the context of our audit of
the financial statements as a whole, and in forming our opinion thereon, and
we do not provide a separate opinion on these matters.
This is not a complete list of all risks identified by our audit.
Key audit matter How the scope of our audit addressed the key audit matter
Revenue recognition
Revenue is recognised in accordance with the accounting policy set out in the Our audit procedures included the following:
financial statements. Revenue in relation to the provision of service to
clients are billed when work is completed and where work is not completed · Walkthrough of the revenue process and evaluation of the design
around the year end there is judgment related to the accrual for the revenue, and implementation of controls around revenue;
which can be complex.
· Evaluated that the accounting policies are appropriate and in
accordance with International Financial Reporting Standard 15 'Revenue from
Contract with Customers' and performed audit procedures to provide evidence
We considered the risk that revenue may be materially mis-stated. that revenue was accounted for in accordance with the policy as detailed in
note 4;
· Tested a sample of revenue transaction across the operating
companies of the Group across each revenue stream by agreeing amounts to
supporting documentation to ensure that the transactions are correctly
accounted for, that the performance obligations have been satisfied and to
cash receipts;
· Tested all material accrued and deferred income balances to
ensure that the accrued income is materially correct; and
· Reviewed the disclosures in the financial statements to ensure
they were compliant with the requirements of IFRS 15.
Impairment of goodwill We reviewed management's assessment of the carrying value of the group's
goodwill. Our procedures included the following:
The carrying value of goodwill relates to goodwill on franchisor activities,
goodwill on acquisitions and owned stores goodwill all of which an annual · Performed a walkthrough of the process and controls to gain an
impairment review is required to be performed. Impairment assessments involve understanding of the Group's impairment process including identification of
judgement regarding the future performance of the cash generating units to CGU's, calculation methodology, selection of sources of key assumptions;
which these assets are allocated, consequently, we consider their
recoverability to have a higher risk of material misstatement · Reviewed the discounted cash-flow forecasts for the group and the
relevant cash generating units to ensure that the cash generating units were
This is set out in the financial statements in Note 3 and 13. appropriately identified and an assessment of the key assumptions, which
principally included discount rate and growth rates as discussed in Note 13;
· Obtained the latest management results post year end to assess
how the Group is performing compared to the forecasts for each CGU;
· Checked the mathematical accuracy of the impairment workings;
· Applied stress tests to the model for reasonable possible changes
in the assumptions;
· Utilising our valuation specialists to assist in our assessment
of the discount rate used in the impairment models; and
· Reviewed the disclosures in the financial statements.
Our audit procedures in relation to these matters were designed in the context
of our audit opinion as a whole. They were not designed to enable us to
express an opinion on these matters individually and we express no such
opinion.
Other information
The directors are responsible for the other information contained within the
annual report. The other information comprises the information included in the
annual report, other than the financial statements and our auditor's report
thereon. Our opinion on the financial statements does not cover the other
information and, except to the extent otherwise explicitly stated in our
report, we do not express any form of assurance conclusion thereon.
Our responsibility is to read the other information and, in doing so, consider
whether the other information is materially inconsistent with the financial
statements or our knowledge obtained in the audit or otherwise appears to be
materially misstated. If we identify such material inconsistencies or apparent
material misstatements, we are required to determine whether this gives rise
to a material misstatement in the financial statements themselves. If, based
on the work we have performed, we conclude that there is a material
misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
Opinion on other matter prescribed by the Companies Act 2006
In our opinion based on the work undertaken in the course of our audit
· the information given in the strategic report and the directors'
report for the financial year for which the financial statements are prepared
is consistent with the financial statements; and
· the strategic report and the directors' report have been prepared
in accordance with applicable legal requirements.
Matters on which we are required to report by exception
In light of the knowledge and understanding of the Group and the Company and
their environment obtained in the course of the audit, we have not identified
material misstatements in the strategic report or the directors' report.
We have nothing to report in respect of the following matters where the
Companies Act 2006 requires us to report to you if, in our opinion:
· adequate accounting records have not been kept by the Company, or
returns adequate for our audit have not been received from branches not
visited by us; or
· the Company financial statements are not in agreement with the
accounting records and returns; or
· certain disclosures of directors' remuneration specified by law
are not made; or
· we have not received all the information and explanations we
require for our audit.
Responsibilities of the directors for the financial statements
As explained more fully in the directors' responsibilities statement, the
directors are responsible for the preparation of the financial statements and
for being satisfied that they give a true and fair view, and for such internal
control as the directors determine is necessary to enable the preparation of
financial statements that are free from material misstatement, whether due to
fraud or error.
In preparing the financial statements, the directors are responsible for
assessing the Group's and Company's ability to continue as a going concern,
disclosing, as applicable, matters related to going concern and using the
going concern basis of accounting unless the directors either intend to
liquidate the Group or the Company or to cease operations, or have no
realistic alternative but to do so.
Auditor's responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial
statements as a whole are free from material misstatement, whether due to
fraud or error, and to issue an auditor's report that includes our opinion.
Reasonable assurance is a high level of assurance, but is not a guarantee that
an audit conducted in accordance with ISAs (UK) will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and
are considered material if, individually or in the aggregate, they could
reasonably be expected to influence the economic decisions of users taken on
the basis of these financial statements.
Irregularities, including fraud, are instances of non-compliance with laws and
regulations. We design procedures in line with our responsibilities, outlined
above, to detect material misstatements in respect of irregularities,
including fraud. The extent to which our procedures are capable of detecting
irregularities, including fraud, is detailed below however the primary
responsibility for the prevention and detection of fraud lies with management
and those charged with governance of the Company.
Based on our understanding of the Group and the Company and industry,
discussions with management and directors we identified financial reporting
standards and Companies Act 2006 as having a direct effect on the amounts and
disclosures in the financial statements.
· As part of our audit planning process, we assessed the different
areas of the financial statements, including disclosures, for the risk of
material misstatement. This included considering the risk of fraud where
direct enquiries were made of management and those charged with governance
concerning both whether they had any knowledge of actual or suspected fraud
and their assessment of the susceptibility of fraud. We considered the risk
was greater in areas that involve significant management estimate or
judgement. Based on this assessment we designed audit procedures to focus on
the key areas of estimate or judgement, this included specific testing of
journal transactions, both at the year end and throughout the year.
· We used data analytic techniques to assist in identifying any
unusual transactions or unexpected relationships.
Owing to the inherent limitations of an audit, there is an unavoidable risk
that some material misstatements of the financial statements may not be
detected, even though the audit is properly planned and performed in
accordance with the ISAs (UK).
The potential effects of inherent limitations are particularly significant in
the case of misstatement resulting from fraud because fraud may involve
sophisticated and carefully organised schemes designed to conceal it,
including deliberate failure to record transactions, collusion or intentional
misrepresentations being made to us.
A further description of our responsibilities is available on the Financial
Reporting Council's website at: www.frc.org.uk/auditorsresponsibilities. This
description forms part of our auditor's report.
Use of our report
This report is made solely to the company's members, as a body, in accordance
with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been
undertaken so that we might state to the company's members those matters we
are required to state to them in an auditor's report and for no other purpose.
To the fullest extent permitted by law, we do not accept or assume
responsibility to anyone other than the company and the company's members as a
body, for our audit work, for this report, or for the opinions we have formed.
John Charlton (Senior Statutory Auditor)
for and on behalf of
Crowe U.K. LLP
Statutory Auditor
London
Consolidated Statement of Comprehensive Income for the year ended 31 December
2024
Notes Year ended 31 December 2024 Year ended 31 December 2023
$ $
Revenue 4 83,291,649 75,974,552
Cost of sales (9,795,325) (10,362,197)
Gross profit 73,496,324 65,612,355
Administrative expenses
- Other income 974,355 59,422
- Gain on bargain purchase 12 356,464 -
- Share-based payments 7 (379,343) (571,970)
- Amortisation of intangibles 13 (854,878) (841,516)
- Other administrative costs (65,941,266) (57,074,745)
) )
Total administrative expenses (65,844,668) (58,428,809)
Operating profit 7,651,656 7,183,546
Finance income 8 395,729 699,819
Finance expense 9 (1,690,900) (1,643,978)
Profit before tax 6,356,485 6,239,387
Taxation expense 10 (1,572,490) (1,605,585)
Profit for the year 4,783,995 4,633,802
Attributable to:
Equity holders of the parent 4,680,130 4,398,681
Non-controlling interests 103,865 235,121
4,783,995 4,633,802
Other Comprehensive Income
Subsequently reclassified to the P&L
Exchange differences arising on translation of foreign operations (173,851) 199,826
Cash flow hedge movement 215,558 (171,912)
Not subsequently reclassified to the P&L
Fair value adjustment on listed equity investment (net of deferred tax) (128,528) (21,927)
Total comprehensive profit for the year 4,697,174 4,639,789
Attributable to:
Equity holders of the parent 4,593,309 4,404,668
Non-controlling interests 103,865 235,121
4,697,174 4,639,789
Cents Cents
Profit per share attributable to equity holders of Parent
Basic 11 26.9 25.3
Diluted 11 26.3 24.7
The results reflected above relate to continuing activities.
Consolidated Statement of Financial Position as at 31 December 2024
Notes 2024 2023
$ $
ASSETS
Non-current assets
Goodwill 13 64,996,704 49,791,203
Listed equity investment 24 292,067 447,231
Other intangible assets 13 11,632,065 7,840,157
Interest rate swap 23 491,824 276,265
Property, plant and equipment 14 12,991,015 10,538,135
Trade and other receivables 17 250,500 207,990
90,654,175 69,100,981
Current assets
Inventories 16 930,439 723,315
Trade and other receivables 17 10,934,817 11,063,253
Investments 18 6,683,089 6,875,250
Cash and cash equivalents 18 5,452,479 8,882,627
24,000,824 27,544,445
TOTAL ASSETS 114,654,999 96,645,426
EQUITY AND LIABILITIES
Equity attributable to holders of the parent
Share capital 21 143,192 143,192
Share premium 21 35,417,072 35,417,072
Shares held in treasury 21 (883,549) (1,139,404)
Merger reserve 1,001,150 1,001,150
Share based payment reserve 2,822,366 2,254,347
Foreign exchange reserve (1,478,888) (1,305,037)
Reverse acquisition reserve 21 (27,758,088) (27,758,088)
Equity investment reserve (794,668) (666,140)
Cash flow hedge reserve 491,823 276,265
Retained earnings 56,018,304 51,495,814
64,978,714 59,719,171
Equity attributable to Non-Controlling interest
Non-controlling Interest 455,007 610,375
Non-current liabilities
Borrowings 22/23 26,361,482 12,510,867
Deferred consideration 12 5,332,269 3,632,074
Deferred tax liability 20 3,212,788 2,618,605
34,906,539 18,761,546
Current liabilities
Trade and other payables 19 6,749,312 5,997,028
Borrowings 22/23 3,787,362 6,805,131
Deferred consideration 12 3,778,065 4,752,175
14,314,739 17,554,334
TOTAL EQUITY AND LIABILITIES 114,654,999 96,645,426
Company Statement of Financial Position as at 31 December 2024
Notes 2024 2023
$ $
ASSETS 15 6,903,702 6,994,345
Non-current assets
Investment in subsidiaries
Trade and other receivables 17 22,041,011 22,673,254
Listed equity investment 24 292,067 447,231
29,236,780 30,114,830
Current assets
Trade and other receivables 17 5,825,417 4,620,777
Cash and cash equivalents 18 44,789 1,105,607
5,870,206 5,726,384
TOTAL ASSETS 35,106,986 35,841,214
EQUITY AND LIABILITIES
Equity attributable to holders of the parent
Share capital 21 143,192 143,192
Share premium 21 35,417,072 35,417,072
Shares held in treasury 21 (883,549) (1,139,404)
Merger reserve 1,001,150 1,001,150
Share based payment reserve 2,822,366 2,254,347
Foreign exchange reserve (2,791,862) (2,585,747)
Equity investment reserve (794,668) (666,140)
Retained earnings 269,428 1,526,798
35,183,129 35,951,268
Non-current liabilities
Deferred tax liability (219,326) (190,069)
(219,326) (190,069)
Current liabilities
Trade and other payables 19 143,183 80,015
143,183 80,015
TOTAL EQUITY AND LIABILITIES 35,106,986 35,841,214
The loss for the financial year in the financial statements of the parent
Company was $1,099,730 (2023: loss $879,468), which related entirely to Plc
costs.
Consolidated Statement of Cash Flows for the Year Ended 31 December 2024
Year ended 31 December 2024 Year ended 31 December 2023
$ $
Cash flows from operating activities
Profit before tax 6,356,484 6,239,387
Adjustments for non-cash/non-operating items:
Depreciation of plant and equipment 4,568,406 3,745,773
Amortisation of intangible assets 854,878 841,516
Share based payments 379,343 571,970
Gain from reversal of contingent consideration (700,000) -
Gain on bargain purchase (356,464) -
Non cash employment costs 268,737 -
Finance costs 1,690,900 1,643,978
Finance income (395,729) (699,819)
Operating cash flows before movements in working capital 12,666,555 12,342,805
(Increase) /Decrease in inventories (207,124) 35,755
Decrease in trade and other receivables 1,634,614 409,913
Increase / (Decrease) in trade and other payables 127,689 (490,886)
Cash generated by operations 14,221,734 12,297,587
Income taxes paid (1,739,725) (897,106)
Net cash generated from operating activities 12,482,009 11,400,481
Cash flows from investing activities
Purchase of plant and equipment (2,108,307) (1,269,867)
Disposal of plant and equipment 200,554 191,178
Purchase of intangible assets (3,813,954) (3,370,700)
Acquisition of subsidiaries (571,246) -
Reacquisition of franchises (6,511,890) (4,203,500)
Purchase of investments 192,161 (6,875,250)
Finance income 395,729 699,818
Net cash used in investing activities (12,216,953) (14,828,321)
Cash flows from financing activities
Share buyback (170,522) -
Contribution from non-controlling interest - 73,500
Distribution to non-controlling interest (185,733) (296,882)
Finance costs (1,635,600) (1,360,057)
Proceeds from borrowings 26,628,000 2,811,353
Repayment of borrowings (18,410,090) (4,986,658)
Repayment of notes (8,098,116) (5,229,265)
Repayment of lease liabilities (1,823,143) (1,715,978)
Net cash (used) from financing activities (3,695,204) (10,703,987)
Net (decrease) in cash and cash equivalents (3,430,148) (14,131,827)
Cash and cash equivalents at the beginning of year 8,882,627 23,014,454
Cash and cash equivalents at end of year 5,452,479 8,882,627
Company Statement of Cash Flows for the Year Ended 31 December 2024
Year ended Year ended
31 December
31 December
2024
2023
$
$
Cash flows from operating activities
Loss before tax (1,099,730) (879,468)
Adjustments for non-cash/non-operating items:
Share based payment expense 379,342 571,970
Non cash employment costs 268,737 -
Operating cash flows before movements in working capital (451,651) (307,498)
(Increase)/Decrease in trade and other receivables (501,813) (271,281)
Increase/(Decrease) in trade and other payables 63,168 299,762
Cash used by operations (890,296) (279,017)
Income taxes paid - -
Net cash used by operating activities (890,296) (279,017)
Cash flows from investing activities
- -
Net cash used in investing activities - -
Cash flows from financing activities
Share buyback (170,522) -
Net cash (used) generated from financing activities (170,522) -
(Decrease) in cash and cash equivalents (1,060,818) (279,017)
Cash and cash equivalents at the beginning of period 1,104,607 1,384,624
Cash and cash equivalents at end of period 44,789 1,105,607
Notes to the Financial Statements
1 General information
The Group is a leading provider of minimally invasive, leak detection and
remediation services for potable and non-potable water. The Group's strategy
is to be a "One-stop Shop" of water leak and repair solutions (services and
products) for residential, commercial and municipal customers.
The Company is a public limited company limited by shares. Domiciled in the
United Kingdom and incorporated under registered number 03923150 in England
and Wales. The Company's registered office is 27-28 Eastcastle Street, London
W1W 8DH.
The Company is listed on AIM of the London Stock Exchange. These Financial
Statements were authorised for issue by the Board of Directors on 30 June
2025.
2 Adoption of a new International Financial Reporting
Standards
No new standards and interpretations adopted by the UK endorsement board had a
significant impact on the consolidated financial statements.
Standards, amendments, and interpretations to published standards not yet
effective
The Directors have considered those standards and interpretations, which have
not been applied in the financial statements but are relevant to the Group's
operations, that are in issue but not yet effective and do not consider that
they will have a material impact on the future results of the Group
3 Material accounting policies
Basis of preparation
These Financial Statements of the Group and Company are prepared on a going
concern basis, under the historical cost convention except for certain
financial instruments at fair value and in accordance with UK adopted
International Accounting Standards (IFRS). The Parent Company's Financial
Statements have also been prepared in accordance with UK adopted International
Accounting Standards as applied by the Companies Act 2006.
The preparation of Financial Statements in conformity with IFRS requires
management to make judgements, estimates and assumptions that affect the
application of policies and reported amounts of assets and liabilities, income
and expenses.
The estimates and associated assumptions are based on historical experience
and factors that are believed to be reasonable under the circumstances, the
results of which form the basis of making judgements about carrying values of
assets and liabilities that are not readily apparent from other sources.
Actual results may differ from these estimates.
The Financial Statements are presented in US Dollars ($), rounded to the
nearest dollar.
Going concern
The Directors have prepared a business plan and cash flow forecast for the
period to December 2026. The forecast contains certain assumptions about the
level of future sales and the level of margins achievable. These assumptions
are the Directors' best estimate of the future development of the business.
The Group generates increasing levels of cash driven by its profitable and
growing US-based business, ALD. The Directors also note that the Group has
diversified its operations further with growth in WII. Moreover, after
oversubscribed capital raises in July and November 2021 and refinancing and
expansion of its credit facilities in August 2024 the Directors believe that
funding will be available on a case-by-case basis for additional initiatives.
Cash and cash investments at 31 December 2024 was $12.1 million. At 31
December 2024, total debt (borrowings and deferred consideration from
franchise acquisitions) was $32.4 million with amortisation of such amount
through 2029. Meanwhile, operating cash flows (EBITDA) in 2024 increased by
11% to $13.1 million (2023: $11.8 million). Cash on the balance sheet plus an
ability to generate significant cash relative to the amount of debt that comes
due in any one year between 2025 and 2029 are important variables for Director
considerations. Moreover, the Directors consider various scenarios that may
influence cash availability such as inflationary pressures, the threat of
recession from rising interest rates and the use of cash for investments, such
as Salesforce.com and related software applications, geared to create
go-forward operational efficiencies that enhance organic cash generation.
The Directors conclude that the Group will have adequate cash resources both
to pursue its growth plan and to accelerate execution if it so chooses. The
Directors are satisfied that the Group has adequate resources to continue in
operational existence for the foreseeable future and accordingly, continue to
adopt the going concern basis in preparing the financial statements.
Basis of consolidation
The Group financial statements consolidate the accounts of Water Intelligence
plc and all of its subsidiary undertakings made up to 31 December 2024. The
Consolidated Statement of Comprehensive Income includes the results of all
subsidiary undertakings for the period from the date on which control passes.
Control is achieved where the Group (or one of its subsidiary undertakings)
obtains the power to govern the financial and operating policies of an
investee entity so as to derive benefits from its activities.
The purchase method of accounting is used to account for the acquisition of
subsidiaries by the Group. The cost of an acquisition is measured as the fair
value of the assets given, equity instruments issued and liabilities incurred
or assumed at the date of exchange. Identifiable assets acquired and
liabilities and contingent liabilities assumed in a business combination are
measured initially at their fair values at the acquisition date, irrespective
of the extent of any non-controlling interest. The excess of the cost of
acquisition over the fair value of the Group's share of the identifiable net
assets acquired is recorded as goodwill. If the cost of acquisition is less
than the fair value of the net assets of the subsidiary acquired, the
difference is recognised directly in the income statement.
The acquisition of ALDHC in 2010 was accounted for as a reverse acquisition.
The assets and liabilities revalued at their fair value on acquisition
therefore related to the Company. Both a merger reserve and a reverse
acquisition reserve were created to enable the presentation of a consolidated
statement of financial position which combines the equity structure of the
legal parent with the reserves of the legal subsidiary.
Inter-company transactions and balances and unrealised gains or losses on
transactions between Group companies are eliminated in full.
Parent Company income statement - UK head office only
The Company has taken advantage of Section 408 of the Companies Act 2006 in
not presenting its own Statement of Comprehensive Income. The Company's loss
after tax for the year ended 31 December 2024 is $1,099,730 (2023: $879,468).
Inventories
The inventories, consisting primarily of equipment, parts, and supplies, are
recorded at the lower of cost (FIFO) or net realisable value.
Taxation
Income tax expense represents the sum of the current tax and deferred tax
charge for the year.
Current tax
The tax currently payable is based on taxable profit for the year. Taxable
profit differs from profit as reported in the Statement of Comprehensive
Income because it excludes items of income or expense that are taxable or
deductible in other periods and it further excludes items that are never
taxable or deductible. The Group's and Company's liability for current tax is
calculated using tax rates that have been enacted or substantively enacted by
the year end.
Deferred tax
Deferred income taxes are provided in full, using the liability method, for
all temporary differences arising between the tax bases of assets and
liabilities and their carrying amounts in the Financial Statements. Deferred
income taxes are determined using tax rates that have been enacted or
substantially enacted and are expected to apply when the related deferred
income tax asset is realised or the related deferred income tax liability is
settled.
The principal temporary differences arise from depreciation or amortisation
charged on assets and tax losses carried forward. Deferred tax assets relating
to the carry forward of unused tax losses are recognised to the extent that it
is probable that future taxable profit will be available against which the
unused tax losses can be utilised. The carrying amount of deferred tax assets
is reviewed at each balance sheet date and reduced to the extent that it is
probable that sufficient taxable profits will be available to allow all or
part of the asset to be recovered.
Foreign currencies
(i) Functional and presentational currency
Items included in the Financial Statements are measured using the currency of
the primary economic environment in which each entity operates
Transactions and balances
Foreign currency transactions are translated into the functional currency
using the exchange rates prevailing at the dates of the transactions. Foreign
exchange gains and losses resulting from the settlement of such transactions
and from the translation at year end exchange rates of monetary assets and
liabilities denominated in foreign currencies are recognised in the income
statement.
(ii) Group Companies
The results and financial position of all the Group entities that have a
functional currency different from the presentational currency are translated
into the presentational currency as follows:
(a) assets and liabilities for each statement of financial position
presented are translated at closing rate at the date of the statement;
(b) the income and expenses are translated at average exchange rates
for period where there is no significant fluctuation in rates, otherwise a
more precise rate at a transaction date is used; and
(c) all resulting exchange differences are recognised in other
comprehensive income.
Leases
The Group recognizes a right-of-use asset and a lease liability at the lease
commencement date. The right of use lease is initially measured at cost,
which comprises the initial amount of the lease liability adjusted for any
lease payments made at or before commencement date plus any initial direct
costs incurred and an estimate of costs to dismantle and remove the underlying
asset. The right-of-use asset is subsequently depreciated using the
straight-line method from the commencement date to the earlier of the end of
the useful life of the right-of-use asset or the end of the useful life of the
right-of-use asset or the end of the lease term. The lease liability is
initially measured at the present value of the lease payments that are not
paid at the commencement date discounted using the Group incremental borrowing
rate.
Contingent consideration
Acquisition consideration accounted for as deemed remuneration in accordance
with the IFRS Interpretations Committee's interpretation of paragraph B55 of
IFRS 3, the cost of the business combination excludes consideration which is
contingent on the selling shareholders remaining with the group. These
amounts are accounted for as deemed remuneration, are charged to the
consolidated statement of comprehensive income over the period of the service
obligation and disclosed as acquisition consideration within administrative
expenses. The resultant liability is recognized withing trade and other
payables. Acquisition consideration payments, which are deemed remuneration
under this accounting policy, are disclosed with cash flows from operating
activities within the cash flow statement. There is no net change in the cash
flow statement.
Nature of the Business
Water Intelligence plc operates through two wholly-owned subsidiaries:
American Leak Detection (ALD) and Water Intelligence International (WII). Both
subsidiaries provide precision water leak detection and repair services. The
services that are performed for various customers are discrete activities -
locating a water leak or fixing a leak. The services are not bundled. Each
service has a price established in a rate book. Depending on customer
preference, a service technician may stop after locating the leak. The
customer would pay a fee for that service. Or following the leak detection
service, the technician may also provide repair services for separate fee
depending on what is contracted for by the customer. Service jobs are
typically short in duration, usually 1-2 hours for a leak detection service.
ALD delivers these services through corporate locations and franchise
locations across the United States and in Canada and Australia. WII operates
outside the United States, mainly in the UK and Ireland, and delivers services
only through corporate locations.
Customers and Sources of Revenue
Residential.
Both ALD and WII provide services to residential customers. Service
technicians, whether from franchise-operated locations or corporate-operated
locations, provide services to homeowners. When the service is delivered,
the homeowner is invoiced immediately upon completion of the service. The
price of the service is a fixed call-out charge for the technician to come to
the house and an hourly charge based on the time it takes to find the leak.
Revenue is recognized upon completion of the service.
Business-to-Business.
ALD has written national contracts with nationwide insurance companies. The
insurance company, as ALD's customer, receives claims from homeowners or
property management for water-related damage. The insurance company
contracts directly with ALD headquarters. ALD headquarters, as the principal,
takes liability risk for performance of the service jobs and for providing to
insurance companies certain management services. A national price book is
established as part of the national contract. After the leak detection
service is performed, report from ALD headquarters is delivered to the
insurance company and the insurance company is also invoiced for the job.
Service is deemed complete upon delivery of the report and invoice. Revenue is
recognized upon delivery of the report and invoice.
Municipal.
WII headquarters or ALD headquarters will contract with a municipality to
provide leak detection services. Such leak detection services largely
consist of surveying kilometers of pipe. During such surveys, a designated
distance is covered each day with a daily rate per technician per kilometer
covered. A report is prepared for the municipality weekly. When the report
is delivered, the service is deemed complete with respect to the distance
covered. The municipality will be billed for the week's work when the report
is conveyed. Revenue is recognized upon the delivery of the report.
Franchise Sales, Equipment and On-going Royalty Payments.
ALD is a franchisor and leak detection services are delivered not only by
corporate-operated locations but also by ALD's franchise System. Franchisees
are independently owned and operated.
The franchise System has the following characteristics for revenue
recognition. ALD sells franchises to third parties. A franchise is an
exclusive territory in which a franchisee is authorized to deliver ALD
services, mainly leak detection and repair. ALD headquarters provides
training and advice to support the delivery of services by franchisees.
The franchise sale is documented by means of a ten-year license agreement that
is renewable for ten-year increments based on certain conditions derived from
franchisee performance. The agreement has three main components. First, the
agreement provides for the payment of an upfront fee in exchange for the
exclusive territory and training. The upfront fee is non-refundable. ALD
revenue is recognized with respect to most of the upfront fee at the Closing
of the franchise sale. The remaining portion of the upfront fee is recognized
as revenue over time using a straight-line method to reflect the delivery of
franchisor services over the ten-year period. Second, the franchise agreement
provides that the franchisee may purchase proprietary equipment from ALD and
more general equipment from ALD-approved third parties. There is a price book.
ALD revenue is recognized upon the delivery of equipment to franchisees and an
invoice for the equipment. Third, in accordance with the franchise license
agreement, each franchise pays a royalty fee to ALD each month based on a
percentage of the franchisee's gross sales for that month. Each month, a
franchise files a royalty report and pays the royalty amount. ALD revenue is
recognized upon the receipt of the royalty report.
In respect of the sale of franchise territories, the Group will monitor on an
ongoing basis the correct apportionment for each such sale between recognition
of upfront fees and fees which are deferred over the length of the franchise
agreement. This year such sales were not a material part of the Group's
revenue or income.
Financial instruments
Financial assets and financial liabilities are recognised in the Group's
statement of financial position when the Group becomes a party to the
contractual provisions of the instrument.
Investments in equity instruments are initially designated at FVTOCI and are
initially measured at fair value plus transaction costs. Subsequently, they
are measured at fair value with gains and losses arising from changes in fair
value recognised in other comprehensive income and accumulated in the
investment's revaluation reserve. The cumulative gain or loss is not
reclassified to profit or loss on disposal of the equity investments, instead,
it is transferred to retained earnings.
The Group enters into a variety of derivative financial instruments to manage
its exposure to interest rate, including interest rate swaps.
Derivatives are recognised initially at fair value at the date a derivative
contract is entered into and are subsequently remeasured to their fair value
at each reporting date. The resulting gain or loss is recognised in profit or
loss immediately unless the derivative is designated and effective as a
hedging instrument, in which event the timing of the recognition in profit or
loss depends on the nature of the hedge relationship.
Loans and receivables
Trade receivables, loans, and other receivables held with the objective to
collect the contractual cash flows are classified as subsequently measured at
amortised cost. These are initially measured at fair value plus transaction
costs. At each period end, there is an assessment of the expected credit loss
in accordance with IFRS 9, with any increase or reduction in the credit loss
provision charged or released to other selling and administrative expenses in
the statement of comprehensive income.
Cash and cash equivalents
Cash and cash equivalents comprise cash in hand, deposits held at call with
banks, and other short term highly liquid investments with original maturities
of three months or less.
Impairment of financial assets
The Group recognises an allowance for expected credit losses (ECLs) for all
debt instruments not held at fair value through profit or loss. ECLs are based
on the difference between the contractual cash flows due in accordance with
the contract and all the cash flows that the Group expects to receive,
discounted at an approximation of the original effective interest rate. The
expected cash flows will include cash flows from the sale of collateral held
or other credit enhancements that are integral to the contractual terms.
The Group always recognises lifetime ECLs for trade receivables and contract
assets. ECLs on these financial assets are estimated using a provision matrix
based on the Group's historical credit loss experience, adjusted for factors
that are specific to the debtors, general economic conditions and an
assessment of both the current as well as the forecast conditions at the
reporting date, including time value of money where appropriate.
For all other financial instruments, the Group recognises lifetime ECL when
there has been a significant increase in credit risk since initial
recognition. However, if the credit risk on the financial instrument has not
increased significantly since initial recognition, the Group measures the loss
allowance for that financial instrument at an amount equal to 12‑month ECL.
Financial liabilities
Financial liabilities, including borrowings, are initially measured at fair
value, net of transaction costs and are subsequently measured at amortised
cost using the effective interest method.
Equity instruments
An equity instrument is any instrument with a residual interest in the assets
of the Company after deducting all of its liabilities. Equity instruments
(ordinary shares) are recorded at the proceeds received, net of direct issue
costs.
Derecognition of financial liabilities
The Group derecognises financial liabilities when, and only when, the Group's
obligations are discharged, cancelled or they expire.
Property, plant and equipment
All property, plant and equipment is stated at cost less accumulated
depreciation.
Depreciation is computed using the straight-line method over the estimated
useful lives of the assets as follows:
Equipment and displays: 5 to 7 years
Motor vehicles: 5
years
Leasehold improvements: 7 years or lease term,
whichever is shorter
The asset's residual values and economic lives are reviewed, and adjusted if
appropriate, at each reporting date. An asset's carrying amount is written
down immediately to its recoverable amount if the asset's carrying amount is
greater than its estimated recoverable amount. Assets that are no longer of
economic use to the business are retired.
Gains and losses on disposals are determined by comparing the proceeds with
the carrying amount and are recognised within other (losses) or gains in the
income statement.
Goodwill
Goodwill represents the excess of the fair value of the consideration over the
fair values of the identifiable net assets acquired.
Goodwill arising on acquisitions is not subject to amortisation but is subject
to annual impairment testing. Any impairment is recognised immediately in the
Consolidated Statement of Comprehensive Income and not subsequently reversed.
Other intangible assets
Intangible assets are recorded as separately identifiable assets and
recognised at historical cost less any accumulated amortisation. These assets
are amortised over their definite useful economic lives on the straight-line
method.
Amortisation is computed using the straight-line method over the estimated
definite useful lives of the assets as follows:
Years
Covenants not to
compete
1-6
Customer
lists
5
Salesforce CRM
platform
5
Trademarks
20
Patents
10
Product
development
4
Any amortisation is included within administrative expenses in the statement
of comprehensive income.
Intangible assets with indefinite useful lives are not amortised, but are
tested for impairment annually, either individually or at the cash-generating
unit level. The assessment of indefinite life is reviewed annually to
determine whether the indefinite life continues to be supportable. If not, the
change in useful life from indefinite to finite is made on a prospective
basis.
The asset's residual values and economic lives are reviewed, and adjusted if
appropriate, at each balance sheet date. An asset's carrying amount is written
down immediately to its recoverable amount if the asset's carrying amount is
greater than its estimated recoverable amount.
Gains and losses on disposals are determined by comparing the proceeds with
the carrying amount and are recognised within other (losses) or gains in the
Statement of Comprehensive Income.
Research and development
Research expenditure is recognised as an expense when incurred. Costs incurred
on development projects (relating to the design and testing of new or improved
products) are recognised as intangible assets when the following criteria are
fulfilled.
· It is technically feasible to complete the intangible asset so that
it will be available for use or resale;
· Management intends to complete the intangible asset and use or sell
it;
· There is an ability to use or sell the intangible;
· It can be demonstrated how the intangible asset will generate
possible future economic benefits;
· Adequate technical, financial and other resource to complete the
development and to use or sell the intangible asset are available; and
· The expenditure attributable to the intangible asset during its
development can be reliably measured.
Other development expenditures that do not meet these criteria are recognised
as an expense in the period incurred. Development costs previously recognised
as an expense are not recognised as an asset in a subsequent period.
Capitalised development costs are recorded as intangible assets and are
amortised from the point at which they are ready for use on a straight-line
basis over the asset's estimated useful life.
Segment reporting
A business segment is a group of assets and operations engaged in providing
products or services that is subject to risks and returns that are different
from those of other business segments.
Impairment reviews
Assets that are subject to amortisation and depreciation are reviewed for
impairment when events or changes in circumstances indicate that the carrying
amount may not be fully recoverable. Assets that are not subject to
amortisation and depreciation are reviewed on an annual basis at each year end
and, if there is any indication that an asset may be impaired, its recoverable
amount is estimated. The recoverable amount is the higher of its net selling
price and its value in use. Any impairment loss arising from the review is
charged to the Statement of Comprehensive Income whenever the carrying amount
of the asset exceeds its recoverable amount.
Share based payments
The Group has made share-based payments to certain Directors and employees and
to certain advisers by way of issue of share options. The fair value of these
payments is calculated either using the Black Scholes option pricing model or
by reference to the fair value of any fees or remuneration settled by way of
granting of options. The expense is recognised on a straight-line basis over
the period from the date of award to the date of vesting, based on the best
estimate of the number of shares that will eventually vest.
Critical accounting estimates and judgements
The preparation of Financial Statements in conformity with UK adopted
International Accounting Standards requires the use of judgements together
with accounting estimates and assumptions that affect the reported amounts of
assets and liabilities and the reported amounts of income and expenses during
the reporting period. Although these judgements and estimates are based on
management's best knowledge of current events and actions, the resulting
accounting treatment estimates will, by definition, seldom equal the related
actual results.
The key judgements in respect of the preparation of the financial statements
are in respect of the accounting for acquisitions, determination of separately
identifiable assets on acquisition, the determination of cash generating
units, the evaluation of segmental information, the evaluation of whether
there is any indication of any impairment in investments, intangibles,
goodwill or receivables and whether deferred tax assets should be recognized
for tax losses.
The estimates and assumptions that have a risk of causing material adjustment
to the carrying amounts of assets and liabilities within the next financial
year are the fair value of assets arising on acquisition (see note 12),
carrying value of the goodwill, the carrying value of the other intangibles
(see note 13) and the carrying value of the investments. Please see relevant
notes for these areas.
In the opinion of the Directors, the operations of the Group currently
comprise five operating segments, being (i) Franchise royalty income, (ii)
Franchise-related activities (including product and equipment sales,
business-to-business sales and sales of franchises), (iii) US corporate
operated locations, (iv) International corporate operated locations and (v)
Head office costs. Information reported to the Group's Chief Operating
Decision Maker (being the Executive Chairman), for the purpose of resource
allocation and assessment of division performance is now separated into the
four income generating segments (items (i) to (iv)), and items that do not
fall into these segments have been categorized as unallocated head office
costs (v).
The Group mainly operates in the US, with operations in the UK and certain
other countries especially Ireland, Canada and Australia. No single customer
accounts for more than 10% of the Group's total external revenue.
The following is an analysis of the Group's revenues and profits from
operations and assets by business segment.
Revenue Year ended Year ended
31 December 31 December
2024 2023
$ $
Franchise royalty income 6,503,134 6,738,816
Franchise related activities 10,665,512 11,163,422
US corporate operated locations 55,854,674 50,459,736
International corporate operated locations 10,268,329 7,612,578
Total 83,291,649 75,974,552
Profit/(Loss) before tax Year ended Year ended
31 December 31 December
2024 2023
$ $
Franchise royalty income 2,296,003 2,156,421
Franchise related activities 870,187 925,126
US corporate operated locations 10,005,806 8,411,622
International corporate operated locations (601,899) 443,180
Unallocated head office costs (5,684,612) (4,627,640)
Net Non-core costs* (529,000) (1,069,322)
Total 6,356,485 6,239,387
*Includes Irish acquisition consideration deemed remuneration under IFRS 3
Assets Year ended Year ended
31 December 31 December
2024 2023
$ $
Franchise royalty income 26,022,309 24,761,073
Franchise related activities 3,142,406 3,028,788
US corporate operated locations 68,349,942 52,394,708
International corporate operated locations 17,140,342 16,460,857
Total 114,654,999 96,645,426
Amortisation Year ended Year ended
31 December 31 December
2024 2023
$ $
US corporate operated locations 832,111 797,292
International corporate operated locations 22,767 44,224
Total 854,878 841,516
Depreciation Year ended Year ended
31 December 31 December
2024 2023
$ $
Franchise royalty income - -
Franchise related activities - -
US corporate operated 3,914,731 3,185,141
locations
International corporate operated locations 653,675 560,632
Total 4,568,406 3,745,773
Finance Expense Year ended Year ended
31 December 31 December
2024 2023
$ $
US corporate operated locations 591,128 716,739
International corporate activities 48,691 15,603
Unallocated head office costs 1,051,081 911,636
Total 1,690,900 1,643,978
Geographic Information
As noted herein, the Group has two wholly-owned subsidiaries - ALD and WII.
ALD, the Group's core business, has US franchise-operated and
corporate-operated locations and international franchises in Australia and
Canada. Meanwhile, WII has corporate-operated activities outside the US. We
may also regroup the same information into US and Outside the US to capture
the Group's effort to be multinational company. For 2024, outside the US
sales have grown 35% to $10.3 million (2023: $7.7 million). Sales in the US
have grown 7% to $72.9 million (2023: $68.3 million). The percentage of
Outside the US sales to total sales has increased to 12.5% (2023: 10%).
Total Revenue
Year ended 31 December 2024 Year ended 31 December 2023
US International Total US International Total
$ $ $ $ $ $
Franchise royalty income 6,407,529 95,605 6,503,134 6,638,442 100,374 6,738,816
Franchise related activities 10,665,512 - 10,665,512 11,163,422 - 11,163,422
US Corporate owned Stores 55,854,674 - 55,854,674 50,459,736 - 50,459,736
International corporate activities - 10,268,329 10,268,329 - 7,612,578 7,612,578
Total 72,927,715 10,363,934 83,291,649 68,261,600 7,712,952 75,974,552
5 Expenses by nature
The Group's operating profit has been arrived at after charging:
Year ended Year ended
31 December 31 December
2024 2023
Note $ $
Raw materials and consumables used 6,215,909 4,178,795
Employee costs 6 34,063,811 30,530,324
Depreciation charge 4,568,406 3,745,773
Amortisation charge 854,878 841,516
Marketing costs 217,292 216,257
R&D - -
Foreign exchange loss 7,599 4,561
Year ended Year ended
31 December 31 December
2024 2023
$ $
Auditors remuneration
Fees payable to the Company's auditor for audit of Parent Company and 98,000 72,000
Consolidated Financial Statements
Fees payables to the Company's auditor for other services (assurance related - -
services)
The Group auditors are not the auditors of the US subsidiary companies. The
fees paid to the auditor of the US subsidiary companies were $206,800 (2023:
$161,478) for the audit of these companies and $50,000 (2023: $34,483) for
other services.
6 Employees and Directors
The Employees and Directors of the Company contribute to the execution and
management of the business.
Year ended Year ended
31 December 31 December
2024 2023
Short-Term employee benefits
Directors fees, salaries and benefits 697,675 663,000
Employee wages and salaries 30,261,722 26,923,972
Employer payroll taxes 2,725,071 2,371,382
Long-Term employee benefits
Share based payments 379,343 571,970
34,063,811 30,530,324
Information regarding Directors' emoluments are as follows:
Year ended Year ended
31 December 31 December
2024 2023
$ $
Directors' fees, salaries and benefits 697,675 663,000
Employer payroll taxes 22,564 20,857
720,239 683,857
The highest paid Director (Executive) received emoluments of $645,250 (2023:
$595,000).
* In lieu of cash compensation, to be added to the above table, all of the
directors received a combination of stock options awards and fully paid-up
shares except for Bobby Knell who received an amount of cash in each year
specified in the Director's Report.
With respect to 2023, for 1H directors received an amount of options awarded
on 7 July 2023 at an exercise price of $6.35: P DeSouza $19.9k, L Hills
$19.9k, D Ewell $39.9k, B Knell $19.9k, M Reisman $19.9. For 2H 2023, as
announced on 15 February 2024, certain directors were issued fully paid-up
Ordinary Shares instead of options: P. DeSouza $37.5k; L. Hills $37.5k;
D.Ewell $37.5k, D. Meckley $10k.
In 2025 it was agreed that P.DeSouza, L.Hills and D.Ewell will receive all of
their 2024 compensation ($50k each) in Ordinary Shares; B. Knell received $20k
in cash and $20k in Ordinary Shares; P.Meckley received $40k in Ordinary
Shares.
The average number of employees (including Directors) in the Group during the
year was:
Year ended Year ended
31 December 31 December
2024 2023
Directors (executive and non-executive) 5 5
Management 57 55
Field Services 338 305
Franchise Support 19 19
Administration 107 98
526 482
7 Share options
The Company grants share options at its discretion to Directors, management
and advisors. These are accounted for as equity settled options. Should the
options remain unexercised after a period of ten years from the date of grant
the options will expire unless an extension is agreed to by the Board. Options
are exercisable at a price equal to the Company's quoted market price on the
date of grant or an exercise price to be determined by the Board.
Details for the share options and warrants granted, exercised, lapsed and
outstanding at the year-end are as follows:
Number of share options 2024 Number
of share
Weighted average exercise price ($)
options Weighted average exercise price ($)
2024 2023 2023
Outstanding at beginning of year 2,773,000 6.15 2,228,000 6.02
Granted during the year 200,000 7.47 545,000 6.70
Forfeited/lapsed during the year - - - -
Exercised during the year - - - -
Outstanding at end of the year 2,973,000 6.24 2,773,000 6.15
Exercisable at end of the year 1,612,500 4.19 1,102,500 3.52
Fair value of share options
During the year, the Group granted 200,000 Share Options pursuant to an
acquisition of a franchise, with exercise prices ranging from £5.00 to £6.60
($6.25 to $10.00).
The fair value of options granted during the current year has been calculated
using the Black Scholes model which has given rise to fair values per share
ranging from $0.85 to $1.51. This is based on risk-free rate of 4.22% and
volatility of 43.6%.
The Black Scholes calculations for the options granted during the year
resulted in a charge of $379,343 (2023: $571,970) which has been expensed in
the year.
The weighted average remaining contractual life of the share options as at 31
December 2024 was 5.5 years (2023: 6.1 years).
Options arrangements that exist over the Company's shares at year end and at
the time of the report are detailed below:
Grant At report date 2024 2023 Date of Grant Exercise price Exercise period
From To
ALDHC Plan 67,500 67,500 67,500 01/12/2013 $1.14 01/12/2013 01/12/2026
2013 Directors 100,000 100,000 100,000 01/08/2013 $1.30 01/08/2013 01/08/2026
2015 Options 117,500 117,500 117,500 08/06/2015 $0.67 08/06/2015 08/06/2026
2016 Directors 100,000 100,000 100,000 13/06/2016 $1.26 13/06/2016 13/06/2026
2016 Employee 25,000 25,000 25,000 19/12/2016 $1.24 19/12/2019 19/12/2026
2016 Employee 82,500 82,500 82,500 19/12/2016 $1.56 19/12/2019 19/12/2026
2018 Acquisition 135,000 135,000 135,000 06/03/2018 $3.15 06/03/2021 06/03/2028
2019 Employee 425,000 425,000 425,000 04/04/2019 $6.24 04/04/2023 04/04/2029
2019 Acquisition 50,000 50,000 50,000 04/04/2019 $4.59 04/04/2023 04/04/2029
2020 Employee 485,000 485,000 485,000 31/07/2020 $5.60 31/07/2024 31/07/2030
2020 Acquisition 25,000 25,000 25,000 30/09/2020 $6.20 30/09/2024 30/09/2030
2021 Acquisition 45,500 45,500 45,500 01/01/2021 $6.80 01/01/2025 01/01/2031
2021 Directors 300,000 300,000 300,000 15/03/2021 $10.40 15/03/2025 15/03/2031
2021 Acquisition 100,000 100,000 100,000 20/04/2021 $11.38 20/04/2025 20/04/2031
2021 Acquisition 75,000 75,000 75,000 01/07/2021 $12.56 01/07/2025 01/07/2031
2022 Acquisition 20,000 20,000 20,000 31/05/2022 $10.30 31/05/2026 31/05/2032
2022 Acquisition 75,000 75,000 75,000 30/06/2022 $12.50 30/06/2026 30/06/2032
2023 Directors 105,000 105,000 105,000 06/02/2023 $8.18 06/02/2027 06/02/2033
2023 Directors 90,000 90,000 90,000 04/07/2023 $6.35 04/07/2027 04/07/2033
2023 Employee 350,000 350,000 350,000 04/07/2023 $6.35 04/07/2027 04/07/2033
2024 Acquisition (1) 100,000 100,000 01/11/2024 $6.25 01/11/2028 01/11/2034
2024 Acquisition (1) 35,000 35,000 01/11/2024 $7.50 01/11/2028 01/11/2034
2024 Acquisition (1) 35,000 35,000 01/11/2024 $8.75 01/11/2028 01/11/2034
2024 Acquisition (1) 30,000 30,000 01/11/2024 $10.00 01/11/2028 01/11/2034
Total 2,973,000 2,973,000 2,773,000
All share options are equity settled on exercise. The amounts at the Report
Date reflect all share options that have been either exercised or forfeited.
(1) On 1 November 2024 options to purchase 200,000 New Ordinary Shares at
prices ranging from $6.25 to $10.00 were granted pursuant to an acquisition.
These options have a four-year vesting requirement.
8 Finance income
Year ended Year ended
31 December
31 December
2024
2023
$
$
Interest income 395,729 699,819
9 Finance expense
Year ended Year ended
31 December
31 December
2024
2023
$
$
Interest expense 1,487,365 1,453,399
Interest on lease liabilities 203,535 190,579
Total interest expense 1,690,900 1,643,978
10 Taxation
Group Year ended Year ended
31 December
31 December
2024
2023
$
$
Current tax:
Current tax on profits in the year 1,055,201 875,062
Adjustment in respect of prior year (21,772) 23,045
Total current tax 1,033,429 898,107
Deferred tax current year 539,061 707,478
Deferred tax prior year - -
Deferred tax expense (note 20) 539,061 707,478
Income tax expense 1,572,490 1,605,585
The tax on the Group's profit before tax differs from the theoretical amount
that would arise using the weighted average tax rate applicable to profits of
the consolidated entities as follows:
Profit before tax on ordinary activities 6,356,485 6,239,387
Tax calculated at domestic rate applicable profits in respective countries
(2024: 17% versus 2023: 17%) 1,102,029 1,037,228
Tax effects of:
Non-deductible expenses 99,255 188,271
Other tax adjustments, reliefs and transfers (5,126) (22,278)
State taxes net of federal benefit 391,074 359,308
Adjustment in respect of prior year (21,772) 23,045
Changes in rates 7,030 20,011
Taxation expense recognized in income statement 1,572,490 1,605,585
The Group is subject to income taxes in multiple jurisdictions. Judgment is
required in determining the worldwide provision for income taxes. There are
many transactions and calculations for which the ultimate tax determination is
uncertain. The Group recognises liabilities for anticipated tax audit issues
based on estimates of whether additional taxes will be due.
As also set forth, in Note 20, at the balance sheet date, the Group's UK
trading operations had unused tax losses of £2,940,544 (2023: £3,830,192)
available for offset against future profits. £735,136 (2023: £957,548)
represents unrecognized deferred tax assets thereon at 25%. The deferred tax
asset has not been recognized due to uncertainty over timing of utilization.
The effective rate across all jurisdictions for tax for 2024 is 17% (2023:
17%).
11 Earnings per share
The profit per share has been calculated using the profit for the year and the
weighted average number of ordinary shares outstanding during the year, as
follows:
Basic
Year ended Year ended 31 December 2023
31 December 2024 $
$
Profit for the year attributable to equity holders of the Parent ($) 4,680,130 4,398,681
Weighted average number of ordinary shares 17,391,205 17,358,688
Diluted weighted average number of ordinary shares 17,825,495 17,833,235
Profit per share (cents) 26.9 25.3
Diluted profit per share (cents) 26.3 24.7
12 Acquisitions
These can be summarised as follows:
On 9 May 2024, the Group announced the reacquisition of its Fresno, California
franchise territory within the Group's ALD franchise business. As Fresno is
located between the Bay Area and Los Angeles in the Central Valley of
California, the reacquisition reinforces the Group's strategy of establishing
regional corporate hubs in the US that fuel growth in adjacent franchise
locations. The cash consideration for the acquisition is $2.9 million based on
2023 revenue of $1.8 million, adjusted profit before tax of $0.6 million and
the transfer of al operating assets to the Group.
On 9 July 2024, the Group announced the acquisition of Feakle Gas and Plumbing
Limited, a company operating in Ireland ("FG&P") by the Group's Water
Intelligence International ("WII") subsidiary. The transaction is structured
as a purchase of 100% of the issued share capital of FG&P by Water
Intelligence Leak Detection and Repair, WII's Irish subsidiary. The purchase
price of €2.32 million in cash is based on the FG&P's 2023 Accounts of
€3.7 million in sales and adjusted operating profits of €550,000. The
purchase price is risk-adjusted by being structured as a four-year earnout
with incentives for strong growth of both revenue and profits above the
baseline 2023 Accounts. In order to preserve the value of Goodwill and
Customer Relationship acquired, a seller is required to remain in the business
for the duration of the earn-out in order to receive the consideration. IFRS 3
deems such consideration as remuneration. The initial consideration for
FG&P is €500,000 plus payments in each of the next four years of
€435,000 based on a minimum operating profit in each of the next four years
of €425,000. A further €75,000 payment will be made based on additional
sales of €650,000 from delivering municipal, commercial and residential
solutions offered by WII. Such additional sales are new business lines
separate from the core FG&P business and geared to be synergistic with
WII's expansion, such as with respect to deploying Pulse, WII's proprietary
sewer diagnostic product.
On 4 November 2024, the Group announced the reacquisition of its Dallas, Texas
franchise territory within the Group's ALD franchise business. Strategically
there are significant operating synergies between the Dallas location and
ALD's neighboring corporate-operated location in Fort Worth, Texas.
Integration of both operations will create cost savings. Moreover, in terms of
future revenue growth and scale, the Dallas-Fort Worth metroplex is expected
to rival New York and Los Angeles in size and concentration of disposable
income by 2030. The transaction involves consideration of both cash and
stock options. $12 million in cash is spread through 2027 and based on
performance of $2.3 million in adjusted profits for 2027. $5 million was paid
at Closing based on a trailing twelve months pro forma of $6 million in sales
and $1.0 million in adjusted profits. $2.5 million is scheduled to be paid in
2025 based on a pro forma with increasing profit before tax. Options for
200,000 ordinary shares are issued in amounts and at exercise prices as
follows: 100,000 at $6.25 per share; 35,000 at $7.50 per share; 35,000 at
$8.75 per share; and 30,000 at $10.00 per share respectively and vest over 4
years. The purchase price includes all assets required to conduct operations,
including trucks and equipment.
Net sales from the date of acquisition through December 31, 2024 attributable
to these acquisitions was approximately $4,395,533. Net income from the date
of acquisition through December 31, 2024 attributable to these acquisitions
was approximately $785,783.
Fresno: Sales $ 976,639, net income $247,746
High Desert: Sales $ 67,710, net income $38,239
Lafayette: Sales $ 255,863, net income $19,930
Feakle: Sales $2,328,279, net income $221,269
Dallas: Sales $ 767,042, net income $258,598
It is not feasible to obtain revenue and net income that would have been
included if the full year was consolidated.
2024 Acquisitions
Feakle Fresno High Desert Lafayette Dallas Adjustment Totals
$ $ $ $ $ $ $
Fair value of assets and liabilities acquired
Equipment 37,267 60,620 30,750 47,884 67,540 - 244,061
Vehicles 114,804 34,422 5,522 108,810 292,809 - 556,367
Non-compete - 55,000 - 55,000 80,000 - 190,000
Customer List 642,882 - - - - - 642,882
Deferred tax liability (80,360) - - - - - (80,360)
Assets 914,496 - - - - - 914,496
Liabilities (263,534) - - (152,223) (120,015) - (535,772)
Net assets acquired 1,365,555 150,042 36,272 59,471 320,334 - 1,931,674
Consideration
Cash 571,246 2,000,000 185,000 525,000 3,801,890 - 7,083,136
Note payable 437,845 900,000 - 51,096 3,608,095 - 4,997,036
Contingent consideration - - - - 4,511,863 - 4,511,863
Stock Options - - - - 255,962 (67,286) 188,676
Total consideration 1,009,091 2,900,000 185,000 576,096 12,177,810 (67,286) 16,780,711
Intangible assets arising on acquisition (see note 13) - 2,749,958 148,728 516,625 11,857,476 (67,286) 15,205,501
Gain on acquisition (356,464) - - - - - (356,464)
The intangible assets arising on the above acquisitions of $15,205,501 are
included in additions to goodwill and indefinite life intangible assets for
owned & operated stores (see note 13).
Following acquisitions all Franchises are classed as one cash generating unit
therefore cannot separately disclose revenue and profit for each individual
franchise.
The amount of deferred consideration for 2024 acquisitions as well as the
remaining deferred consideration for acquisitions made in 2018, 2019, 2020,
2021, 2022 and 2023 can be summarized as follows:
Current Year ended Year ended
31 December 31 December
Year acquired 2024 2023
$ $
South Florida 2018 - 29,831
Tucson 2019 - 48,468
San Jose 2020 - 51,074
Seattle 2020 75,000 -
Las Vegas and Phoenix 2021 - 1,862,802
Daytona 2021 - 150,000
Fort Worth 2022 - 1,270,000
Nashville 2023 - 1,125,000
Pittsburgh 2023 - 150,000
Evergreen Plumbing 2023 - 65,000
Fresno 2024 900,000 -
Lafayette 2024 51,096 -
Dallas 2024 2,751,969 -
Total current deferred consideration 3,778,065 4,752,175
Non-Current Year ended Year ended
31 December 31 December
Year 2024 2023
acquired $ $
South Florida 2018 - 59,510
Tucson 2019 - -
San Jose 2020 - 21,313
Seattle 2020 - 300,000
Las Vegas and Phoenix 2021 - 1,976,251
Daytona 2021 - -
Fort Worth 2022 - 1,275,000
Dallas 2024 5,332,269 -
Total non-current deferred consideration 5,332,269 3,632,074
13 Intangible assets
The calculation of amortisation of intangible assets requires the use of
estimates and judgement, related to the expected useful lives of the assets.
An impairment review is undertaken annually or whenever changes in
circumstances or events indicate that the carrying amount may not be
recovered.
Goodwill and other indefinite life intangible assets
Group Goodwill Acquisitions Goodwill relating to Owned & Operated stores Goodwill on franchisor activities Totals
$ $ $ $
Cost
At 1 January 2023 11,234,627 34,676,563 636,711 46,547,901
Additions - 4,824,531 - 4,824,531
At 31 December 2023 11,234,627 39,501,094 636,711 51,372,432
Additions (see note 12) - 15,205,501 - 15,205,501
At 31 December 2024 11,234,627 54,706,595 636,711 66,577,933
Impairment
At 1 January 2023 1,506,229 75,000 - 1,581,229
Impairment in year - - - -
At 31 December 2023 1,506,229 75,000 - 1,581,229
Impairment in year - - - -
At 31 December 2024 1,506,229 75,000 - 1,581,229
Carrying amount
At 31 December 2023 9,728,398 39,426,094 636,711 49,791,203
At 31 December 2024 9,728,398 54,631,595 636,711 64,996,704
The increase in carrying value of Goodwill Acquisitions at 31 December 2024
relate to goodwill additions arising on the acquisitions outlined in Note 12
above during 2024.
Goodwill on owned & operated stores comprises legacy owned stores together
with additions arising from reacquisitions of franchise operations from 2015
through 2024. Details on additions in 2024 can be found in note 12 above.
Where appropriate consideration of separately identifiable intangible assets
has been considered in the evaluation of the fair value of assets acquired and
the determination of the fair value of goodwill arising. For the acquisitions
in 2015 - 2024 relating to the reacquisition of franchises, it is considered
that the value being attributed to the purchase consideration relates to the
synergies with surrounding franchises, obtaining wider geographical coverage
directly within the Group, the focus to seize potential opportunity within a
wider business strategy for revenue and earnings growth and the ability to
expand new service offerings. Where appropriate, consideration of separate
intangibles, such as covenants not to compete, are evaluated.
There is no separately identified intangible considered to arise from the
customer list of a franchise reacquired given the terms of the franchise
agreement and on that these customers continue to be customers of the Group's
products and services before and after the reacquisition.
An impairment review is undertaken annually or whenever changes in
circumstances or events indicate that the carrying amount may not be
recovered. For the purpose of impairment testing, goodwill or indefinite life
intangible assets are allocated to appropriate cash generating units which can
be summarised as follows:
Goodwill on Acquisitions is allocated to separate cash generating units.
Goodwill or indefinite life intangible assets on owned & operated stores
is allocated to cash generating units that are expected to benefit from the
synergies of the combination.
Goodwill on Franchisor Activities is considered to be related to a single cash
generating unit by reference to revenues and activities derived from the
franchise royalty income and franchise related activities segments (see note
4).
The cash generating units to which goodwill or indefinite life intangible
assets have been allocated are tested for impairment annually. If the
recoverable amount of the cash generating unit is less than its carrying
amount, the impairment loss is allocated first to reduce the carrying amount
of any goodwill allocated to the unit and then to the other assets of the unit
pro-rata on the basis of the carrying amount of each asset in the unit. An
impairment loss recognised for goodwill is not recovered in a subsequent
period.
The key assumptions/inputs used for the impairment assessment based on the
forecast cash flow and revenues for 2024 were as follows:
%
Pre-tax Discount rate
15
Short term revenue
growth
5
Long term revenue
growth
3.5
Tax rate
25
Discount rate sensitivity step
2
Perpetual growth rate sensitivity
step
1
This has resulted in no material impairment charge being required in 2024
(2023: $nil).
Based upon the sensitivity analysis had the estimated discount rate used been
2% higher and the perpetual revenue growth rate used been 1% lower in these
calculations the Group would still not have incurred any material impairment
for any of the categories of goodwill or indefinite life intangible assets.
13 Intangible assets continued
Other Intangible assets table
Product development Covenants Customer Lists Trademarks Patents Salesforce Enterprise Solution Development Total
not to compete
$ $ $ $ $ $ $ $
Cost
At 1 January 2023 1,113,409 893,315 705,568 5,233,817 134,908 3,316,304 102,000 11,499,322
Additions 3,370,700 180,000 - - - - - 3,550,700
Completed development (888,232) - - - - - - (888,232)
Reallocation 1,590,583 - - - - (1,590,583) - -
Disposals - (7,164) - - - (167,513) - (174,677)
At 31 December 2023 5,186,460 1,066,151 705,568 5,233,817 134,908 1,558,208 102,000 13,987,113
Additions 3,813,954 190,000 642,882 - - - - 4,646,836
Disposals - (101,553) - - - - - (101,553)
At 31 December 2024 9,000,414 1,154,598 1,348,450 5,233,817 134,908 1,558,208 102,000 18,532,396
Accumulated amortisation
At 1 January 2023 - 252,819 158,311 4,405,131 14,321 609,005 40,375 5,479,962
Amortisation expense - 195,481 38,181 261,691 9,021 311,642 25,500 841,516
Disposals - (7,164) - - - (167,513) - (174,677)
Exchange differences - 182 - - (28) - - 155
At 31 December 2023 - 441,318 196,492 4,666,822 23,314 753,134 65,875 6,146,956
Amortisation expense - 208,808 38,181 261,691 9,056 311,642 25,500 854,878
Disposals - (101,553) - - - - - (101,553)
Exchange differences - 112 - - (62) - - 50
At 31 December 2024 - 548,685 234,673 4,928,513 32,308 1,064,776 91,375 6,900,331
Carrying amount
At 31 December 2023 5,186,460 624,833 509,076 566,995 111,594 805,074 36,125 7,840,157
At 31 December 2024 9,000,414 605,913 1,113,777 305,304 102,600 493,432 10,625 11,632,065
All intangible assets have been acquired by the Group.
The calculation of amortisation of intangible assets requires the use of
estimates and judgement, related to the expected useful lives of the assets.
An impairment review is undertaken annually or whenever changes in
circumstances or events indicate that the carrying amount may not be
recovered.
$1.6m of Salesforce costs were re-allocated to Product
development as these costs were still in progress
14 Property, plant and equipment
Equipment & displays Motor Vehicles Leasehold Improvem-ents Right of Right of Total
$
$
$
$ Buildings Use Vehicles Use Offices
$ $ $
Cost
At 1 January 2023 5,732,225 4,745,181 72,820 148,905 3,801,787 2,402,944 16,903,863
Additions 796,986 2,449,710 - - - 1,115,204 4,361,900
Capitalised costs 888,232 - - - - - 888,232
Purchase ROU Vehicles - 517,540 - - (517,540) - -
Exchange differences 33,502 25,336 - (66) 1,143 5,688 65,603
Disposals (2,000) (380,208) - (148,839) (19,048) (514,782) (1,064,878)
At 31 December 2023 7,448,945 7,357,559 72,820 - 3,266,342 3,009,054 21,154,720
Acquired on acquisition of subsidiary 81,800 169,369 - - - - 251,169
Additions 871,274 2,965,877 839,843 - - 2,756,189 7,433,183
Purchase ROU Vehicles - 318,027 - - (318,027) - -
Exchange differences (60,099) (90,269) - - (3,599) (29,612) (183,579)
Disposals (43,539) (494,616) (68,672) - (28,769) (1,542,361) (2,177,956)
At 31 December 2024 8,298,382 10,225,947 843,991 - 2,915,947 4,193,270 26,477,537
Accumulated depreciation
At 1 January 2023 2,893,168 2,385,670 47,855 64,613 1,408,865 878,738 7,678,909
Eliminated on disposals (233) (267,409) - (66,749) (19,048) (493,226) (846,665)
Purchase ROU Vehicles - 458,495 - - (458,495) - -
Depreciation expense 1,069,236 952,173 15,117 2,174 742,943 964,130 3,745,773
Exchange differences 24,061 13,408 - (38) 946 191 38,568
At 31 December 2023 3,986,232 3,542,337 62,972 - 1,675,211 1,349,833 10,616,585
Acquired on acquisition of subsidiary 44,533 54,564 - - - - 99,097
Eliminated on disposals (43,539) (295,227) (67,527) - (17,623) (1,263,525) (1,687,441)
Purchase ROU Vehicles - 318,027 - - (318,027) - -
Depreciation expense 1,208,152 1,456,886 81,103 - 646,475 1,175,790 4,568,406
Exchange differences (46,488) (53,621) - - (3,217) (6,799) (110,125)
At 31 December 2024 5,148,891 5,022,966 76,548 - 1,982,818 1,255,298 13,486,522
Carrying amount
At 31 December 2023 3,462,713 3,815,222 9,848 - 1,591,131 1,659,221 10,538,135
At 31 December 2024 3,149,491 5,202,981 767,443 - 933,129 2,937,972 12,991,015
Included within additions are additions of $648,357 (2023: $739,123), which
were acquired on the acquisition of franchises.
15 Investment in subsidiary undertakings
Company Subsidiary Undertakings
$
Cost
At 31 December 2023 13,395,251
Exchange difference (90,643)
At 31 December 2024 13,304,608
Impairment
At 31 December 2023 6,400,906
Exchange difference -
At 31 December 2024 6,400,906
Carrying amount
At 31 December 2023 6,994,345
At 31 December 2024 6,903,702
The Directors annually assess the carrying value of the investment in the
subsidiary and in their opinion no further impairment provision is currently
necessary. See notes 12 and 13 for the assumptions and sensitivities in
assessing the carrying value of the goodwill and acquired intangible assets
that underpins the varying value of the investments.
The net carrying amounts noted above relate to the US incorporated
subsidiaries.
The subsidiary undertakings during the year were as follows:
Country of incorporation Interest held
%
Registered office address
Water Intelligence International Limited* (leak detection products and 27-28 Eastcastle Street, London, England and Wales 100%
services)
United Kingdom, W1W 8DH
Wat-er-save Services Limited Agriculture house, Acland Rd, 100%
Dorchester DT1 1EF
Water Intelligence Australia Pty 1 Farrer Place, Sydney, NSW 2000 Australia 100%
Feakle Gas and Plumbing Limited Unit 1, Ireland 100%
The Old Creamery,
Feakle, County Clare, V94 N727
American Leak Detection Holding Corp. (holding company of ALD Inc.) * 199 Whitney Avenue, New Haven, Connecticut 06511 US US 100%
199 Whitney Avenue, New Haven, Connecticut 06511 US US 100%
American Leak Detection, Inc. (leak detection product and services)
Canadian Leak Detection, Inc. 8-4696 Bartlette Rd. Beamsville, Ontario L0R 1B1 Canada 100%
Colorado ALD LLC 199 Whitney Avenue, New Haven, Connecticut 06511 US US 51%
American Leak Detection Irrigation, Inc 199 Whitney Avenue, New Haven, Connecticut 06511 US US 75%
Qonnectis Group Limited (dormant) 27-28 Eastcastle Street, London, United Kingdom, W1W 8DH England and Wales 100%
NRW Utilities Limited (Dormant) 27-28 Eastcastle Street, London, United Kingdom, W1W 8DH England and Wales 100%
* Subsidiaries owned directly by the Parent Company. These subsidiaries -
WII and ALDHC - represent the two principal business lines of the Parent
Company. Wat-er-save, Water Intelligence Australia, Feakle Gas and Plumbing,
Canadian Leak Detection and American Leak Detection Inc. are also wholly-owned
by the two principal subsidiaries respectively and indirectly owned by the
Parent.
The Company's strategy involves acquisitions, especially of franchisees. Not
all acquisitions are 100% owned. American Leak Detection also has a 51%
stake in a former franchise located in Denver, Colorado. Finally, American
Leak Detection owns 75% of the IntelliDitch subsidiary that was set up as part
of the acquisition of IP assets from FastDitch in 2021.
16 Inventories
Group
Year ended Year ended
31 December
31 December
2024
2023
$
$
Group Inventories 930,439 723,315
During the year ended 31 December 2024, an expense of $9,795,324 (2023:
$10,362,197) was recognized in the Consolidated Statement of Comprehensive
Income, including business to business expenses of $9,243,378 (2023:
$9,677,633). There has been no write down of inventories during 2024.
17 Trade and other receivables
Group Company
Year ended Year ended Year ended Year ended
31 December
31 December
31 December
31 December
2024
2023
2024
2023
$
$
$
$
Trade notes receivable 250,500 207,990 - - -
Due from Group undertakings - - 22,041,011 22,673,254
All trade notes receivables are due within five years from the end of the
reporting period.
Group Company
Year ended Year ended Year ended Year ended
31 December
31 December
31 December
31 December
2024
2023
2024
2023
$
$
$
$
Trade receivables 5,861,351 7,204,731 - -
Prepayments 2,004,035 1,180,945 149,069 11,170
Prepaid taxes 1,583,930 850,007 - -
Due from Group undertakings - - 5,676,348 4,609,607
Accrued royalties receivable 596,539 608,891 - -
Trade notes receivable 103,552 209,716 - -
Other receivables 522,892 717,435 - -
Due from related party 262,518 291,528 - -
Current portion 10,934,817 11,063,253 5,825,417 4,620,777
Trade receivables disclosed above are classified as loans and receivables and
are therefore measured at amortised cost. The Directors consider that the
carrying amount of trade and other receivables approximates their fair value.
Accrued royalties receivable are never reclassified to trade receivables as,
should any royalties be withheld or unpaid, the Group has the right to take
back the relevant franchise.
The average credit period taken on sales is 26 days (2023: 35 days).
The carrying amounts of the Group's trade and other receivables are
denominated in the following currencies:
Year ended Year ended
31 December
31 December
2024
2023
$
$
US Dollar 8,897,494 9,373,691
UK Pound 1,058,038 1,176,455
Euros 726,509 -
Australian Dollar 215,217 454,421
Canadian Dollar 37,559 58,686
10,934,817 11,063,253
The maximum exposure to credit risk at the reporting date is the carrying
value of each class of receivable mentioned above.
18 Cash and cash equivalents
Group Company
Year ended Year ended Year ended Year ended
31 December
31 December
31 December
31 December
2024
2023
2024
2023
$
$
$
$
Cash at bank and in hand 5,452,479 8,882,627 44,789 1,105,607
Cash with period over 90 days 6,683,089 6,875,250 - -
19 Trade and other payables
Group Company
Year ended Year ended Year ended Year ended
31 December
31 December
31 December
31 December
2024
2023
2024
2023
$
$
$
$
Trade payables 1,796,579 1,401,653 548 4,642
Accruals and other payables 4,952,733 4,595,375 142,635 75,373
6,749,312 5,997,028 143,183 80,015
Trade payables and accruals principally comprise amounts outstanding for trade
purchases and ongoing costs and are payable within 3 months. The average
credit period taken for trade purchases is 38 days (2023: 38 days).
20 Deferred Tax
The analysis of deferred tax liabilities is as follows:
Group 2024 2023
$ $
Deferred tax (liability) (3,212,788) (2,618,605)
The movement in deferred tax liabilities is as follows:
2024 Opening balance Recognized in the income statement Recognized in Other Comprehensive Income Recognized on acquisition Closing balance
$ $ $ $ $
Temporary differences: - - - - -
Net operating profit (loss) (non-current) - - - - -
Short term temporary differences (2,618,605) (539,061) 25,238 (80,360) (3,212,788)
(2,618,605) (539,061) 25,238 (80,360) (3,212,788)
2023 Opening balance Recognized in the income statement Recognized in Other Comprehensive Income Recognized on acquisition Closing balance
$ $ $ $ $
Temporary differences: - - - - -
Net operating profit (loss) (non-current) - - - - -
Short term temporary differences (1,915,581) (707,478) 4,454 - (2,618,605)
(1,915,581) (707,478) 4,454 - (2,618,605)
Deferred tax recognized in OCI is purely related to the revaluation of the
listed shares.
As also set forth, in Note 10, at the balance sheet date, the Group's UK
trading operations had unused tax losses of £2,940,544 (2023: £3,830,192)
available for offset against future profits. £735,136 (2023: £957,548)
represents unrecognized deferred tax assets thereon at 25%. The deferred tax
asset has not been recognized due to uncertainty over timing of utilization.
21 Share capital
The issued share capital in the year was as follows:
Group & Company
Ordinary Shares Number Shares held in treasury Number
Total Number
At 31 December 2023 17,358,688 129,000 17,487,688
At 31 December 2024 17,371,538 116,150 17,487,688
Group & Company
Share capital Share premium Shares in Treasury
$
$
$
At 31 December 2023 143,192 35,417,072 (1,139,404)
At 31 December 2024 143,192 35,417,072 (883,549)
The Group has ordinary B shares of 2,080,000 shares in 2024 and 2023. The
ordinary shares and ordinary B shares have a par value of $0.01
Reverse acquisition reserve
The reverse acquisition reserve was created in accordance with IFRS3 Business
Combinations and relates to the reverse acquisition of Qonnectis Plc by ALDHC
in July 2010. Although these Consolidated Financial Statements have been
issued in the name of the legal parent, the Company it represents in substance
is a continuation of the financial information of the legal subsidiary ALDHC.
A reverse acquisition reserve was created in 2010 to enable the presentation
of a consolidated statement of financial position which combines the equity
structure of the legal parent with the reserves of the legal subsidiary.
Qonnectis Plc was renamed Water Intelligence Plc on completion of the reverse
acquisition on 29 July 2010.
22 Lease liability
Year ended Year ended
31 December
31 December
2024
2023
$
$
Lease liabilities in statement of financial position
Amounts due within one year 1,519,823 1,394,147
Amount due after more than one year 2,543,042 2,025,653
4,062,865 3,419,800
Amount recognized in the statement of
comprehensive income
Interest on leasehold liabilities 203,535 190,579
Amount recognized in the statement of
cash flows
Repayment of lease liabilities 1,823,143 1,715,978
23 Financial instruments
The Group has exposure to the following key risks related to financial
instruments:
i. Market risk (including foreign currency risk management)
ii. Interest rate risk
iii. Credit risk
iv. Liquidity risk
This note presents information about the Group's exposure to each of the above
risks, the Group's objectives, policies and processes for measuring and
managing risk, and the Group's management of capital. Further quantitative
disclosures are included throughout these consolidated Financial Statements.
The Directors determine, as required, the degree to which it is appropriate to
use financial instruments or other hedging contracts or techniques to mitigate
risk. The main risk affecting such instruments is foreign currency risk which
is discussed below. Throughout the year ending 31 December 2024 no trading in
financial instruments was undertaken (2023: none). The Group did enter into
interest rate swap agreements as detailed in the derivatives section below.
The Group uses financial instruments including cash, loans, as well as trade
receivables and payables that arise directly from operations.
Due to the simple nature of these financial instruments, there is no material
difference between book and fair values. Discounting would not give a
material difference to the results of the Group and the Directors believe that
there are no material sensitivities that require additional disclosure.
Fair value of financial assets and financial liabilities
The estimated difference between the carrying amount and the fair values of
the Group's financial assets and financial liabilities is not considered
material.
Credit risk
The Group's principal financial assets are bank balances, cash, cash
equivalents, trade and other receivables. The Group's credit risk is primarily
attributable to its trade receivables and cash and cash equivalents.
Receivables are regularly monitored and assessed for recoverability. The Group
has no significant concentration of credit risk as exposure is spread over a
number of customers. As at 31 December 2024 the Group held significant cash
and cash equivalents andwith 2 counterparties, 12.58% was held with one
counterparty with a credit rating of A+ and a further 59.5% was held with
another counterparty with a credit rating of BBB+.
The Group applies the IFRS 9 simplified approach to measuring expected credit
losses which uses a lifetime expected loss allowance for all trade
receivables. To measure the expected credit losses, trade receivables have
been grouped based on the shared credit risk characteristics and the days past
due. The expected loss rates are based on the historic payment profiles of
sales and the credit losses experienced within this period. The historical
loss rates are adjusted to reflect current and forward-looking information.
As the Group does not hold any collateral, the maximum exposure to credit risk
is represented by the carrying amount of the financial assets as at the end of
each reporting period.
As at 31 December 2024, trade receivables of $396,432 (2023: $1,137,671) were
past due but not impaired. These relate to corporate store customers for whom
there is no history of default. The ageing analysis of these trade receivables
is as follows:
Ageing of past due but not impaired receivables
Year ended Year ended
31 December
31 December
2024
2023
$
$
60-90 days 141,860 361,416
90+ days 254,572 776,255
396,432 1,137,671
Average age (days) 95 95
The Group believes that no impairment allowance is necessary in respect of
trade receivables that are past due but not impaired. This is based on the
Group's good historic track record of collection for all such receivables.
Credit risk management
Credit risk refers to the risk that a counterparty will default on its
contractual obligations resulting in financial loss to the Group. The Group
seeks to limit credit risk on liquid funds through trading only with
counterparties that are banks with high credit ratings assigned by
international credit rating agencies.
Exposure to credit risk
The carrying amount of financial assets represents the maximum credit
exposure. The exposure to credit risk at the year-end was in respect of the
past due receivables that have not been impaired are disclosed in note 17.
Categories of financial instruments
Group Company
Year ended Year ended Year ended Year ended
31 December
31 December
31 December
31 December
2024
2023
2024
2023
$
$
$
$
Loans and receivables
Cash and cash equivalents 5,452,479 8,882,627 44,789 1,105,607
Investments 6,683,089 6,875,250 - -
Trade and other receivables - current 10,934,817 11,063,253 5,825,417 4,620,777
Trade and other receivables - non-current 250,500 207,990 22,041,011 22,673,254
Financial Liabilities measured at amortised cost
Trade and other payables 6,749,312 5,997,028 143,183 80,015
Borrowings - current 3,787,362 6,805,131 - -
Borrowings - non-current 26,361,482 12,510,867 - -
Deferred consideration - current 3,778,065 4,752,175 - -
Deferred consideration - non-current 5,332,269 3,632,074 - -
* Total deferred consideration includes $4.5 million in contingent amounts
based on earn out.
Borrowings
Bank Debt
The Group has a commercial banking relationship with M&T Bank (M&T)
with various facilities: a working capital line of credit ("WCL"); acquisition
lines of credit ("ALOCs"), and term loans ("Term Loans").
In August of 2024, M&T provided a refinancing of $21,000,000 to pay off
existing bank debt as well as other deferred consideration payments to
previously acquired franchisees (M&T Refinancing). The new term loan (2024
Term Loan) matures in August 2029 and requires principal repayment of between
5 and 10% per year of the principal balance, and bears interest at a rate per
annum equal to 3% plus SOFR. The 2024 Term Loan has a related swap agreement
which matures at the same time as the underlying loan. The 2024 Term Loan is
secured by substantially all of the assets of the Group.
In addition to the refinancing, M&T also expanded the credit capacity by
providing an additional $3,000,000 ALOC (2024 ALOC) to the Group. The 2024
ALOC bears interest at a rate per annum equal to 2.85% plus SOFR. Any
outstanding drawdowns convert into 5-year term notes and bear interest at a
rate per annum equal to 3% plus SOFR. The New ALOC is secured by
substantially all of the assets of the Group.
A $2,000,000 WCL is secured by substantially all of the assets of the Group.
On December 5, 2023, the WCL was extended to a maturity date of December 5,
2025, and bore an annual variable interest rate equal to SOFR plus 3.00%.
Monthly interest only payments are to be made on any unpaid balance. The
balance outstanding at both December 31, 2024 and 2023 was $0.
M&T had previously provided the Group with various term loans and ALOC's
at various dates in 2020, 2021, 2022, and 2023. All these facilities were
paid off and included in the 2024 M&T Refinancing. The balance
outstanding for these facilities at December 31, 2024 and 2023 was $0 and
$14,662,520, respectively and is included within notes payable on the balance
sheets.
The balance outstanding for the 2024 Term Loan and 2024 ALOC at December 31,
2024 was $23,650,000 and is included within notes payable on the balance
sheet.
In connection with the M&T line of credit, ALOC, and term note facilities,
the Group is required to comply with certain financial and non-financial
covenants. The most restrictive of these covenants includes a debt service
coverage ratio to be tested quarterly and a maximum total funded debt to
EBITDA ratio minimum to be tested quarterly. The Group was in compliance with
those requirements at December 31, 2024.
Current Non-Current
Financial Instruments Year ended Year ended Year ended Year ended
31 December
31 December
31 December
31 December
2024
2023
2024
2023
$
$
$
$
Working Capital Line of Credit - - - -
External borrowings 2,384,772 5,491,647 24,079,212 10,606,671
Less: Loan Closing Costs (117,233) (80,663) (260,772) (121,457)
Lease Liabilities 1,519,823 1,394,147 2,543,042 2,025,653
Total 3,787,362 6,805,131 26,361,482 12,510,867
Capital risk management
In managing its capital, the Group's primary objective is to maintain a
sufficient funding base to enable working capital, research and development
commitments and strategic investment needs to be met and therefore to
safeguard the Group's ability to continue as a going concern in order to
provide returns to shareholders and benefits to other stakeholders. In making
decisions to adjust its capital structure to achieve these aims, through new
share issues, the Group considers not only its short-term position but also
its long term operational and strategic objectives.
The capital structure of the Group currently consists of cash and cash
equivalents, short and medium term borrowings and equity comprising issued
capital, reserves and retained earnings. Other than with respect to Bank Debt,
the Group is not subject to any externally imposed capital requirements.
Material accounting policies
Details of the significant accounting policies including the criteria for
recognition, the basis of measurement and the bases for recognition of income
and expense for each class of financial asset, financial liability and equity
instrument are disclosed in Note 3.
Foreign currency risk management
The Group undertakes transactions denominated in foreign currencies (other
than the functional currency of the Company and its UK operations, being £
Sterling), with exposure to exchange rate fluctuations. These transactions
predominately relate to royalties receivable in the US denominated in
currencies other than US$ being Canadian Dollars, Australian Dollars and Euro;
royalties from such outside US sources in 2024 were $95,605 (2023: $100,374).
No foreign exchange contracts were in place at 31 December 2024 (2023: Nil).
The carrying amount of the Group's foreign currency denominated monetary
assets and monetary liabilities were:
Group Company
Year ended Year ended Year ended Year ended
31 December
31 December
31 December
31 December
2024
2023
2024
2023
$
$
$
$
Assets
Sterling, Euro, Australian and Canadian Dollars 3,542,691 3,736,952 27,911,217 28,399,637
Liabilities
Sterling, Euro, Australian and Canadian Dollars 2,161,652 1,144,750 143,183 80,015
As shown above, at 31 December 2024 the Group had Sterling, Euro, Australian
and Canadian denominated monetary current assets of $3,542,691 (2023:
$3,736,952). If the foreign currency weakens by 10% against the US dollar,
this would decrease net assets by $354,269 (2023: $373,695) with a
corresponding impact on reported losses. Changes in exchange rate movements
resulted in a loss from exchange differences on a translation of foreign
exchange of $173,851 in 2024 (2023: gain of $199,826), resulting primarily
from the share issuance from prior years in Pound Sterling and subsequent
intercompany transfers accounted in US Dollars.
Interest rate risk management
The Group is potentially exposed to interest rate risk because the Group
borrows and deposits funds at both fixed and floating interest rates. However,
at the year end, the majority of borrowings are subject to fixed rates with
only the WCL subject to variable rates. Borrowings for which there are
interest rate swaps at year-end are $20,650,000 (2023: $10,949,543) and
borrowings for which there are no interest rate swaps are $5,435,979 (2023:
$4,946,654).
Interest rate sensitivity analysis
The gains/losses recorded by both the Group and the Company for the year ended
31 December 2024 would not materially change if market interest rates had been
1% higher/lower throughout 2024 and all other variables were held constant.
Liquidity risk management
Ultimate responsibility for liquidity management rests with management. The
Group's practice is to regularly review cash needs and to place excess funds
on fixed term deposits for periods not exceeding one month. The Group manages
liquidity risk by maintaining adequate banking facilities and by continuously
monitoring forecast and actual cash flows.
The Directors have prepared a business plan and forecast for the period to 31
December 2026. The forecast contains certain assumptions about the level of
future sales and the level of margins achievable. These assumptions are the
Directors' best estimate of the future development of the business. The
Directors acknowledge that the Group in the near-term trading is primarily
reliant on cash generation from its predominantly US-based corporate-operated
profits and franchisee royalty income.
The following tables detail the Group's remaining contractual maturity for its
non-derivative financial liabilities with agreed repayment periods. The tables
have been drawn up based on the undiscounted cash flows of financial
liabilities based on the earliest due repayment dates. The table shows
principal cash flows.
Group 0-6 months 6-12 months 2-3 years 4-5 years >5 years Total
$ $ $ $ $ $
2024
Payables 6,749,312 - - - - 6,749,312
Lease liabilities 855,564 663,958 1,485,812 476,669 580,862 4,062,865
Borrowings 1,146,925 1,120,614 5,058,571 18,755,395 4,474 26,085,979
Deferred consideration 1,009,324 2,768,741 3,156,143 2,176,126 - 9,110,334
Group 0-6 months 6-12 months 2-3 years 4-5 years >5 years Total
$ $ $ $ $ $
2023
Payables 5,997,028 - - - - 5,997,028
Lease liabilities 776,522 617,625 1,062,989 962,664 - 3,419,800
Borrowings 2,705,869 2,705,113 4,782,400 5,702,815 - 15,896,197
Deferred consideration 3,551,079 1,201,096 3,604,235 27,840 - 8,384,250
Interest expected to be paid on liabilities are shown in the table below
0-6 months 6-12 months >12 months Total
Group $ $ $
$
2024
Payables - - - -
Lease liabilities 70,035 50,641 94,042 214,718
Borrowings 858,970 816,987 4,620,931 6,296,888
Deferred consideration 120,813 77,192 84,630 282,635
Derivatives
The Group recognized that there was inherent risk related to interest rates in
the economic environment. Therefore, the Group utilized interest rate swaps
to fix its future rates and thereby eliminated the risk against the numerous
increases in interest rates that occurred.
The Group entered into a swap agreement with M&T Bank which fixed the
Daily Simple SOFR interest at 3.35% through August 1, 2029. The interest rate
swap had a notional amount of $21,000,000, an effective date of August 5,
2024, and a fair value of $491,824 at December 31, 2024, which was included as
an asset on the balance sheets.
The interest rate swaps meet the criteria necessary to qualify as effective
cash flow hedges as defined in the accounting standards. Accordingly, the
Group has reflected the changes in the fair value within other comprehensive
income in the statement of comprehensive income.
Fair values
The Directors consider that the carrying amounts of financial assets and
financial liabilities approximate their fair values.
Reconciliation of liabilities arising from financing activities
The changes in the Group's liabilities arising from financing activities can
be classified as follows:
Long-term borrowings Short-term borrowings Lease Liabilities Total
$ $ $ $
At 1 January 2024 10,485,215 5,410,983 3,419,800 19,315,998
Cash flows
- Repayment (18,410,090) - (1,823,143) (20,233,233)
- Proceeds 26,628,000 - - 26,628,000
Non-cash
- New Leases - - 2,466,208 2,466,208
- New Loans 1,971,871 1,971,871
- Reclassification 3,143,444 (3,143,444) - -
As at 31 December 2024 23,818,440 2,267,539 4,062,865 30,148,844
Long-term borrowings Short-term borrowings Lease Liabilities Total
$ $ $ $
At 1 January 2023 12,741,748 4,092,050 4,020,575 20,854,373
Cash flows
- Repayment (4,986,658) - (1,715,978) (6,702,636)
- Proceeds 2,811,353 - - 2,811,353
Non-cash
- New Leases - - 1,115,203 1,115,203
1,237,705 1,237,705
- Reclassification (1,318,933) 1,318,933 - -
As at 31 December 2023 10,485,215 5,410,983 3,419,800 19,315,998
The New non-cash loans in the period are related to the financing for motor
vehicles acquired in the period and these are all fixed term borrowings
24 Fair value measurement
The following table provides the fair value measurement hierarchy for assets
measured at fair value:
Fair value measurement using
Quoted process in active markets Significant observable inputs Significant unobservable inputs
Total (Level 1) (Level 2) (Level 3)
Assets measured at fair value Date of valuation $ $ $ $
Listed equity investments
SEEEN investment 31 292,067 292,067 - -
December 2024
SEEEN investment 31 447,231 447,231 - -
December 2023
Derivative financial assets
Interest rate swap 31 491,824 - 491,824 -
December 2024
Interest rate swap 31 276,265 - 276,265 -
December 2023
To estimate fair value, the lower end of the bid-offer spread as at 31
December 2024 was used to calculate the value of the holding. There is an
active market for the Group's liquid equity investment.
25 Contingent liabilities
The Directors are not aware of any material contingent liabilities.
26 Related party transactions
PSS was one former owner of ALDHC until the reverse merger in 2010 that
created Water Intelligence. PSS is now a significant shareholder of Water
Intelligence and hence is a related party to the Company. PSS provides a
technology license to Water Intelligence and ALD on terms favourable to Water
Intelligence and ALD. The license is royalty-free for the first $5 million of
sales for products developed with PSS technology. PSS also guarantees the bank
debt of Water Intelligence as described below.
During the normal course of operations, there are intercompany transactions
among PSS, Water Intelligence plc, ALDHC and ALD. In previous years, PSS
charged administrative fees to the Company to cover activities taken on behalf
of company business, including research. The financial results of these
related party transactions are reviewed by an independent director of Water
Intelligence plc, the parent of ALDHC and ALD.
As described in Note 23, the Company's parent (and the Company as co-borrower)
have different credit facilities with M&T Bank. For the PSS guarantee,
ALDHC pays 0.75% per annum based on the outstanding balance of the loan
calculated at the end of each month. Interest charged on the PSS receivable
will match the interest rate charged by the bank. The monthly charge for the
PSS guarantee would not change and would be offset against amounts owed by
PSS. The charge will be eliminated should the guarantee no longer be required
by the bank. Interest income related to the PSS receivable amounted to $15,784
and $17,747 for the years December 31, 2024 and 2023, respectively. The
guarantee fee expense for the PSS guarantee amounted to $133,840 and $123,748
for the years ended December 31, 2024 and 2023, respectively. During 2024 the
Company paid expenses on behalf of PSS in the amount of $55,603. The related
receivable/prepaid balance remaining is $229,076 and $291,528 at December 31,
2024 and 2023, respectively.
During the year, the Company had the following transactions with its
subsidiary companies:
Water Intelligence International Limited $
Balance at 31 December 2023 4,609,606
Net loans to subsidiary 1,156,639
Other expenses recharged and exchange differences (89,897)
Balance at 31 December 2024 5,676,348
ALDHC $
Balance at 31 December 2023 -
-
Balance at 31 December 2024 -
ALD Inc. $
Balance at 31 December 2023 22,673,254
Loans paid to WI (250,000)
Other expenses recharged and exchange differences (382,243)
Balance at 31 December 2024 22,041,011
27 Exemption from audit by parent guarantee
The following subsidiaries of this entity are exempt from the requirement of
the Companies Act 2006 relating to the audit of individual financial
statements by virtue of s479A:
Name of
subsidiary
Company number
Water Intelligence International Limited
03634838
Wat-er-save Services
Limited
02498598
28 Subsequent events
In January of 2025, The Group through its ALD franchise business, completed
the acquisition of Effective Plumbing a fast growing plumbing company in
Connecticut. The purchase price was $1.2 million and is based on 2024 pro
forma financials of $1.2 million in sales and $0.3 million in profits.
Effective Plumbing builds on ALD's 2022 acquisition of Shanahan Plumbing. Both
plumbing companies service high-end residential homes useful for
implementation of the StreamLabs partnership.
In February of 2025, The Group completed the reacquisition of its franchise
covering parts of Georgia and South Carolina within the Group's ALD franchise
business. The purchase price was $3 million and is based on $1.55 million of
sales and $0.55 million of profits for 2024. Its operating area includes a
significant number of resorts and high-end second homes in South Carolina
useful for the implementation of the StreamLabs partnership.
In February 2025, the Group announced a strategic partnership with StreamLabs
Water, Inc., a Chubb company. StreamLabs Water makes various leading water
monitoring devices. The partnership involves the resale of products by the
Group's American Leak Detection business, as well as, installations and
aftercare based on data managed by American Leak Detection.
29 Control
The Company is under the control of its shareholders and not any one party.
The shareholdings of the directors and entities in which they are related are
as outlined within the Director's Report.
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