FLLYR: JWI: Preliminary Full Year Report and Release for 30 June 2010

3 Sep 2010 10:19 am

JWI 03/09/2010 FLLYR

REL: 1019 HRS Just Water International Limited

FLLYR: JWI: Preliminary Full Year Report and Release for 30 June 2010

Chairman's and Chief Executive's review

Just Water International Limited Results for year ended 30 June 2010

Just Water International Limited (JWI) presents its full year results for the year ended 30 June 2010.

In May we provided guidance for the year which has proven accurate. After incurring the impairment on the Australian subsidiary of $18.3 million, the consolidated EBIT loss was $17.7 million, and the loss before tax was $19.4 million.

Consolidated result 2010; 2009 $'000; $'000; % change Income; 35,458; 36,600; -3% EBITDA; 6,027; 9,118; -34% Depreciation & Amortisation; (5,417); (4,528); -20% EBIT before impairment; 610; 4,590; -87% Goodwill impairment; (18,300); -; n/a EBIT; (17,690); 4,590; n/a Interest; (1,753); (2,196); 20% Net profit before tax; (19,443); 2,394; n/a Tax; 231; (590); n/a NPAT; (19,212); 1,804; n/a

Although EBITDA increased in the second half of the year, and we expect this to continue in 2011, the 2010 results are unacceptable.

As previously advised, the implementation of a new computer system in March 2009 has impacted the profit results. Although the computer system is still not producing what we expected, it is much improved, and we are at least able to perform standard functions. It is not expected to impact the profit results during the coming year.

New Zealand 2010; 2009 $'000; $'000; % change Income; 23,967; 24,101; -1% EBITDA; 4,114; 6,972; -41% Depreciation & Amortisation; (3,758); (2,945); -28% EBIT before impairment; 356; 4,027; -91% Goodwill impairment; -; -; n/a EBIT; 356; 4,027; -91% Interest; (1,432); 429; n/a Net profit before tax; (1,076); 4,456; n/a Tax; 303; (1,241); n/a NPAT; (773); 3,215; n/a The numbers above have been adjusted for elimination entries.

Second half EBITDA of $2.3m compares to $1.9m in the first half. Although better, this second half result is still not acceptable, and significant costs have been taken out of the business in the last few months, positioning the New Zealand operation for an improvement in 2011.

Australia 2010; 2009 $'000; $'000; % change Income; 11,491; 12,499; -8% EBITDA; 1,913; 2,146; -11% Depreciation & Amortisation; (1,659); (1,583); -5% EBIT before impairment; 254; 563; -55% Goodwill impairment; (18,300); -; - EBIT; (18,046); 563; n/a Interest; (321); (2,625); 88% Net profit before tax; (18,367); (2,062); -791% Tax; (72); 651; n/a NPAT; (18,439); (1,411); -1,207% The numbers above have been adjusted for elimination entries.

In 2009 the Australian subsidiary enjoyed a $900,000 income and profit improvement through an exchange gain on consolidation. If this non-cash item is stripped from results the Australian subsidiary has continued to improve since the turn around started in October 2007. Between 2007 and 2010, EBITDA has improved by $4.8m. Considerable attention, and cost to the Group, was diverted by an offer to acquire the Australian business, which the Board rejected in June 2010.

Dividend

The directors have decided it would not be prudent to pay a dividend in the current year. The directors are focusing on debt reduction, and would not anticipate resuming dividends in the 2011 year.

Audit

Just Water International Limited's accounts have been audited and an unqualified audit opinion was given.

Bank Facilities

The Company has complied with all bank covenants at 30 June 2010. Net bank debt at year end was $25.5m. Debt has remained constant over the past year, and it is expected to reduce significantly in the 2011 year.

Summary

Overall trading conditions remain challenging in both countries. The underlying base of customers is strong, and there is a focus on managing margins and controlling costs.

The directors are disappointed with the results, and are making every effort to improve performance in 2011. Based on the actions taken already, it is expected the Company will turn around in the 2011 with a markedly improved EBITDA.

Staff

The directors wish to acknowledge the efforts of the management team and all staff, for what has been a very difficult year.

Yours sincerely

Tony Falkenstein, CEO 021 950 856 End CA:00199273 For:JWI Type:FLLYR Time:2010-09-03:10:19:09

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