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Just Water first company to float on NZAX

Just Water first company to float on NZAX

Just Water International Ltd announced today that it will list on the NZX alternative market (NZAX), with an initial public offer (IPO) of 16.5 million $0.50 shares.

This is the first IPO on the alternative market by a previously unlisted company.

Just Water International Ltd is the leading provider of drinking water to organisations in New Zealand. The Just Water Group comprises Just Water New Zealand, Cool Water Corporate Water Brands and has just announced the acquisition of Aqua-Cool.

Just Water International now has more than 35,000 water coolers placed in organisations around the country, and is the largest player in this niche of the beverage industry.

Capital raised from the share float will be used to fund growth and reduce borrowings from the Aqua-Cool purchase. The share offer represents 25% of the company’s share capital.

The company’s prospectus was registered with the Registrar of Companies on Friday 7 May 2004. Closing date for the offer is 31 May 2004. The company expects to begin trading on the NZAX by 15 June 2004.

The company

Just Water International Ltd comprises the following businesses:

Just Water New Zealand, established in 1989, primarily supplies point-of-use water systems. These coolers either allow customers to filter their own water, or the coolers are plumbed in to the mains water supply, utilising a high tech mini-filtration system.

Aqua-Cool Ltd, established in 1990, operates its own water filtration plants and delivers bottled water to businesses and government departments. It is the largest supplier of bottled water in New Zealand.

Cool Water Company Ltd, established in 1997 operates in both the point-of-use and bottled water delivery markets.

Corporate Water Brands, established in 1998, supplies branded bottled water for corporate events and promotions.

Note: Just Water companies are not involved in the retail bottled water market.

The company’s success to date has been based on the simple over-riding objective: “Create a customer, and retain that customer.”

Just Water International Ltd employs 179 staff throughout New Zealand. Tony Falkenstein will continue as Managing Director. Red Eagle Corporation Limited, Just Water’s current sole shareholder, will gift all employees a small parcel of shares.

The company board is chaired by former Deputy Prime Minister, the Hon. Jim McLay. Other directors are Tony Falkenstein, Ian Malcolm and Renny Cunnack.

Mr Falkenstein said continued growth in the company’s customer base, plus a proven ability to retain customers, would generate strong free cash flows.

“Historically, the Just Water group has earned a profit before tax, depreciation and amortisation of around 30% on revenues. The industry is characterised by strong cash flows and low credit risk. Our largest customer accounts for less than 2% of revenues.”

The industry

Bottled drinking-water has been an international growth phenomenon. In the US, bottled drinking water has been one of the fastest growing categories within the beverage industry in recent years.

Worldwide, growth of this category has been estimated at an average 10% per year.

While the New Zealand market has grown rapidly over the past 10-15 years, the average water consumption per capita in New Zealand is still only one-fifth of the average in Australia.

(Source: Zenith International 2004).

As a result, Just Water International Ltd expects the New Zealand market to continue to grow strongly over the next few years.

“Just Water is anticipating compounded growth from increased penetration in a growing market,” Mr Falkenstein said.

Clear philosophy

Tony Falkenstein has been a CEO of companies for more than 25 years, including subsidiaries of multi-nationals and two NZX-listed companies. For the past 16 years, he has built the annual turnover of his family company, Red Eagle Corporation Ltd, to more than $150m.

His business philosophy is: “Keep it simple, enjoy what you are doing, and make a profit.”

Tony believes business education is a key to New Zealand’s economic prosperity. He helped establish and is now Chairman of the country’s first business high school, Onehunga High Business School.

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