Just Water adds home ventilation business to its Hometech play
By Pattrick Smellie
Dec. 6 (BusinessDesk) - Auckland-based Just Water is continuing its expansion into healthy home ventilation and natural lighting with an agreement in principle to acquire ductless ventilation system vendor Unovent, for an undisclosed sum.
Chief executive Tony Falkenstein told the company's annual meeting in Penrose, Auckland, that Unovent would be added to the operations of Hometech, a ventilation and skylight systems vendor that Just Water, previously focused only supplying drinking water dispensers to workplaces, took over in two transactions over the last 12 months.
Unovent competed with HRV and DVS ducted ventilation systems, but "avoids all the ducting required by other ventilation company suppliers, and as a result is less expensive", said Falkenstein. "We are currently completing due diligence on Unovent and expect to close this deal in early 2019."
The purchase is in the context of the company's determination to make strategic acquisitions when opportunities arise, but not to "bet the farm" on any single acquisition.
Recently appointed chair Hilary Poole said the Hometech acquisition was "so far" rewarding the board's faith in its expectations for the company and was "achieving its profit objectives".
"However, I do have to advise that in this first full year, we will be required to amortise over $800,000 of the value attributed to customer contracts under the acquisition accounting required of the IFRS 3 accounting standard," Poole said.
Falkenstein said the immediate focus is on bedding down existing major relationships, including with Housing New Zealand and Auckland International Airport, and a belief that home retrofitting and the KiwiBuild scheme will prove to be sources of growth, as will new regulatory obligations on landlords with respect to both ventilation and lighting.
"Basically, for Hometech, we are looking for growth, firstly organically, by sourcing complementary products on an exclusive basis, and secondly by the acquisition of businesses that will add to our portfolio and be sold through existing licensees, established contractors or our own sales force," he said.
The company is preparing to move to the NZX main board next January as the local stock exchange operator winds down its NZAX and NXT small-cap boards and expects the increased visibility and greater scrutiny will be rewarded also by a wider pool of shareholders.
Shareholders were asked to support an increase in the directors' fee pool from $130,000, set in 2006, to $200,000 both to allow fee increases and to allow the appointment of an additional independent director, as required by the move to the main board.
Quoted at 40 cents per share today, Just Water shares have fallen 11.1 percent in the last year.