rns pt39 May 2019 08:35
Chairman's Statement
Overview.
We had another remarkable year both in terms of financial and operating performance. We delivered on our annual commitment in these pages for sustainable, multinational growth. Year-over-year, we grew revenue by 45% to $25.5 million (2017: $17.6 million) and profit before tax even faster by 53% to $1.8 million (2017: $1.1 million). Further, our shareholders benefited with fully diluted EPS growth of 21.3% to 9.1 cents per share (2017: 7.5 cents per share). Our balance sheet is strong and we have cash required to execute our growth plan. Moreover, as we will discuss below, robust financial performance results over the last five years underscore not only sustained growth but also an acceleration of that growth path. Water Intelligence profits before tax adjusted for non-core costs and non-cash amortization expense at $2.4 million exceeded 2018 market expectations.
Operationally, the foundations have been laid for continued strong performance. We have expanded cross-selling efforts between our American Leak Detection (ALD) and Water Intelligence International (WII) subsidiaries so that we can capture an entire matrix of opportunities - residential, commercial, municipal, clean water and wastewater - as complementary business lines with reduced customer acquisition costs. Further, we have reinvested profits and are launching new proprietary products for each subsidiary to sustain growth in market capture. Yet, before discussing our strong 2018 performance and current momentum, we should underscore that demand from the global marketplace has provided us with a tailwind to deliver a very valuable company for our investors as we continue to scale operations.
Water and infrastructure services, as a global investment category, continues to gain salience because market demand for solutions is anticipated to remain strong irrespective of volatile macroeconomic or political conditions. Market research indicates that total global spending on water and wastewater currently amounts to $771 billion with capital expenditure expected to rise between 2019-2023 by 4.7% compounded annually, which is higher than forecasts of worldwide economic growth. Moreover, the water infrastructure crisis has reached areas typically less visible to the marketplace. On March 7, 2019 the Wall Street Journal published "American Homeowners and Their Insurers Face a Flooding Crisis From Within." The article indicated that over the last five years, the frequency of water-damage claims is rising affecting 1 in 50 homeowners and posing a $13 billion problem for insurance companies. The article identified a hot new market for innovation called "InsureTech." Water remains our most precious natural resource around the world and may be considered a safe haven for investors.
The research marketplace is responding to such demand. Columbia University, with whom we have a strong relationship, has recently announced the launch of its "2019: A Year of W
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