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Chairman's report

Company	Code	Released	Type	Headline
Just Water International Limited	JWI	31 Oct, 2007, 11:30	MEETING	Resolutions passed at AGM and Chairman's address

Full Text of Announcement

Just Water International Limited

Annual Meeting

Guineas Room 3, Ellerslie Convention Centre, Auckland

Comments by Chairman, Hon Jim McLay CNZM QSO

Wednesday 31 October 2007, 11 am

Welcome to this, the fourth Annual Meeting of Just Water International Limited since the Company was floated on the NZAX in June 2004.

Today's programme is that -

- shortly, I will formally open the meeting;

- I will then move the receipt of the company's Annual Report, followed by a few remarks;

- we will then proceed with four resolutions, all of which were notified in the formal Notice of Meeting; and

- then there will then be a full opportunity for your questions and comments...

After that, our CEO, Tony Falkenstein, will introduce a video presentation to mark the 20th birthday since the Company was founded.

I will then formally close the meeting;

Then I invite you to join the directors and other Just Water personnel on an informal basis over refreshments.

Formal opening of meeting

It's now my pleasure formally to declare open this Annual Meeting of Just Water International Limited.

First, let me introduce those at the top table -

- Renny Cunnack is, with me, the other independent director on the board, and Chairman of the company's Remuneration Committee;

- Ian Malcolm is a non-executive director and Chairman of the Audit Committee;

- Tony Falkenstein is Chief Executive of the Company;

- Phil Dash was appointed to the board after the company acquired Clearwater Filter Systems in Australia in November 2005, and was formally elected as a director at last year's AGM; and

- Raj Chaudhary, our Chief Financial Officer.

Apologies

Turning now to the formal agenda; are there any apologies?

Would a shareholder please move that those apologies be accepted?

Is there a seconder?

I put the motion: Those in favour raise their hands; those against.

I declare the motion [ ].

Resolutions

Before turning to the resolutions foreshadowed in the Notice of Meeting, I should advise that, in dealing with those resolutions, it is my practice to call for a formal show of hands.

Obviously, only those who are shareholders, and who have formally registered their attendance at this meeting, are eligible to vote on these resolutions.

Section 23 of the company's Constitution provides, that at a meeting of shareholders, a poll may be demanded either before or after the vote is taken on a resolution.

A poll may be demanded by -

(a) the chairperson; or

(b) not less than five shareholders having the right to vote at the meeting; or

(c) a shareholder or shareholders representing not less than ten percent of the total voting rights of all shareholders having the right to vote at the meeting; or

(d) a shareholder or shareholders holding shares that confer a right to vote at the meeting and on which the aggregate amount paid up is not less than ten percent of the total amount paid up on all shares that confer that right.

I should also advise that, in accordance with normal practice, a number of shareholders who are unable to be present at this meeting have lodged proxies for their votes

Details of these proxies can be inspected with the share registrar.

In the event of any formal vote, those proxy votes can be caste by the proxy holder.

Minutes of previous Annual Meeting

The Minutes of the last Annual Meeting of Just Water International Limited, held on 26 October 2006, have been available for inspection at the registered office of the Company, and at this meeting.

Again, in accordance with normal practice, these Minutes were considered by the board at a meeting following the last AGM and were regarded at that time as a true and correct record of that meeting

It is therefore proposed to take these Minutes as read.

Is there any discussion on these Minutes?

Annual Report

The first item on the Agenda - Resolution 1 - is the receipt of the Company's Annual Report for the year to 30 June 2007, including the auditors' report.

I will shortly deal formally with that Resolution and the others that have been notified.

However, a few preliminary comments are appropriate.

Shareholders have received the Annual Report, and I don't intend to repeat what is contained therein.

I should, however, summarise the major results.

The result included $7.655 million EBITDA from JWI's New Zealand operations, an increase of four percent over 2006.

The dispenser base in New Zealand grew by 2,185 units or 5.7 percent over the period, thereby breaking through the 40,000 unit milestone.

In Australia the 2007 EBITDA was a loss of $2.768 million compared to an EBITDA loss of $1.772 million in 2006.

This 2007 year saw the start of an aggressive push into the relatively undeveloped Australian point-of-use market as part of our aim to become a leading player in that market.

The dispenser base in Australia grew by 7,273 units, or 72.4 percent, over the period.

3,940 of these units came from the acquisition of our former Brisbane franchisee in March 2007.

Organic growth in units, generated by our own sales and servicing efforts, was 3,333 units or 33.2 percent, and we are pleased with that progress.

The Company has declared a fully-imputed dividend of 1.98 cents per share, giving a total dividend of 3.58 cents.

This maintains the dividend paid in the previous year.

Shareholders should also be aware that the Company's New Zealand operation is on budget for the first quarter of the present financial year.

This performance should be further enhanced by the recent decision to integrate and rationalise our two New Zealand operating companies, Just Water New Zealand and Aqua Cool.

That integration has gone well, and we expect to achieve savings as a result.

As part of that process, just two weeks ago both Auckland operations shifted into the one building.

Consequently, one set of premises became surplus to requirements; so, last month, we sold the former Just Water building in Charles Street, Auckland at a small gain over the June 2005 acquisition price.

In terms of new income flows, we have established a "Home Delivery" division in New Zealand, which is proving a very successful business model and is achieving well above our original forecasts.

As with our other aspects of our operations, part of the cost of acquiring these new contracts will be expensed in the year of acquisition.

Therefore, in the current year this Home Delivery division will not contribute to EBIT, but will significantly increase both our customer base and the resulting EBIT in future years.

By contrast with the New Zealand operations, there have been problems with Clearwater, the Australian operation, where the point-of-use market has grown less than expected.

As a result, in Australia, our costs-to-sales ratio has been unacceptably high.

We will also be obliged to "book" slightly over $A 500,000 of one-off restructuring and relocation expenses to the Australian accounts for the current year, together with higher than expected recruitment costs; and there will be increased costs arising from the Company's decision to improve its customer service model in Australia, something I will talk of more in a moment.

In recent times, Tony Falkenstein has been spending most of his time in Australia, addressing these issues and motivating staff with his unique management style.

As a result of his efforts, the Australian operations are now proceeding in line with revised expectations, but the timing of profitability from Australia has been extended beyond the next financial year.

I also express appreciation to Phil Dash, one of our two Australian based directors, for the valuable role he has played in this process.

His contribution has been invaluable.

Despite these challenges, we remain confident about the fundamental soundness and future growth prospects of the Australian operation, and as to the considerable growth potential of this large and important market.

When Just Water was set up eighteen years ago, it saw its customer service programme as its first point of difference; and, over that time, it has developed a very professional customer service programme, which it has branded as DrinkSafe International.

Under DrinkSafe International, coolers are cleaned and sanitised every sixteen weeks, and filters are changed every thirty two weeks; all work undertaken by trained personnel.

The DrinkSafe programme is ISO 9001/9002 certified, and also conforms with the standards of the Australasian Bottled Water Institute.

At the time when Just Water first established the DrinkSafe programme, servicing of water coolers was not undertaken in other countries, including the USA and Australia; and, if you had been aware of their condition, you would not even have considered drinking from most coolers.

It is only in recent years that overseas markets have directed their general attention towards cleaned and sanitised coolers.

In New Zealand, the customer response to DrinkSafe International has been positive and strong; and, as customers and potential customers became increasingly aware of the health risks associated with coolers that are not regularly cleaned and sanitised, the programme became a strong marketing point of difference and significantly contributed to Just Water's growth in this market.

It got to the point where, in premises with coolers from our competitors, staff commented adversely when these were not serviced regularly; and those where our coolers were installed waited for the small bag of jellybeans left on the Just Water cooler as the signal that a DrinkSafe consultant had recently done his or her job!

However, up until now, we have not been offering our Australian customers the same level of service that they get in New Zealand.

We think this is wrong - and it certainly did not exploit and utilise our point of difference.

We believe that, in Australia, we need to set and follow the same standards that have made Just Water successful in New Zealand.

We are therefore currently setting up a team of thirty DrinkSafe consultants around Australia to carry out this function.

This obviously comes at an additional cost, but (based on the New Zealand experience) will be extremely important in securing long-term business.

You may recall that, last year, directors delayed action on a Dividend Reinvestment Plan.

That has now been implemented in time for the recent dividend payment; and I can report that shareholders representing 20 percent of our registered shareholders, who held a combined 62 percent of the Company's shareholding, availed themselves of the opportunity to participate in that plan.

Thank you for your decision to reinvest so positively in the Company.

We confirm that it is the board's present intention to continue to offer this Dividend Reinvestment option in the short term future.

I want to thank my fellow directors each of whom has made an excellent contribution to Just Water's governance.
They bring real, valuable and complementary skills to the company.

As I have previously observed, ours is still a small board, and deliberately so; and I am grateful to each member for their respective contributions.

Your board had spent considerable time and effort ensuring that the company's governance structures meet the highest standards.

We take our governance responsibilities very seriously; and, therefore the process of continuous governance improvement will continue.

I should also reiterate the advice (given to previous annual meetings) that the Board has adopted a policy that directors, apart from the CEO, should hold office for a maximum term of five years.

That policy will help to achieve a constant input of new thinking and ideas, and will ensure that we continue to inject new dynamics into the company.

At the same time, to ensure some continuity, the retirement of the initial group of directors has staggered over three years; but with no one serving more than five.

In accordance with usual practice, directors will retire by rotation, and, if still within the five-year period, and if they wish, will be eligible to offer themselves for re-election.

Therefore, in accordance with that policy, Renny Cunnack will retire at the conclusion of this Annual Meeting, Ian Malcolm at the next AGM, and I will retire in 2009.
Renny Cunnack, who this year leaves the board under that policy, has been a tireless and an extraordinarily valuable member of the Board and has chaired its Remuneration Committee.

His background in marketing and advertising has greatly assisted other directors in formulating the company's strategy; and his knowledge of the Australian market has guided us as we have moved into that country.

Renny: Thanks for being a great director and a wonderful friend, and for your service to Just Water International.

I would also like to thank the entire Just Water team for its efforts and performance over the year.

Above all, they are the people responsible for Just Water's continuing performance.

Their infectious enthusiasm and loyalty to the company - which I continue to ascribe to Tony Falkenstein's leadership style - makes it a pleasure to be a part of Just Water International.

We will now move on to the formal business and resolutions which were advised in the Notice of Meeting.

Resolution 1

As I have indicated, Resolution 1 is to receive the Annual Report, (which includes the Auditors' Report), for the year ended 30 June 2007.

As the Resolution has been properly notified, there is no formal need to seek a Mover and Seconder; but it is still appropriate to do so if someone wishes to go on record to that effect.

Is there a Mover?; and a Seconder?

Is there any discussion, comment or query on the resolution?

[Discussion.]

In respect of this resolution, proxy votes have been received as follows:

In favour 331,821
Open votes 16,000
Against none
No Instruction 4,089,239

I now put the resolution: All those in favour, please raise their hands.

All those against, please raise their hands.

I declare the motion [ ].

Resolution 2

Resolution 2 relates to Auditors' Remuneration

Under Section 200 of the Companies Act 1993, PricewaterhouseCoopers are automatically reappointed as the company's Auditors.

This resolution authorises the board to fix the fees and expenses of the Auditor.

The Resolution is: "That the company's board of directors be authorised to fix the auditor's remuneration".

Again, as the Resolution has been properly notified, there is no formal need to seek a Mover and Seconder; but, on the same basis, I will ask if there is someone who wishes to be a Mover?; and a Seconder?

Is there any discussion, comment or query on the resolution?

[Discussion.]

In respect of this resolution, Proxy votes have been received as follows:

In favour 271,821
Open votes 16,000
Against 60,000
No Instruction 4,089,239

I now put the resolution: All those in favour, please raise their hands.

All those against, please raise their hands

I declare the motion [ ].

Resolution 3

Resolution 3 relates to the re-election of a retiring director.

Today, by rotation, Tony Falkenstein retires as a director, and (being eligible) offer himself for re-election.

The Resolution is: "That Anthony Edwin Falkenstein be re-elected as a director of the Company."

On the same basis, is there a Mover and Seconder?

Is there any discussion, comment or query on the resolution?

[Discussion.]

In respect of this resolution, Proxy votes have been received as follows:

In favour 331,821
Open votes 16,000
Against none
No Instruction 4,089,239

I now put the resolution: All those in favour, please raise their hands.

All those against, please raise their hands.

I declare the resolution [ ]; [and that Tony Falkenstein is re-elected to the board].
Resolution 4

Resolution 4 relates to directors taking their dividends as ordinary shares in lieu of cash remuneration.

This practice has been followed since the Company's public listing and is indicative of your directors' personal commitment to the company.

It aligns the interests of directors with those of the Company's shareholders, particularly in creating long-term shareholder value.

The resolution allows the Company to issue shares to directors for that purpose.

By law, it is a resolution that we must seek at every Annual Meeting, so long as that practice continues.

I should explain, again, that issuing shares is the most appropriate way of providing for remuneration to be paid in this manner.

Previously, a shareholder asked whether it would be better for the Company to buy shares on-market and then allocate these to directors.

The difficulty with that approach is that there are long periods when both the company and its directors are deemed to be insiders and, in the normal course of events, are unable to trade in the company's securities.

Thus, the procedure contemplated by their resolution is the proper course to follow.
I do wish to point out that there is no increase to the remuneration of the directors proposed in this resolution for the current year.

Again, you have the resolution in front of you; so, with the leave of the meeting, I will take it as read.

Is there a Mover and Seconder?

Is there any discussion, comment or query on the resolution?

[Discussion.]

In respect of this resolution, Proxy votes have been received as follows:

In favour 271,821
Open votes 16,000
Against 60,000
No Instruction 4,089,239

I now put the resolution: All those in favour, please raise their hands.

All those against, please raise their hands.

I declare the motion [ ].

General Business

Is there any General Business or are there any further questions?

Tony Falkenstein is, of course, the leader of the Just Water team and is the man who provides the Company's inspiration and leadership; and it is now my pleasure to invite him to introduce a special video presentation.

Tony - Presentation

Conclusion

Ladies and Gentlemen: That concludes this Annual Meeting; and I formally declare it closed.

Thank you all for attending.

Please now join us for refreshments.