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IWE
IWE
IWE - Interwaste Holdings - Reviewed financial results for the six months
ended 30 June 2007
Interwaste Holdings Limited
(formerly Mentor Trading and Investment 66 (Pty) Limited)
(Incorporated in the Republic of South Africa)
(Registration number: 2006/037223/06)
(JSE code: IWE ISN: ZAE000097903)
("Interwaste Holdings" or "the company" or "the group")
Highlights
* Revenue up 39%
* Attributable earnings up 15%
* EPS up 13%
* HEPS up 10%
* NAV per share up 52%
* Listing on ALTx on 14 June 2007
REVIEWED GROUP INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2007
Abridged income statements
Reviewed Pro forma
6 months Unaudited
ended 6 months
30 June ended
2007 30 June
R`000 2006
R`000
Revenue 144 259 103 844
Cost of sales (66 131) (54 031)
Gross profit 78 128 49 813
Other income 1 826 661
Administration expenses (48 629) (20 694)
Earnings before interest, tax, 31 325 29 780
depreciation and amortisation
Depreciation (9 863) (8 681)
Profit before interest and taxation 21 462 21 099
Net interest paid (4 266) (3 069)
Profit before taxation 17 196 18 030
Taxation (5 003) (6 067)
Profit after taxation 12 193 11 963
Minority interests (487) (1 761)
Profit attributable to ordinary 11 706 10 202
shareholders
Reconciliation of headline earnings:
Profit attributable to ordinary 11 706 10 202
shareholders
Adjusted for profit on disposal of (663) (296)
property, plant and equipment
Headline earnings attributable to 11 043 9 906
ordinary shareholders
Weighted average shares in issue on 259 771 254 579
which earnings are based 880 551
Basic earnings per share (cents) 4.5 4.0
Adjusted for -
Profit on disposal of property, plant (0.2) (0.1)
and equipment (after tax) (cents)
Headline earnings per share (cents) 4.3 3.9
Weighted average shares in issue on 259 771 254 579
which earnings are based 880 551
Share trust treasury shares 306 849 -
Fully diluted weighted average shares 260 078 254 579
in issue 729 551
Fully diluted earnings per share 4.5 4.0
(cents)
Fully diluted headline earnings per 4.3 3.9
share (cents)
Notes:
1 The pro forma weighted average number of shares in issue for 30 June
2006 is based on the sub-division and increase of the ordinary shares
in issue into 254 579 551 ordinary shares in issue on the last
practicable date as set out in the detailed prospectus dated 5 June
2007 ("the detailed prospectus").
2 The headline earnings attributable to ordinary shareholders for the six
Months ending 30 June 2006 includes a once-off non-recurring profit of
R2.4 million as set out in the detailed prospectus.
3 Interwaste Holdings acquired the entire issued share capital of Inter-
Waste
(Pty) Limited ("Inter-Waste") and Enviro-Fill (Pty) Limited ("Enviro-
Fill")
With effect from 1 January 2007 in terms of the group restructuring as
set out in the detailed prospectus and as detailed further below under
the heading Business Combinations.
Abridged balance sheets
Reviewed Pro forma
30 June Unaudited
2007 31
R`000 December
2006
R`000
ASSETS
Non-current assets 208 210 171 860
Property, plant and 152 955 126 283
equipment
Goodwill 47 464 45 577
Other financial assets 7 791 -
Current assets 144 189 70 494
Inventories 22 602 11 349
Trade and other receivables 54 311 54 102
Loans receivable - 633
Bank and cash 67 276 4 410
Total assets 352 399 242 354
EQUITY AND LIABILITIES
Equity 196 741 98 690
Issued capital 34 26
Share premium 183 048 97 001
Accumulated profits 11 605 -
Minority interest 2 054 1 663
Non-current liabilities 74 478 65 743
Other financial liabilities 1 414 -
Instalment sale creditors 53 444 48 047
Deferred taxation 19 620 17 696
Current liabilities 81 180 77 921
Loans payable 4 596 -
Trade and other payables 38 595 29 301
Current portion of non- 37 648 28 671
current liabilities
Taxation 341 11 907
Bank overdraft - 8 042
Total equity and liabilities 352 399 242 354
Number of shares in issue 336 979 254 579
551 551
Fully diluted number of 343 979 254 579
shares in issue 551 551
Net asset value per share 57.8 38.1
(cents)
Net tangible asset value per 43.7 20.2
share (cents)
Notes:
1 The pro forma weighted average number of shares in issue for 30 June
2006 is based on the sub-division and increase of the ordinary shares
in issue into 254 579 551 ordinary shares in issue on the last
practicable date as set out in the detailed prospectus.
2 The 7 000 000 ordinary shares issued to the Interwaste Holdings
Incentive
Scheme have been treated as "treasury" shares.
Abridged statement of changes in equity
Reviewed
6 months
ended
30 June
2007
R`000
Balance at beginning of period -
Net profit for the period 11 706
Issue of share capital 34
Share premium 183 048
Purchase of Earth 2 Earth (Pty) 1 299
Limited minority interest
Dividend paid (1) (1 400)
Minority interests 2 054
Balance at end of period 196 741
Notes:
1 The dividend paid relates to a dividend declared by Enviro-Fill prior
to the group restructuring as set out in the detailed prospectus.
Abridged cash flow statement
Reviewed
6 months
ended
30 June
2007
R`000
Cash flows from operating 9 164
activities
Cash flow from investing (142 995)
activities
Cash flow from financing 201 107
activities
Net increase in cash and cash 67 276
equivalents
Cash and cash equivalents at -
beginning of period
Cash and cash equivalents at end 67 276
of period
Abridged segment report Reviewed Pro forma
6 months Unaudited
ended 6 months
30 June ended
2007 30 June 2006
R`000 R`000
Gross revenue
Waste management 93 405 75 197
Landfill management, construction and 50 854 28 647
rehabilitation
144 259 103 844
Profit before interest and taxation
Waste management 11 054 17 182
Landfill management, construction and 10 408 3 917
rehabilitation
21 462 21 099
Depreciation
Waste management 9 836 7 307
Landfill management, construction and 27 1 474
rehabilitation
9 863 8 681
No geographical segments are reported as the company operates
mainly in South Africa and the international operations do not
meet the thresholds for reportable segments as per IAS 14.
OVERVIEW
The directors of Interwaste Holdings are pleased to present the
reviewed interim financial results for the six months ended 30
June 2007 ("the interim period"). Interwaste Holding`s
management team has positioned the subsidiaries to take
advantage of the growth opportunities, presented by South
Africa`s current economic climate.
The unaudited, comparative pro forma results for the six months
ended 30 June 2006 include once-off non-recurring profits of
approximately of R2.4 million, which relate to the once-off non-
recurring profits disclosed in the detailed prospectus dated, 5
June 2007.
During the interim period, our waste management business
incurred overhead expenses in advance of the profit curve in
excess of R6.5 million. These expenses have been incurred to
establish two transport depots in Durban and Kempton Park.
Our landfill management business performed exceptionally well
during the interim period and was recently awarded the Ethekweni
municipality landfill gas extraction tender which will further
increase this subsidiary`s profitability. As part of this
project, Enviro-Fill have spent R4.5 million on the acquisition
of gas turbines and stand to achieve a milestone for the group
with the Cleaner Development Mechanism ("CDM") component of the
bid.
BUSINESS COMBINATIONS
Interwaste Holdings acquired the entire issued share capital of, and a
portion of all shareholders` claims on loan account against, Inter-Waste and
Enviro-Fill from the existing shareholders and Inter-Waste with effect from
1 January 2007 for an aggregate consideration in the sum of R102 107 047,50
discharged by Interwaste Holdings by the issue and allotment of 248 555 871
ordinary shares, credited as fully paid, at an issue price equal to the par
value of such ordinary shares plus a premium of R96 750 994. The balance of
the aforesaid consideration constitutes a claim on loan account owing by
Interwaste Holdings to Inter-Waste, which claim is payable on demand.
Inter-Waste acquired the business of Ex-Waste (Pty) Ltd ("Ex-Waste") from Ex-
Waste with effect from 1 January 2007 for a consideration of R251 184. The
aforesaid consideration was discharged by Interwaste Holdings on behalf of
Inter-Waste by the issue and allotment of 5 023 680 ordinary shares,
credited as fully paid, at an issue price equal to the par value of such
shares plus a premium of R250 681.
FINANCIAL RESULTS
Group revenue increased by 39% to R144 million. Within the subsidiaries,
the Inter-waste group grew turnover by 24% and the Enviro-Fill group grew
turnover by 79%.
Gross profit increased to R78 million for the interim period, 57% higher
than the comparative interim period. EBITDA only grew by 5% to R31.3
million due to the fact that Inter-Waste incurred overhead expenses in
advance of the profit curve in excess of R6.5 million.
Headline earnings of R11 million was achieved against R9.9 million for the
comparative interim period (which included a once-off non-recurring profit
of R2.4 million for the six months ending June 2006) while profit
attributable to ordinary shareholders rose 15% to R11.7 million. Taking into
account the once off non-recurring profit of R2.4 million for the six month
period ending June 2006, the profit attributable to ordinary shareholders
increased with 50%.
PROSPECTS
In light of favorable market conditions and our current order
book, the group remains confident that it will achieve its profit forecast
as set out in the detailed prospectus. The second half of the financial
reporting period is traditionally stronger than the first half.
The group`s organics business has large volumes of high value stock at the
end of June, in preparation for the busy sales season. July marks the start
of the gardening season, with August to October being the peak seasons of
the organics business.
SHARE CAPITAL
Prior to the date of listing on ALTX, an offer was made to:
- the group`s employees to acquire shares in the company through the
Share Incentive Trust. The 7 000 000 shares have been treated as "treasury"
shares in the share capital of the company and deducted from equity.
DIVIDEND POLICY
It is the intention of the company to reconsider its dividend policy once
the group has achieved mature growth and periodically thereafter to take
account of prevailing circumstances and future cash requirements. Initially
all earnings generated by the group will be utilised to fund future growth
and development.
BASIS OF PREPARATION
The interim results have been prepared in accordance with IAS34 (Interim
Financial Reporting). The accounting policies used to prepare these interim
financial statements are consistent with those applied in the prior interim
period and at previous year-end and are in accordance with International
Financial Reporting Standards.
These consolidated interim financial statements incorporate the financial
statements of the company, its subsidiaries and special purpose entities
that, in substance, are controlled by the group. Results of subsidiaries
are included from the effective date of acquisition or up to the effective
date of disposal. All significant transactions and balances between
group enterprises are eliminated on consolidation.
This announcement has been prepared in accordance with the Listings
Requirements of the JSE Limited.
AUDITORS` REVIEW
The auditors, RSM Betty & Dickson (Johannesburg), have reviewed these
interim results. A copy of their unqualified review opinion is available
for inspection at the company`s registered office.
By order of the Board
26 September 2007
WAH Willcocks CR Venter
Chief Executive Officer Chief Financial Officer
CORPORATE INFORMATION
Non executive directors: EG Dube (Chairperson),
S M Jewaskiewitz
Executive directors: WAH Willcocks (CEO); CR Venter (CFO); LC
Grobbelaar; BL Willcocks
Registration number: 2006/037223/06
Registered address: Corner of Avocet and
Bronhof Roads, Bromhof, 2154
Postal address: PO Box 73503, Fairlands, 2030
Company secretary: Genesis Chartered
Accountants
Telephone: (011) 792 9330
Facsimile: (011) 792 8998
Transfer secretaries: Computershare Investor
Services 2004 (Pty) Limited
Designated Adviser: Exchange Sponsors (Pty)
Limited
Date: 26/09/2007 08:35:09 Produced by the JSE SENS Department.
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