| Mon 30 Mar 2009, 7:45 | | IWE - Interwaste Holdings - Audited abridged financial results for the year |
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IWE
IWE
IWE - Interwaste Holdings - Audited abridged financial results for the year
ended 31 December 2008
Interwaste Holdings 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 40% to R471 million
- Headline earnings up 96% to R39 million
- Headline earnings per share up 117% to 14.4 cents
- Fully diluted headline earnings per share up 81% to 11.9 cents
- Net tangible asset value per share up 70% to 74.5 cents
- Return on equity up 7% to 22%
- Strong cash generation funding growth and limiting gearing
AUDITED CONDENSED FINANCIAL RESULTS
FOR THE YEAR ENDED 31 DECEMBER 2008
Abridged income statement
Audited Audited
December December
2008 2007
R`000 R`000
Revenue 471 156 335 545
Cost of sales (298 229) (202 992)
Gross profit 172 927 132 553
Other income 3 286 7 296
Operating expenses (84 076) (78 827)
Earnings before interest, tax, 92 137 61 022
depreciation and amortisation ("EBITDA")
Depreciation (21 314) (19 048)
Profit before interest and taxation 70 823 41 974
Dividend received 605 1 268
Net interest paid (16 805) (11 429)
Profit before taxation 54 623 31 813
Taxation (13 530) (8 435)
Profit after taxation 41 093 23 378
Minority shareholders` interest (1 482) (948)
Profit attributable to ordinary 39 611 22 430
shareholders
Reconciliation of headline earnings:
Profit attributable to ordinary 39 611 22 430
shareholders
Adjusted for profit on disposal of (417) (2 411)
property, plant and equipment
Headline earnings attributable to ordinary 39 194 20 019
shareholders
Weighted average number of shares in issue 272 061 517 301 310 508
on which earnings per share are based (2)
Basic earnings per share (cents) 14.5 7.4
Profit on disposal of property, plant and (0.1) (0.8)
equipment (after tax) (cents)
Headline earnings per share (cents) 14.4 6.6
Weighted average number of shares in issue 272 061 517 301 310 508
on which earnings per share are based
Treasury shares (3) - 3 835 617
Equity instrument 57 249 691 -
Fully diluted weighted average shares in 329 311 208 305 146 125
issue
Fully diluted earnings per share (cents) 12.0 7.4
Fully diluted headline earnings per share 11.9 6.6
(cents)
Notes:
(1) Certain reclassifications were made to gross profit and administrative
expenses in the prior financial year.
(2) The weighted average number of shares in issue includes a pro rata
portion, namely 25 081 967 shares, of the 90 000 000 shares which were
cancelled in terms of an agreement dated 11 April 2008.
(3) 7 000 000 ordinary shares held by the Interwaste Holdings Share
Incentive Scheme have been treated as treasury shares. The shares
have not been added back in the current period as the fair value is
less than the strike price.
Abridged balance sheet
Audited Audited
December December
2008 2007
R`000 R`000
ASSETS
Non-current assets 293 773 244 077
Property, plant and equipment 245 262 195 566
Goodwill 48 332 48 332
Intangible assets 179 179
144 488 155 271
Current assets
Inventories 41 320 24 562
Trade and other receivables 91 116
83 576
Taxation 5 505 -
Shareholders` loans - 1 200
Deposits - 2 311
Bank and cash 14 087 36 082
Total assets 438 261 399 348
EQUITY AND LIABILITIES
Equity attributable to equity holders 237 704 199 000
of the company
Issued capital 25 34
Share premium 175 466 177 269
Reserves 1 572 667
Accumulated profits 60 641 21 030
Minority interest 3 819 2 337
Total equity 241 523 201 337
Non-current liabilities 91 213 85 112
Other financial liabilities 68 495 67 976
Deferred taxation 22 718 17 136
Current liabilities 105 525 112 899
Other financial liabilities 54 793 46 027
Trade and other payables 46 969 49 731
Dividend payable - 158
Taxation 2 592 4 267
Bank overdraft 1 171 12 716
Total equity and liabilities 438 261 399 348
Number of shares in issue at period end 253 979 551 343 979 551
Net asset value per share (cents) 93.6 57.9
Net tangible asset value per share 74.5 43.8
(cents)
Abridged statement of changes in equity
Shar Share Share- Retain Total Minori Total
e premiu based ed attribut ty equity
capi m paymen income able to intere R`000
tal R`000 t R`000 equity st
R`00 reserv holders R`000
0 e of the
R`000 group
R`000
Balance at 1 34 177 667 21 030 199 000 2 337 201
January 2008 269 337
Profit for the - - - 39 611 39 611 1 482 41 093
year
Cancellation of (9 ) 9 - - - - -
shares
Share issue - (1 - - ( 1 812) - (1
costs 812) 812)
Employee share - - 905 - 905 - 905
option scheme
expenses
Total changes (9 ) (1 905 39 611 38 704 1 482 40 186
803)
Balance at 31 25 175 1 572 60 641 237 704 3 819 241
December 2008 466 523
Abridged cash flow statement
Audited Audited
December 2008 December 2007
R`000 R`000
Cash flow from operating activities 51 114 566
Cash flow from investing activities (70 382) (86 759)
Cash flow from financing activities 8 818 109 559
Net (decrease)/increase in cash and (10 450) 23 366
cash equivalents
Cash and cash equivalents at 23 366 -
beginning of period
Cash and cash equivalents at end of 12 916 23 366
period
Abridged segment report
Audited Audited
December 2008 December 2007
R`000 R`000
Gross revenue
Waste management 289 206 177 636
Compost manufacturing and sales 61 147 44 995
Landfill management, construction and 120 803 112 914
rehabilitation
471 156 335 545
Profit before interest and taxation
Waste management 48 117 26 479
Compost manufacturing and sales 7 535 988
Landfill management, construction and 19 719 17 252
rehabilitation
75 371 44 719
Depreciation
Waste management 15 190 13 858
Compost manufacturing and sales 1 418 981
Landfill management, construction and 4 706 4 209
rehabilitation
21 314 19 048
Segment assets
Waste management 331 042 266 419
Compost manufacturing and sales 707 47 518
Landfill management, construction and 106 512 85 411
rehabilitation
438 261 399 348
Segment liabilities
Waste management 121 772 130 837
Compost manufacturing and sales 3 532 19 148
Landfill management, construction and 71 434 48 026
rehabilitation
196 738 198 011
Note:
(1) 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 are pleased to report significant growth in revenue and
earnings. The group performed strongly during the year, generating
substantial levels of cash which enabled it to fund much of the growth
it achieved. The growth arose through a combination of new clients and
contracts, and organic growth on existing clients, despite challenging
market conditions. While there has been some recent relief on interest
rates, they were consistently high throughout the period and this,
together with very high fuel costs for the first six months of the
year, put considerable pressure on margins. We also began to see some
signs of the impact of the global crises on the South African market
during the second half of the year.
The Interwaste Waste Management division, the largest division in the
group, produced strong results. The division experienced a reduction in
volumes on existing clients but secured additional clients as more
corporate enterprises strive for environmental compliance. This,
together with healthy innovation, new business initiatives and careful
cost control, resulted in a satisfactory profit for the year.
The Landfill Management, Construction and Rehabilitation division
performed slightly below expectations mainly due to high fuel costs and
under-recoveries on bulk earthworks contracts. The division has re-
tendered for a number of major contracts, several of which have been re-
awarded at much improved margins. During 2008 a Record of Decision
(ROD) was awarded to the division by the Gauteng Department of
Agriculture, Conservation and Environment, allowing it to operate a
landfill site in Gauteng and it is anticipated that this will produce
solid returns.
Subsequent to the commissioning of new processing equipment in April
2008, the Metals Recovery business delivered much improved outputs
whilst reducing operating costs. The business took advantage of the
high metals prices which prevailed during much of 2008 and was a strong
positive contributor to the group.
The Organics division produced a reasonable increase in revenue, with
spring and summer being its most productive periods. The division is
the market leader in its sector but continued to come under pricing
pressure from competitors and was not able to render a profit.
Considerable effort is being directed at this business with a focus on
cost cutting, improving asset utilisation, securing additional export
orders from existing offshore customers and growing this customer base.
FINANCIAL RESULTS
Group revenue increased by 40% to R471 million (2007: R336 million).
The waste management business increased revenue by 63% to R289 million
(2007: R178 million), the Enviro-Fill group grew revenue by 7% to R121
million (2007: R113 million) and the compost manufacturing division
increased revenue by 36% to R61 million (2007: R45 million).
Gross profit increased to R173 million for the 2008 year and gross
profit margins decreased by 2.8%, from 39.5% to 36.7%, mainly as a
result of higher fuel costs in the first half of 2008.
Attributable profit increased by 77%, a pleasing performance given the
difficult environment in which the businesses operated during the year.
The group generated a substantial amount of cash from its operating
activities which was used to fund a large portion of the capital
expenditure required as a result of the rapid growth of the business.
This had the effect of limiting gearing. While there is a strong
emphasis on improved asset utilisation in the current year, the group`s
strong cash generation and limited gearing mean that it is well placed
to take advantage of the opportunities which will arise in the tough
markets we are likely to face for the foreseeable future.
As a consequence of the group not achieving its forecast profit targets
for the year ended 31 December 2007, the original vendors of the
businesses to the Interwaste group cancelled 90 million shares, subject
to a claw-back if defined profit levels for 2008 were achieved. On the
basis of the 2008 results approximately 91% of the shares will be
reissued to the vendors at a nominal amount. The effect of this
reissue of shares is reflected in the fully diluted headline earnings
per share figure which increased by 80%.
PROSPECTS
The global credit crises has impacted the South African economy and
despite the various local and international stimulus measures, South
African markets are likely to be difficult for some time and the group
will have to manage tough trading conditions. While we anticipate some
reduction in existing revenue per client, the group has begun to
generate additional sources of revenue from existing and new clients,
and there will be a continued emphasis on developing products and
services which will bolster revenue streams.
Interwaste is divisionalising certain of its subsidiaries which is
expected to reduce costs and improve operating efficiencies. The
anticipated interest rate cuts over the next few months will also be of
benefit to the group.
The long awaited National Environmental Management Waste Act (the
"Waste Act"), was recently assented to by the President of South
Africa. The Waste Act will have a dramatic effect on the manner in
which industrial concerns and corporates manage their waste. This is an
important development for the industry and Interwaste is well
positioned to take advantage of the additional requirements for waste
management that will result from the Waste Act.
SHARE CAPITAL
There were no alterations to the authorised share capital during the
year. An agreement was entered into on 11 April 2008, and ratified by
shareholders on 25 August 2008, with the original Inter- Waste, Enviro-
Fill and Ex- Waste vendors, being the Wilco Family Trust, GL Share
Trust, Kusasa Trust, Tibiyo Trust, Frilma Family Trust and Ex- Waste,
which resulted in 90 000 000 Interwaste Holdings ordinary shares being
cancelled.
The aforementioned agreement provided for a claw-back of the cancelled
shares if defined profit targets for 2008 were met. Based on the
audited results for 2008, approximately 91% of these shares will be
reissued to the original vendors.
DIVIDEND POLICY
In line with its policy, the group will not pay a dividend for the 2008
year. It is Interwaste`s long term intention to pay dividends and the
existing policy will be reconsidered as its rate of growth slows and in
the light of market conditions and anticipated cash requirements for
the business.
BASIS OF PREPARATION
The condensed financial statements comprise a consolidated balance
sheet at 31 December 2008, a consolidated income statement,
consolidated statement of changes in equity and summarised consolidated
cash flow statement for the year ended 31 December 2008. The condensed
financial statements have been prepared in accordance with the
recognition and measurement criteria of International Financial
Reporting Standards ("IFRS"), JSE Listings Requirements and the South
African Companies Act.
The accounting policies applied for the year are consistent with those
of the prior year.
These consolidated financial statements incorporate the financial
statements of the company and its subsidiaries 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.
AUDIT OPINION
The auditors, RSM Betty & Dickson (Johannesburg), have audited the
annual financial statements for the year ended 31 December 2008. A
copy of their unqualified audit report is available for inspection at
the company`s registered office.
SUBSEQUENT EVENTS
Interwaste completed two small acquisitions on 1 January 2009, both of
which have exciting growth prospects.
In terms of a signed agreement approved by the shareholders at a
general meeting on 25 August 2008, 90 000 000 ordinary issued shares
were cancelled. The Interwaste, Enviro-fill and Ex- Waste vendors will
claw-back 82 331 659 of these shares subsequent to year end. The claw
back has been taken into account in the fully diluted earnings per
share and diluted headline earnings per share.
STATEMENT ON GOING CONCERN
The financial statements have been prepared on the going-concern basis
since the directors have every reason to believe that the company has
adequate resources in place to continue in operation for the
foreseeable future.
ANNUAL REPORT AND NOTICE OF ANNUAL GENERAL MEETING
Shareholders are advised that the Annual Report for the year ended 31
December 2008 will be posted to them on or about 31 March 2009. An
electronic version of the annual report will be available on the
company`s website on or about 31 March 2009.
Notice is hereby given that the Annual General Meeting of shareholders
will be held at 11:00 on Friday, 19 June 2009 at the registered offices
of the company, corner of Avocet and Bromhof Roads, Bromhof, Gauteng,
South Africa, to transact the business as stated in the notice of
annual general meeting forming part of the Annual Report.
PEOPLE
The results for the year would not have been possible without an
outstanding effort by all of our people. The board thanks the
executive and the whole Interwaste team for an impressive performance.
By order of the Board
30 March 2009
WAH Willcocks
Chief Executive Officer
CORPORATE INFORMATION
Non executive directors: EG Dube (Chairperson), G Tipper
Executive directors: WAH Willcocks (CEO); I John (FD); LC
Grobbelaar; BL Willcocks; S M Jewaskiewitz
Registration number: 2006/037223/06
Registered address: Corner of Avocet and Bromhof Roads, Bromhof,
2154
Postal address: PO Box 73503, Fairlands, 2030
Company secretary: Allen de Villiers
Telephone: (011) 792 9330
Facsimile: (011) 792 8998
Transfer secretaries: Computershare Investor Services (Pty) Limited
Designated Adviser: Vunani Corporate Finance
Date: 30/03/2009 07:45:01 Produced by the JSE SENS Department.
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