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IWE
IWE
IWE - Interwaste Holdings - Reviewed financial results for the six months ended
30 June 2009
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")
Salient Features
* Revenue down 16.4%
* Headline earnings down 57%
* Continued investment in the
business
REVIEWED GROUP INTERIM RESULTS
FOR THE SIX MONTHS ENDED 30 JUNE 2009
Abridged Income Statement
Reviewed Reviewed Audited
6 months 6 months 12 months
June 2009 June Dec 2008
R`000 2008 R`000
R`000
Revenue 199 654 238 691 471 156
Cost of sales (127 408) (163 (298 229)
555)
Gross profit 72 246 75 136 172 927
Other income 212 863 3 286
Operating expenses (44 332) (39 043) (84 076)
Earnings before interest, tax, 36 956
depreciation and amortisation 28 126 92 137
Depreciation and amortisation (11 214) (7 411) (21 314)
Profit before interest and taxation 16 912 29 545 70 823
Net interest paid (7 526) (7 403) (16 200)
Profit before taxation 9 386 22 142 54 623
Taxation (2 500) (6 666) (13 530)
Profit for the period 6 886 15 476 41 093
Profit for the period attributable to:
-ordinary shareholders 6 329 14 895 39 611
-non controlling shareholders 557 581 1 482
6 886 15 476 41 093
Reconciliation of headline earnings
Profit attributable to ordinary 6 329 14 895
shareholders 39 611
Profit on disposal of property, plant (74) (245)
and equipment (417)
Headline earnings attributable to 6 255 14 650
ordinary shareholders 39 194
284 297
Weighted average number of shares in 272 061
issue on which 733 846 419 110
earnings per share are based 517
Basic earnings per share (cents) 2.2
5.0 14.5
Profit on disposal of property, plant - (0.1)
and equipment (after tax) (cents) (0.1)
Headline earnings per share (cents) 2.2 4.9 14.4
Weighted average number of shares in 284 733 297 419
issue on which earnings per share are 846 110 272 061
based 517
Equity instrument - 39 560 57 249
439 691
Fully diluted weighted average shares 284 733 336 979 329 311
in issue 846 549 208
Fully diluted earnings per share 2.2 4.4
(cents) 12.0
Fully diluted headline earnings per 2.2 4.4
share (cents) 11.9
Statement of Comprehensive Income
Reviewed Reviewed Audited
6 months 6 months 12
June June months
2009 2008 Dec
R`000 R`000 2008
R`000
Profit for the Period
6 886 15 476
41 093
Other Comprehensive Income, net of tax - - -
Total Comprehensive Income for the 15 476
period 6 886 41 093
Total Comprehensive Income 14 895
attributable to: 6 329 581
- Ordinary shareholders 557 39 611
- Non controlling interest 1 482
6 886 15 476 41 093
Abridged Statement of Changes in Equity
Reviewed Reviewed Audite
6 months 6 months d 12
June 2009 June 2008 months
R`000 R`000 Dec 2008
R`000
Total Comprehensive Income for 6 886 15 476 41 093
the period - (9)
Share capital 8 (1 202)
Share premium (8) (76 500) 9
Treasury shares - 76 500 -
Equity instrument - - -
Share issue cost - - (1
Dividends paid (465) 579 812)
Share option expense 143 201 337 -
Equity at beginning of period 241 525 907
201
337
Equity at end of period 248 089 216 190 241
525
Made up as follows:
Share capital issued 33 34 25
Share premium 175 459 175
99 568 467
Share based reserves 1 885 77 744 1 573
Retained income 66 340 35 926 60 640
Non controlling interests 4 372 2 918 3 820
248 089 216 190 241
525
Abridged Statement of Financial Position
Reviewed Reviewed Audited
June June Dec 2008
2009 2008 R`000
R`000 R`000
ASSETS
Non-current assets 293 336 261 606 296 280
Property, plant and equipment 240 137 207 101 245 262
Goodwill 49 569 48 534 48 332
Intangible assets 1 402 1 579 179
Other financial assets - 1 845 -
Deferred tax 2 228 2 547 2 507
Current assets 143 824 153 368 144 490
Inventories 39 809 35 182 41 320
Tax receivable 1 262 2 938 5 505
Trade and other receivables 96 679 90 158 83 578
Bank and cash 6 074 25 090 14 087
Total assets 437 160 414 974 440 770
EQUITY AND LIABILITIES
Equity 248 089 216 190 241 525
Issued capital 33 34 25
Share premium 175 459 99 568 175 467
Reserves 1 885 77 744 1 573
Retained earnings 66 340 35 926 60 640
Non controlling interest 4 372 2 918 3 820
Non-current liabilities 71 162 79 891 93 720
Other financial liabilities 44 400 59 002 68 496
Shareholder loan - 150 -
Deferred taxation 26 762 20 739 25 224
Current liabilities 117 909 118 893 105 525
Loans payable - 550 -
Shareholders` loans 5 415 - -
Trade and other payables 49 435 60 821 46 970
Current portion of non-current 58 311 46 307 54 793
liabilities
Taxation - 3 094 2 591
Bank overdraft 4 748 8 121 1 171
Total equity and liabilities 437 160 414 974 440 770
Number of shares in issue at period 336 311 246 979 253 979
end 208 551 551
Net asset value per share (cents) 72.5 86.4 93.6
Net tangible asset value per share 57.3 66.1 74.5
(cents)
Abridged Statement of Cash Flow
Reviewed Reviewed Audited
6 months 6 months 12
June 2009 June 2008 months
R`000 R`000 Dec
2008
R`000
Cash flows from operating 11 320 26 090 51 115
activities
Cash flows from investing (7 748) (24 564) (70
activities 383)
Cash flows from financing (15 162) (7 923) 8 817
activities
Net decrease in cash and cash (11 590) (6 397) (10
equivalents 451)
Cash and cash equivalents at 12 916 23 366 23 367
beginning of period
Cash and cash equivalents at end 1 326 16 969 12 916
of period
Abridged Segment Report
Reviewed Reviewe Audited
6 months d 12
June 2009 6 months
R`000 months Dec
June 2008
2008 R`000
R`000
Gross revenue
Waste management 129 175 123 200 271 958
Metals recovery 15 555 36 546 78 395
Landfill management, construction and 54 924 78 945
rehabilitation 120 803
199 654 238 691 471 156
Profit before interest and taxation
Waste management 9 426 13 737 34 773
Metals recovery (547) 8 615 16 331
Landfill management, construction and 8 033 7 193
rehabilitation 19 719
16 912 29 545 70 823
Depreciation
Waste management 9 716 6 882 15 609
Metals recovery 700 407 999
Landfill management, construction and 798 122
rehabilitation 4 706
11 214 7 411 21 314
Geographical segments are not reported as the company operates mainly in
South Africa and its international operations do not meet the IAS 14
thresholds for reportable segments.
OVERVIEW
The group started the 2009 trading year with a cautiously optimistic
outlook, based on the good results achieved in the second part of 2008
and the imminent promulgation of the Waste Bill, but tempered by the
downturn in the economy.
The first quarter yielded good growth with some large clean-up projects
concluded. However, the sector suffered a rapid decline in April with
the loss of revenue associated with the traditional Easter break being
significantly aggravated by the prolonged transport workers strike.
The balance of the second quarter saw suppressed sales, with waste
volumes at almost all of our major customers decreasing. The
implementation of the National Environmental Management: Waste Act was
a welcome event and we believe this will generate additional revenue
for the Group in the future.
The year to date results of the group are disappointing, but given the
current economic climate were expected.
The waste collection business weathered the economic crisis well in
comparison to the group`s other divisions and while not recession
proof, our strategy to align our business model with responsible waste
generators has paid off as there was no compromise on environmental
standards from this customer base and revenues were maintained in the
most part.
Income in the organics business dropped rapidly with the slow-down in
the economy. We did, however, manage to increase our export sales in
the first quarter, although this sector has subsequently contracted.
This is a traditionally seasonal business and the third quarter has
started well.
The metals recycling business was badly affected by the decline in
metal demand and prices as a result of the turmoil in international
markets. We are seeing signs of a recovery in prices and we have
adapted our business model which should result in a positive
contribution from the division by year end.
The landfill division`s revenues came under pressure as volumes
decreased. Encouragingly have been successful in the award of tenders
for several new sites which will start up during the second half of the
year.
Despite the recession, we continued to invest in the business where
appropriate. The investment was made carefully with a view to taking
advantage of the opportunities arising as a result of the downturn and
positioning the group for future growth. The significant increase in
the depreciation charge reflects investment in the prior period.
Operating expenses increased as a result of the steps taken to
accommodate the group`s growth in the second part of 2008. As the
downturn impacted our customers and volumes declined, steps were taken
to address the cost base but not quickly enough. There has subsequently
been decisive action in this regard and cost ratios should improve
during the second half of the year.
The group experienced a squeeze on its cash during the period. Many
customers delayed payments, suppliers were under pressure and required
payments timeously and the group was faced with a fixed cost structure
which had grown and a need to invest in certain parts of the business.
While there are adequate buffers on cash, considerable attention has
been devoted to this area and to the optimisation of cash flows.
FINANCIAL RESULTS
Group revenue decreased by 16,4% to R199,6 million (2008: R238,6
million).
Gross profit decreased by 3,85% to R72,2 million (2008:
R75,1million). EBITDA dropped by 23,8% to R28,1 million (2008:
R36,9 million).
Rising input costs, particularly landfill costs and fleet
expenses, reduced margins during the first part of the period.
Steps were taken to manage this during the second quarter.
Headline earnings of R6,3 million were achieved against R14,7
million for the comparative interim period, while profit
attributable to ordinary shareholders dropped 58% to R6,3
million (2008: R14,9 million).
Considerable attention is being paid to gearing, working capital
levels, the optimal use of capital and cost containment.
PROSPECTS
During the first half of the year the group underwent a
restructuring process and implemented a regional management
structure in terms of which all of our business interests
function as a singular unit. This has, and will continue to,
enable us to leverage off the synergies in the different
divisions to achieve revenue growth and cost savings.
Costs continue to be a major part of our focus. We are engaging
our customers and suppliers to ensure we achieve effective cost
savings and cash management.
The third quarter has seen an upturn in all divisions. Sales are
in line with budget and we are hopeful that, should the upturn
continue, the group`s year end results will be more in line with
expectations.
DIVIDEND
The group will not pay a dividend for the interim period, in the
light of current market conditions and the anticipated cash
requirements for the business.
Platinum Waste Resources and Enviro-fill Namibia, both group
subsidiaries, paid dividends of R0,47m to non controlling
shareholders.
BASIS OF PREPARATION
The interim results have been prepared in accordance with IAS 34
(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.
STATEMENT ON GOING CONCERN
The financial statements have been prepared on the going-concern
basis as the directors have every reason to believe that the
company has adequate resources in place to continue in operation
for the foreseeable future.
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.
APPRECIATION
The directors would like to thank our staff for their extended
efforts and our clients for their support during the period.
On behalf of the Board
30 September 2009
WAH Willcocks I John
Managing Director Financial Director
CORPORATE INFORMATION
Non executive directors: EG Dube (Chairperson), G Tipper
Executive directors: WAH Willcocks (MD); I John (FD); LC
Grobbelaar; BL Willcocks
S M Jewaskiewitz resigned
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: 29/09/2009 10:02:22 Produced by the JSE SENS Department.
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