| Wed 31 Mar 2010, 9:27 | | Interwaste Holdings Limited - Reviewed abridged financial results for the year |
|
IWE
IWE
Interwaste Holdings Limited - Reviewed abridged financial results for the year
ended 31 December 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")
Reviewed abridged financial results for the year ended 31 December 2009
Salient features
Revenue and earnings down
Profits despite extremely difficult operating conditions
Significant ongoing investment in the business
Restructuring completed
REVIEWED ABRIDGED FINANCIAL RESULTS FOR THE YEAR ENDED 31 DECEMBER 2009
Abridged statement of comprehensive income
Reviewed Change Audited
December % December
2009 2008
R`000 R`000
Revenue 407 259 (14) 471 156
Cost of sales (241 625) (298 229)
Gross profit 165 634 (4) 172 927
Other income 2 483 3 286
Operating expenses (122 390) (105 390)
Profit before interest and taxation 45 727 70 823
Dividend received - 605
Net interest paid (10 471) (16 805)
Share of profit of associate 1 113 -
Profit before taxation 36 369 (33) 54 623
Taxation (10 654) (13 530)
Profit for the period 25 715 41 093
Other comprehensive income - -
Total comprehensive income for the year 25 715 (37) 41 093
24 971 39 611
Comprehensive income attributable to:
Owners of the parent
Non-controlling interest 744 1 482
25 715 41 093
Reconciliation of headline earnings:
Comprehensive income attributable to 24 971 39 611
ordinary shareholders
Adjusted for profit on disposal of (1 817) (417)
property, plant and equipment
Headline earnings attributable to ordinary 23 154 (41) 39 194
shareholders
Weighted average number of shares in issue 307 205 721 272 061 517
on which earnings per share are based
Basic earnings per share (cents) 8.1 (44) 14.5
Profit on disposal of property, plant and (0.5) (0.1)
equipment (after tax) (cents)
Headline earnings per share (cents) 7.6 (47) 14.4
Weighted average number of shares in issue 307 205 721 272 061 517
on which earnings per share are based
Equity instrument - 57 249 691
Fully diluted weighted average shares in 307 205 721 329 311 208
issue
Fully diluted earnings per share (cents) 8.1 (33) 12.0
Fully diluted headline earnings per share 7.6 (36) 11.9
(cents)
Abridged statement of financial position
Reviewed Audited
December December
2009 2008
R`000 R`000
ASSETS
Non-current assets 327 320 296 280
Property, plant and equipment 272 448 245 262
Goodwill 49 590 48 332
Intangible assets 185 179
Investments in joint ventures 2 911 -
Deferred taxation 2 186 2 507
140 123 144 488
Current assets
Inventories 37 425 41 320
Trade and other receivables 86 212 83 576
Taxation 10 655 5 505
Bank and cash 5 831 14 087
Total assets 467 443 440 768
EQUITY AND LIABILITIES
Equity attributable to equity holders 261 864 237 704
of the company
Issued capital 25 25
Share premium 175 466 175 466
Reserves 1 572 1 572
Accumulated profits 84 801 60 641
Non controlling interest 4 220 3 819
Total equity 266 084 241 523
Non-current liabilities 85 232 93 720
Financial liabilities, borrowings and 54 285 68 495
operating lease straight line
liabilities
Deferred taxation 30 947 25 225
Current liabilities 116 127 105 525
Current borrowings 50 172 54 793
Trade and other payables 39 694 46 969
Taxation 881 2 592
Bank overdraft 25 380 1 171
Total equity and liabilities 467 443 440 768
Number of shares in issue at period end 336 311 208 253 979 551
Net asset value per share (cents) 77.4 93.6
Net tangible asset value per share 62.6 74.5
(cents)
Abridged statement of changes in equity
Share Share Share-based Retained Total
capital premium payment income attributable
R`000 R`000 reserve R`000 to equity
R`000 holders of
the group
R`000
Balance at 1 25 175 466 1 572 60 641 237 704
January 2009
Comprehensive 24 971 24 971
income for the
year
Dividends paid (465) (465)
Disposal of (346 ) (346 )
subsidiary
Total changes 24 160 24 160
Balance at 31 25 175 466 1 572 84 801 261 864
December 2009
Table continues:...
Non Total equity
controlling R`000
interest
R`000
Balance at 1 3 819 241 523
January 2009
Comprehensive 744 25 715
income for the year
Dividends paid (465)
Disposal of (343) (689 )
subsidiary
Total changes 401 24 561
Balance at 31 4 220 266 084
December 2009
Abridged statement of cash flows
Reviewed Audited
December 2009 December 2008
R`000 R`000
Cash flow from operating activities 40 464 51 114
Cash flow from investing activities (54 097) (70 382)
Cash flow from financing activities (18 832) 8 818
Net decrease in cash and cash (32 465) (10 450)
equivalents
Cash and cash equivalents at 12 916 23 366
beginning of period
Cash and cash equivalents at end of (19 549) 12 916
period
Abridged segment report
Reviewed Audited
December 2009 December 2008
R`000 R`000
Gross revenue
Waste management 255 748 296 747
Compost manufacturing and sales 57 146 53 606
Landfill management, construction and 94 365 120 803
rehabilitation
407 259 471 156
Profit before interest and taxation
Waste management 23 746 46 559
Compost manufacturing and sales 3 441 4 545
Landfill management, construction and 18 540 19 719
rehabilitation
45 727 70 823
Depreciation
Waste management 17 788 14 488
Compost manufacturing and sales 2 050 2 120
Landfill management, construction and 6 129 4 706
rehabilitation
25 967 21 314
Segment assets
Waste management 344 257 301 097
Compost manufacturing and sales 9 491 33 159
Landfill management, construction and 113 695 106 512
rehabilitation
467 443 440 768
Segment liabilities
Waste management 108 284 65 810
Compost manufacturing and sales 7 599 62 001
Landfill management, construction and 85 476 71 434
rehabilitation
201 359 199 245
Notes:
No geographical segments are reported as the Group operates mainly in South
Africa and the international operations do not meet the thresholds for
reportable segments specified in IFRS 8.
The following disclosures in the segment report for the prior year were
reclassified:
- Gross revenue of R7,5m, from waste management to compost manufacturing and
sales;
- Profit before interest and tax of R3m from compost manufacturing and sales
to waste management;
- Assets of R32,5m from waste management to compost manufacturing and sales;
- Liabilities of R58m from waste management to compost manufacturing.
OVERVIEW
2009 was one of the most challenging years the Group has faced in its
20 year history. The decline in the South African market meant that
many of our clients curtailed production and hence their generation of
waste, market conditions became more competitive and we chose to walk
away from a number of opportunities where our competitors were prepared
to tender for work at prices below cost, and we had to address a
business structure we had geared for expansion on the back of the
significant growth we had experienced through to 2008.
Despite an overall reduction in turnover for the year, the Group`s
trade receivables increased. Many of our larger clients stretched their
payment terms and significant effort was applied to working capital
management. The position stabilised towards the end of the year and
cash collections are improving.
We continued to invest in the underlying businesses where favourable
opportunities arose. While these investments resulted in profits and
positioned the business well for the future, increasing capital assets
while reducing gearing resulted in severe pressure on cash flows.
In an effort to control costs we looked at lengthening the period for
which we use our fleet prior to replacement. This was however not
successful and resulted in a significant increase in operating
expenses. During the latter part of the year a favourable fleet
replacement and maintenance programme was negotiated and implemented.
In response to the difficult trading conditions, we implemented a
restructuring and retrenchment programme, the costs of which
contributed to the rise in operating costs. The new structure has been
in place for a number of months and it is pleasing to see that costs
have reduced and certain of the expected synergies between the
logistics and landfill operations are being realised. As a part result
of these measures, and recognising that there is seasonality in the
business, the midyear attributable profits of R6,3 million increased to
R24,9 million by year end.
Waste management
The decreases in revenue and profit were a function of reduced volumes
from our clients, the nationwide strike in April and high maintenance
costs.
Existing client volumes are improving, a number of new contracts have
been secured, several new initiatives implemented, and a fleet
replacement programme is in place which is showing positive results.
Revenue and profitability in the metals recovery business reduced
sharply during the year as metals prices fell significantly from their
highs in 2008. The business broke even for the majority of the 2009
financial year and has returned to profitability with recent increases
in metals prices.
Compost manufacturing and sales
Revenue was slightly up and profits decreased. While this was largely
a function of the difficult environment, significant management time
was devoted to the division and its performance improved over the
course of the year. The division expanded its export market and this is
proving to be a promising source of new business.
Landfill management, construction and rehabilitation
Revenue decreased due to the postponement of several landfill gas
projects. The business successfully tendered for a number of new
landfill management contracts, the benefits of which should be realised
during the 2010 financial year.
While the decrease in Group revenue and profit for the year is
disappointing, despite the very difficult operating conditions we
produced profits and emerged leaner and more focused. The latter part
of 2009 and the early months of 2010 evidenced an improvement in all
aspects of the business and we are hopeful that this will continue.
FINANCIAL RESULTS
Despite a 14% decline in revenue, gross profit only reduced by 4%.
This was achieved through tight control of variable expenses and was
partly a result of the restructuring and retrenchment programme
implemented during the year.
Unfortunately, high maintenance costs and the costs of the
restructuring and retrenchment programme resulted in a 16% increase in
operating expenses and contributed heavily to the decline in profits.
Net interest paid decreased as a result of lower interest rates and the
reduction in the Group`s borrowings.
While the Group produced a positive cashflow from its operating
activities, it was a net utiliser of cash for the year. It continued
to invest in the underlying businesses by way of property, plant and
equipment and joint venture initiatives, gearing reduced despite the
increase in capital assets, inventories were managed down but the
decrease was more than offset by an increase in receivables as our
customers stretched their payment terms, and payables decreased. The
net cash outflow has been stabilised and the Group generated cash
during the first months of 2010.
PROSPECTS
While there are some signs of improvement in the South African economy,
trading conditions remain difficult. The reduction in revenue per
client that we saw in 2009 is however stabilising and we are starting
to see growth in existing revenues at the same time as we generate
additional sources of revenue from existing and new clients.
The Group has restructured and cut costs, cash management is looking
more positive and a number of new initiatives have been implemented
that bode well for the future.
SHARE CAPITAL
There were no alterations to the authorised share capital during the
year. The number of shares in issue increased at the beginning of the
year as a result of a clawback of shares by management relating to a
warranty provided in a prior period.
DIVIDEND POLICY
The Group will not pay a dividend for the 2009 year. Dividends will be
paid once market conditions and the anticipated cash requirements for
the business permit.
BASIS OF PREPARATION
The abridged annual financial statements have been prepared in
accordance with the recognition and measurement criteria of
International Financial Reporting Standards "IFRS", the AC 500
Standards as issued by the Accounting Practices Board, the presentation
and disclosure requirements of IAS 34 - Interim Financial Reporting,
the Listings Requirements of the JSE Limited and the requirements of
the South African Companies Act.
The abridged annual financial statements are presented in thousands of
South African Rands ("R`000") on the historical cost basis.
The accounting policies applied for the year are consistent with those
applied in the prior year.
These abridged annual financial statements incorporate the financial
statements of the company and its subsidiaries (the "Group") and the
Group`s interest in associate entities.
AUDIT OPINION
The auditors, RSM Betty & Dickson (Johannesburg), have reviewed the
abridged annual financial statements for the year ended 31 December
2009. The auditors` unmodified review report is available for
inspection at the company`s registered office.
SUBSEQUENT EVENTS
Subsequent to the year end the Group disposed of its Namibian
operations for a consideration of R5 million.
STATEMENT ON GOING CONCERN
The financial statements have been prepared on the going concern basis
as the directors are of the view that the Group has adequate resources
in place to continue in operation for the foreseeable future.
APPRECIATION
Our people made an outstanding effort during a very difficult period.
The directors offer their thanks to our staff for their efforts and to
our clients for their continued support.
By order of the Board
31 March 2010
WAH Willcocks I John
Chief Executive Officer Financial Director
CORPORATE INFORMATION
Non executive directors: EG Dube (Chairperson), GR Tipper
Executive directors: WAH Willcocks (CEO); I John (FD); BL
Willcocks; L Grobbelaar
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 2004 (Pty)
Limited
Designated Adviser: Vunani Corporate Finance
Date: 31/03/2010 09:27:01 Produced by the JSE SENS Department.
The SENS service is an information dissemination service administered by the
JSE Limited (`JSE`). The JSE does not, whether expressly, tacitly or
implicitly, represent, warrant or in any way guarantee the truth, accuracy or
completeness of the information published on SENS. The JSE, their officers,
employees and agents accept no liability for (or in respect of) any direct,
indirect, incidental or consequential loss or damage of any kind or nature,
howsoever arising, from the use of SENS or the use of, or reliance on,
information disseminated through SENS.
