| Tue 28 Sep 2010, 7:05 | | IWE - Interwaste Holdings Limited - Unaudited financial results for the six |
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IWE
IWE
IWE - Interwaste Holdings Limited - Unaudited financial results for the six
months ended 30 June 2010
Interwaste Holdings Limited
(Incorporated in the Republic of South Africa)
(Registration number: 2006/037223/06)
(JSE code: IWE ISIN: ZAE000097903)
("Interwaste Holdings" or "the company" or "the group")
Salient Features:
- Revenue increased 6%, despite sale of Namibian subsidiary
- Comprehensive income up 19,8%
- Substantial investment in the business
Unaudited group interim results for the 6 months ended 30 June 2010
Abridged Statement of Comprehensive
Income
Unaudited % Reviewed Audited
6 months Change 6 months 12 months
June 2010 June 2009 Dec 2009
R`000 R`000 R`000
Revenue 211 690 6,0 199 654 407 258
Cost of Sales (132 012) (116 194) (241 625)
Gross profit 79 678 (4,5) 83 460 165 633
Other income 2 990 212 2 483
Operating expenses (50 759) (55 546) (96 423)
Earnings before interest,tax,
depreciation and amortisation 31 909 28 126 71 693
Depreciation and amortisation (16 147) 44,0 (11 214) (25 967)
Profit before interest and taxation 15 762 16 912 45 726
Share of profit of joint venture 148 1 113
Net interest paid (4 606) (7 526) (10 471)
Profit before taxation 11 304 9 386 36 368
Taxation (3 055) (2 500) (10 654)
Total comprehensive income for the
period 8 249 19,8 6 886 25 714
Comprehensive income for the period
attributable to:
-ordinary shareholders 7 877 6 329 24 970
-non controlling shareholders 373 557 744
8 249 6 886 25 714
Reconciliation of headline earnings
Comprehensive income attributable to
Ordinary shareholders 7 887 6 329 24 970
(Profit) on disposal of subsidiary (2 593) - -
Loss/(Profit) on disposal of
property,plant and equipment 827 (74) (1 817)
Headline earnings attributable to
ordinary shareholders 6 111 6 255 23 153
Weighted average number of
shares in issue on which
earnings per share are based 329 311 210 284 733 846 307 205 722
Basic earnings per share (cents) 2.4 2.2 8.1
Profit on disposal of property,
plant and equipment (after tax)
(cents) 0.3 (0.0) (0.6)
Profit on disposal of subsidiary
(after tax)(cents) (0.8) - -
Headline earnings per share (cents) 1.9 2.2 7.5
Abridged Statement of Changes in Equity
Unaudited Reviewed Audited
6 months 6 months 12 months
June 2010 June 2009 Dec 2009
R`000 R`000 R`000
Total Comprehensive Income for the period 8 249 6 886 25 714
Share capital - 8 -
Share premium - (8) -
Disposal of subsidiary (minority share) (1 574) - (689)
Disposal of subsidiary (NDR) (20) - -
Dividends paid to minorities (244) (465) (465)
Share option expense - 143 -
Equity at beginning of period 266 085 241 525 241 525
Equity at end of period 272 496 248 089 266 085
Made up as follows:
Share capital issued 33 33 33
Share premium 175 459 175 459 175 459
Share based reserves 1 553 1 885 1 572
Retained income 93 416 66 340 84 801
Non controlling interests 2 035 4 372 4 220
Total 272 496 248 089 266 085
Abridged Statement of Financial Position
Unaudited Reviewed Audited
June 2010 June 2009 Dec 2009
R`000 R`000 R`000
Assets
Non-current assets 318 780 293 336 325 879
Property, plant and equipment 264 716 240 137 272 448
Goodwill 50 381 49 569 49 590
Intangible assets 179 1 402 185
Investment in joint venture 1 619 - 1 471
Deferred tax 1 885 2 228 2 185
Current assets 145 112 143 824 141 564
Inventories 34 368 39 809 37 425
Other financial assets 973 - 1 441
Tax receivable 4 202 1 262 10 655
Trade and other receivables 97 735 96 679 86 212
Bank and cash 7 834 6 074 5 831
Total assets 463 892 437 160 467 443
Equity and liabilities
Equity 272 496 248 089 266 085
Issued capital 33 33 33
Share premium 175 459 175 459 175 459
Reserves 1 553 1 885 1 572
Retained earnings 93 416 66 340 84 801
Non controlling interest 2 035 4 372 4 220
Non-Current liabilities 76 578 71 162 85 231
Other financial liabilities 47 782 44 400 54 285
Deferred taxation 28 796 26 762 30 946
Current liabilities 114 818 117 909 116 127
Trade and other payables 34 017 54 850 39 694
Current portion of non-current
liabilities 49 533 58 311 50 172
Taxation 1 778 - 881
Bank overdraft 29 490 4 748 25 380
Total equity and liabilities 463 892 437 160 467 443
Number of share in issue as period end 329 311 208 329 311 208 329 311 208
Net asset value per share (cents) 82.1 74.0 79.5
Net tangible asset value per share (cents) 66.8 59.0 64.5
Abridged Statement of Cash Flow
Unaudited Reviewed Audited
6 months 6 months 12 months
June 2010 June 2009 Dec 2009
R`000 R`000 R`000
Cash flows from operating activities 15 317 11 320 41 214
Cash flows applied to investing activities (17 369) (7 748) (54 383)
Cash flows applied to financing activities (55) (15 162) (19 296)
Net decrease in cash and cash equivalents (2 107) (11 590) (32 465)
Cash and cash equivalents at beginning
of period (19 549) 12 916 12 916
Cash and cash equivalents at end of period (21 656) 1 326 (19 549)
Abridged Segment Report
Unaudited Reviewed Audited
6 months 6 months 12 months
June 2010 June 2009 Dec 2009
R`000 R`000 R`000
Gross revenue
Waste Management 130 340 111 104 216 200
Metals recovery 21 979 15 555 39 548
Organics 19 510 18 071 57 146
Landfill management, construction and
Rehabilitation 39 861 54 924 94 364
211 690 199 654 407 258
Profit before interest and taxation
Waste Management 13 793 19 143 41 401
Metals recovery (2 713) (1 967) (1 173)
Organics (2 338) (3 285) (1 542)
Landfill management, construction and
rehabilitation 7 020 3 021 7 040
15 762 16 912 45 726
Depreciation
Waste Management 10 103 8 755 16 737
Metals recovery 376 700 1 051
Organics 1 181 961 2 050
Landfill management, construction and
rehabilitation 4 487 798 6 129
16 147 11 214 25 967
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 produced a positive but mixed performance for the period with some
businesses showing strong growth while others lagged. On balance the result was
pleasing given the difficult economic conditions.
The logistics division saw a 17.3 percent increase in revenue due to improved
uptime, a number of new clients and inflationary increases. However, increased
disposal and fuel costs (the average fuel cost was up 14 percent) put pressure
on margins.
Vehicle routing and production efficiencies, together with landfill cost
containment, are the primary areas of focus for the division`s business unit
managers. The fleet replacement programme is 70 percent complete, resulting in
improved vehicle uptime, better operating cost ratios and enhanced customer
service levels.
New corporate clients in South Africa, and a number of year end clean up
projects, bode well for an improved performance in the second half of 2010.
Unexpected regulatory delays resulted in disappointing results from the
logistics division`s non SA operations. The issues causing the delays have been
resolved and these operations are expected to deliver good margins in the second
half of the year.
The metals division continued to be adversely affected by depressed metals
prices. Measures have been implemented to limit the Group`s exposure to this
segment, however the division is strategic in terms of our service offering to
our customer base.
The organics division`s export sales declined significantly due to the
unfavorable US dollar exchange rate during the period. This was however
compensated for by strong growth in the local market. Operational costs were
well managed, and production processes streamlined, resulting in better margins
than in the first six months of 2009. New processing equipment was commissioned
in July 2010, which is delivering operational efficiencies and higher quality
products, facilitating more efficient utilisation of our distribution system.
The turnaround in the division has taken hold and management are confident of
its future prospects.
At the beginning of 2010, the landfill division sold its stake in Enviro-fill
Namibia yielding a profit before tax of R3,5 million. The stake was sold on the
basis of an assessment that opportunities in the South African market outweighed
those in Namibia.
The division elected to walk away from a number of non-performing contracts
resulting in a significant reduction in revenue. This was more than compensated
for by the decrease in associated costs and, together with the benefits of the
recent restructuring, resulted in a significant improvement in profits.
The division`s own landfill investment has experienced a marked turnaround and
management are upbeat about its future profit prospects.
The Groups first Materials Recycling Facility (MRF) is now fully operational and
with increased input volumes, it should generate positive returns. The MRF is an
important component of a holistic waste management solution, access to which is
becoming increasingly important to our clients.
Financial Results
Group revenue increased by 6 percent to R211,7 million
(2009: R199,6 million).
Gross profit decreased by 4.5 percent to R79,7 million
(2009: R83,4 million).
EBITDA increased by 13.5 percent to R31,9 million (2009: R28,1 million).
The Group has moved a significant proportion of its fleet on to full maintenance
leases. A consequence of this is that the lease cost is included in cost of
sales, which depresses gross margin percentages, but depreciation and finance
costs reduce correspondingly.
In January the Group disposed of its Namibian subsidiary which generated revenue
of R4,7 million and headline earnings of R183 000 in the comparative period. On
a like for like basis, Group revenue increased by 11 percent.
Headline earnings of R6,1 million were achieved against R6,3 million in the
comparative interim period, while profit attributable to ordinary shareholders
increased by 24.4 percent to R7,8 million (2009: R6,3 million).
Headline earnings per share were negatively affected, relative to the June 2009
figure, by the increased number of shares in issue due to the clawback of shares
by the original vendors in April 2009(The clawback, which was fully described in
earlier reports, effectively resulted in an additional 82.3 million shares in
issue for no consideration).
Prospects
Trading conditions in the South African market remain difficult, however, waste
volumes have stabilised after the reductions experienced in 2009 and early 2010.
The Group`s market share has been maintained and it continues to target
profitable new business.
Costs and productivity improvements are a major part of management`s focus.
For a number of years all surplus cash has been invested in the business to
facilitate the ongoing growth thereof. Organic growth and growth by acquisition
remain key objectives, however management is focused on cash flow management and
on optimising working capital levels and asset utilisation in order to ensure
that invested cash is utilised as effectively as possible and the business`
funding requirements are actively managed.
While the costs and efficiency initiatives implemented to date, and the ongoing
focus thereon, should bear fruit, and while the second half of the year is
traditionally a stronger period for the Group, management remain cautious until
there is a meaningful improvement in the economic environment.
Changes to board of directors
Ethan Dube resigned as chairman at the end of July 2010 and was replaced by
Andisiwe Kawa who is an independent non-executive chairperson. The board extends
its gratitude to Ethan for the contribution he made to the company.
Funani Mojono joined the board as an independent non-executive director in June
2010.
The board also accepted the resignation of Ivan John during the period and
welcomed Andre Broodryk as the group`s new financial director.
Bronwyn Willcocks announced her retirement as human resources director with
effect from 30 September 2010 and will in future be a non-executive member of
the board. Bronwyn played a pivotal role in the Group`s growth and will be
sorely missed. The board thanks her for an invaluable contribution over a long
period.
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 (Pty) Ltd, a partly owned subsidiary, paid dividends of
R240 000 to non- controlling shareholders.
Basis of preparation
These 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 the 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 believe that the Group has adequate resources to continue in operation
for the foreseeable future.
Auditor`s review
The interim financial results have not been reviewed by the group`s auditors.
Appointment of new auditors
RSM Betty & Dickson (Johannesburg) resigned as the group`s auditors, with effect
from 16 September 2010 and KPMG has been appointed as the group auditor for the
2010 financial year.
Appreciation
The directors would like to thank staff for their extended efforts and clients
for their support during the period under review.
On behalf of the Board
30 September 2010
WAH Willcocks A Broodryk
Managing Director Financial Director
Corporate Information
Independent non executive directors: A Kawa (Chairperson), G Tipper,
PF Mojono, EG Dube (resigned 31.07.10)
Executive directors: WAH Willcocks (MD), A Broodryk (FD), LC Grobbelaar,
BL Willcocks
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: 28/09/2010 07:05:20 Produced by the JSE SENS Department.
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