| Thu 29 Mar 2012, 10:06 | | IWE - Interwaste Holdings Limited - Reviewed condensed preliminary financial |
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IWE
IWE
IWE - Interwaste Holdings Limited - Reviewed condensed preliminary financial
results for the year ended 31 December 2011
Interwaste Holdings Limited
(Incorporated in the Republic of South Africa)
(Registration number: 2006/037223/06)
(JSE code: IWE ISIN: ZAE000097903)
("Interwaste" or "the Company" or "the Group")
REVIEWED CONDENSED PRELIMINARY FINANCIAL RESULTS FOR THE YEAR ENDED 31
DECEMBER 2011
Condensed Consolidated Statement of Comprehensive Income
Reviewed Audited
12 months 12 months
Dec 2011 Dec 2010
R`000 R`000
Revenue 455 991 442 674
Cost of sales (276 323) (290 032)
Gross profit 179 668 152 642
Other income - 7 029
Operating expenses (139 625) (123 401)
Earnings before interest, tax, 40 043
depreciation and amortisation 36 270
Depreciation and amortisation (37 785) (38 816)
Results from operating activities 2 258 (2 546)
Share of profit in equity accounted joint 563 55
venture
Interest received 1 171 351
Interest paid (10 641) (13 235)
Loss before taxation (6 649) (15 375)
Taxation credit 1 548 3 419
Total comprehensive loss for the year (5 101) (11 956)
Comprehensive (loss)/income for the year
attributable to:
Non-controlling interests 749 111
Comprehensive loss attributable to equity (5 850) (12 067)
holders
(5 101) (11 956)
Reconciliation of headline loss
Loss attributable to ordinary shareholders (5 850) (12 067)
Adjusted for:
Profit on disposal of subsidiary - (4 946)
Loss on disposal of property, plant and 1 371 3 331
equipment
Impairment of investment in joint venture - 1 416
Impairment of goodwill - 1 432
Taxation on headline adjusting entries (384) (241)
Headline loss attributable to ordinary (4 863) (11 075)
shareholders
Weighted average number of shares in issue 329 311 210 329 311 210
on which loss per share is based
Basic loss and diluted loss per share (1.78) (3.66)
(cents)
Headline loss and diluted headline loss (1.48) (3.36)
per share (cents)
Condensed Consolidated Statement of Changes in Equity
Reviewed Audited
12 months 12 months
Dec 2011 Dec 2010
R`000 R`000
Total comprehensive loss for the year (5 101) (11 956)
Dividends paid to non-controlling (105) (243)
interest 53 -
Foreign currency translation reserve - (1 575)
Disposal of subsidiary (non-controlling 95 142
interest) 236 781 250 413
Share option expense
Equity at beginning of year
Equity at end of year 231 723 236 781
Made up as follows:
Share capital issued 33 33
Share premium 175 458 175 458
Share based payment reserve 123 1 715
Foreign currency translation reserve 53 -
Retained earnings 53 638 57 801
Non controlling interests 2 418 1 774
Equity at end of year 231 723 236 781
Condensed Consolidated Statement of Financial Position
Reviewed Audited
Dec 2011 Dec 2010
R`000 R`000
ASSETS
Non-current assets 325 914 296 552
Property, plant and equipment 277 719 248 540
Goodwill 47 001 47 001
Intangible assets - 179
Investment in joint venture 673 110
Deferred tax asset 521 722
Current assets 115 301 119 902
Inventories 17 106 15 717
Loans to related companies 7 369 7 347
Current tax receivable 2 999 6 947
Trade and other receivables 82 957 80 581
Cash and cash equivalents 4 870 9 310
Total assets 441 215 416 454
EQUITY AND LIABILITIES
Equity 231 723 236 781
Share capital and premium 175 491 175 491
Share based payment reserves 123 1 715
Foreign currency translation reserve 53 -
Retained earnings 53 638 57 801
Non controlling interests 2 418 1 774
Non-current liabilities 67 174 67 942
Interest-bearing borrowings 46 191 48 971
Landfill rehabilitation provision 5 394 -
Deferred tax liability 15 589 18 971
Current liabilities 142 318 111 731
Current tax payable 815 -
Loans from related parties 3 567 3 630
Interest-bearing borrowings 50 088 46 685
Trade and other payables 55 358 37 949
Bank overdrafts 32 490 23 467
Total liabilities 209 492 179 673
TOTAL EQUITY & LIABILITIES 441 215 416 454
Number of shares in issue at period end 329 311 210 329 311 210
Net asset value per share (cents) 69.6 71.4
Net tangible asset value per share 55.4 57.1
(cents)
Condensed Consolidated Statement of Cash Flow
Reviewed Audited
12 months 12 months
Dec 2011 Dec 2010
R`000 R`000
Cash inflow from operating activities 50 122 47 265
Cash outflow on investing activities (64 146) (34 925)
Cash inflow/(outflow) from financing 561 (6 948)
activities
Total cash movement for the year (13 463) 5 392
Cash and cash equivalents at beginning (14 157) (19 549)
of year
Cash and cash equivalents at end of year (27 620) (14 157)
Condensed Consolidated Segment Report
Reviewed Audited
12 months 12 months
Dec 2011 Dec 2010
R`000 R`000
Gross revenue
Waste management 310 223 270 566
Metals recovery 21 809 37 469
Organics 40 415 56 755
Landfill management 83 544 77 884
455 991 442 674
Results from operating activities
Waste management 2 686 14 307
Metals recovery (3 414) (13 126)
Organics (2 719) (5 588)
Landfill management 5 705 1 861
2 258 (2 546)
Depreciation and amortisation
Waste management 23 149 23 378
Metals recovery 3 682 1 786
Organics 3 073 1 826
Landfill management 7 881 11 826
37 785 38 816
The preparation of the group`s condensed consolidated financial results was
supervised by the group financial director, AP Broodryk, CA(SA).
OVERVIEW
Having cautioned in the interim announcement that the markets in which the
Group operates are likely to remain difficult, it is nonetheless
disappointing to report that performance did not improve in the second half
of the year.
The Group produced a loss for the second six month period which resulted in
an overall loss for the year. This was primarily the result of negative
leverage; a number of major costs increased at higher rates than the rate at
which revenue increased.
The markets in which the Group operates are challenging. Customers are
managing costs tightly, growth is limited, and clean ups have been delayed
and restricted. While the majority of our clients recognise the importance of
ethical waste disposal, we have seen some movement of customers to
questionable operators. We retained our market share over the year by
providing ethical and innovative waste disposal and quality service, we will
continue to do so as this is critical to the vast majority of the market and
will support revenue growth.
Gross margins improved over the previous year and were supported by a
contribution from the Group`s own landfill. The level of the margins however
declined from those achieved in the first half of the financial year as a
result of cost pressures.
The waste management business increased revenue by 14.6% over the previous
year. Landfill costs were well managed during the second half and our success
in developing alternate, cost effective waste disposal options, limited the
cost increase for the year to 6%. Fixed vehicle costs increased significantly
as a result of the movement to full maintenance leases, this was however
offset by lower depreciation and interest charges resulting in a net increase
in the expense of 3%. Fuel, maintenance and other vehicle costs increased by
11%, largely as a result of higher fuel prices during the year. Payroll costs
increased by 13%, a function of an above inflation union wage increase and
growth in staff numbers. Operating costs excluding payroll increased by 15%,
due to administered price increases, professional fees and expenditure on the
Group`s IT systems.
The metals recovery business was scaled down and revenue decreased by 42%.
The loss before interest and taxation decreased substantially relative to the
last financial year and the first six months of the current year. The
business forms an important part of the service offering to our customers but
the capital available for growth has been restricted and it is expected to
generate small positive returns going forward.
Revenue in the organics business declined by 29%, and the loss before
interest and taxation by 51%, from the previous year, a function of more
concentrated marketing and sales at higher margins. The proportion of sales
through building and retail chains increased during the period with a
positive effect on results.
The landfill division grew revenue by 7% and produced a profit before
interest and taxation of R5.7 million, a significant improvement over the
profit of R1.8 million in the previous year. The bulk of the profit was
earned in the first half of the financial year, due to large unscheduled
maintenance and repair costs in the second half. The Group`s contracts on a
number of strategic landfills were extended during the last six months and
the business should continue the positive trend established during the year.
The Group`s property, plant and equipment increased in the latter part of the
year, mainly as a result of the development of the FG landfill site. This was
financed through interest bearing borrowings and the bank overdraft. The
landfill rehabilitation provision is required as a result of the operation of
the FG landfill site.
The Group generated cash from operating activities. This was reinvested into
the business with an additional amount being raised to fund the landfill.
PROSPECTS
Significant effort is being devoted to growing revenue and cutting costs.
FG landfill has been permitted and is authorised to operate as a B-lined site
in terms of the new Waste Act, allowing it to accept other than "general"
waste. This will bolster the Group`s ability to offer customers innovative
and cost effective solutions for disposal and should significantly enhance
our ability to produce profitable growth.
The move to the central Gauteng site was delayed but will be completed before
June 2012 and will lead to cost savings. Exercises to improve vehicle
utilisation and staff efficiency are under way.
The markets in which the Group operates are likely to remain difficult.
Considerable time and effort have been invested in building a platform for
profitable growth in difficult conditions and some benefit of this may be
realised during 2012.
DIVIDEND
The Group will not pay a dividend for the financial year.
Platinum Waste Resources (Pty) Ltd, a partly owned subsidiary, paid dividends
of R105 000 to non-controlling shareholders.
SUPPLEMENTARY NOTES
Interwaste is a South African registered company. The condensed consolidated
financial statements of the Company comprise the Company and its subsidiaries
and the Group`s interest in jointly controlled entities.
STATEMENT OF COMPLIANCE
These condensed consolidated financial statements have been prepared in
accordance with the recognition and measurement criteria of International
Financial Reporting Standards "IFRS", the presentation and disclosure
requirements of IAS 34 - Interim Financial Reporting, the AC 500 Standards as
issued by the Accounting Practices Board, the Listing Requirements of the JSE
Limited and the requirements of the Companies Act of South Africa, 2008 (as
amended), and Companies Regulations, 2011.
BASIS OF MEASUREMENT
The condensed consolidated financial statements are prepared in thousands of
South African Rands (R`000s) on the historical cost basis, except for
derivative financial instruments which are measured at fair value.
The accounting policies are those presented in the annual financial
statements for the year ended 31 December 2011 and have been applied
consistently to the periods presented in these condensed consolidated
financial statements by all Group entities.
GOING CONCERN
The condensed consolidated 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.
REPORT OF THE INDEPENDENT AUDITORS
The condensed group financial statements of Interwaste Holdings Limited for
the year ended 31 December 2011 have been reviewed by the Company`s auditor,
KPMG Inc. In their report dated 28 March 2012, which is available for
inspection at the Company`s registered office, KPMG Inc state that their
review was conducted in accordance with the International Standard on Review
Engagements 2410, Review of Interim Information Performed by the Independent
Auditor of the Entity, which applies to a review of condensed consolidated
group financial information, and have expressed an unmodified conclusion on
the condensed preliminary group financial statements.
APPRECIATION
The board extends its gratitude to our employees, our customers and our
investors for the effort and support during the period.
On behalf of the Board
29 March 2012
WAH Willcocks AP Broodryk
Chief Executive Financial Director
CORPORATE INFORMATION
Non-executive directors: A Kawa (Chairperson)
PF Mojono, GR Tipper, BL Willcocks
Executive directors: WAH Willcocks (MD), AP Broodryk (FD), LC Grobbelaar
Registration number: 2006/037223/06
Registered address: P O 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: 29/03/2012 10:06:01 Produced by the JSE SENS Department.
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