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UNAUDITED CONDENSED CONSOLIDATED FINANCIAL RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2012
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”)
UNAUDITED CONDENSED CONSOLIDATED FINANCIAL RESULTS
FOR THE SIX MONTHS ENDED 30 JUNE 2012
Condensed Consolidated Statement of Comprehensive Income
Unaudited Unaudited Audited
6 months 6 months 12 months
June 2012 June 2011 Dec 2011
R’000 R’000 R’000
Revenue 257 509 220 990 455 991
Cost of sales (144 382) (129 382) (276 323)
Gross profit 113 127 91 608 179 668
Operating expenses (78 313) (66 828) (139 625)
Earnings before interest, tax, depreciation
and amortisation 34 814 24 780 40 043
Depreciation and amortisation (20 486) (19 640) (37 785)
Profit before interest and taxation 14 328 5 140 2 258
Share of (loss)/profit in equity accounted
joint venture (168) 589 563
Net finance cost (3 772) (4 143) (9 471)
Finance cost (4 054) (4 399) (10 709)
Finance income 282 256 1 238
Profit/(loss) before taxation 10 388 1 586 (6 650)
Taxation (charge)/credit (2 779) (429) 1 548
Total comprehensive profit/(loss) for the
period 7 609 1 157 (5 102)
Comprehensive income for the period
attributable to:
Less: Non-controlling interests (317) (264) (749)
Income/(loss) attributable to equity holders 7 292 893 (5 851)
Foreign currency translation reserve
movement on foreign operations 16 - 53
Total comprehensive income/(loss) 7 308 893 (5 798)
Reconciliation of headline earnings/(loss)
Profit/(loss) attributable to ordinary 7 292 893 (5 851)
shareholders
Adjusted for:
(Profit)/loss on disposal of property, plant
and equipment (2 750) 401 1 371
Taxation charge/(credit) on (profit)/loss on
disposal of property, plant and equipment 550 (112) (384)
Headline earning/(loss) attributable to
ordinary shareholders 5 092 1 182 (4 864)
Weighted average number of shares in issue
on which earnings per share are based 329 311 210 329 311 210 329 311 210
Basic profit/(loss) and diluted
2.21 0.27 (1.78)
profit/(loss) per share (cents)
Headline profit/(loss) per share (cents) 1.54 0.36 (1.48)
Move in earnings per share 718.5%
Move in headline earnings per share 327.8%
Condensed Consolidated Statement of Financial Position
Unaudited Unaudited Audited
June 2012 June 2011 Dec 2011
R’000 R’000 R’000
ASSETS
Non-current assets 331 332 302 376 325 914
Property, plant and equipment 283 305 253 866 277 719
Intangible assets - 179 -
Goodwill 47 001 47 001 47 001
Investments in subsidiaries - - -
Investments in joint ventures 505 700 673
Deferred tax asset 521 630 521
Current assets 125 341 117 308 115 301
Inventories 18 008 18 051 17 106
Loans to related companies 7 707 7 413 7 369
Current tax receivable 3 040 2 254 2 999
Trade and other receivables 95 734 81 239 82 957
Cash and equivalents 852 8 351 4 870
Total assets 456 673 419 684 441 215
EQUITY AND LIABILITIES
Equity 239 124 237 833 231 723
Share capital 175 491 175 491 175 491
Share based payment reserve 264 113 123
Foreign currency translation reserve 69 - 53
Retained earnings 60 930 60 287 53 638
Non controlling interests 2 370 1 942 2 418
LIABILITIES
Non-current liabilities 74 681 58 942 67 174
Interest-bearing borrowings 50 545 40 172 46 191
Landfill rehabilitation provision 6 665 - 5 394
Deferred tax liability 17 471 18 770 15 589
Current liabilities 142 868 122 909 142 318
Current tax payable 1 180 176 815
Loans from related parties 5 356 4 329 3 576
Interest-bearing borrowings 37 307 46 746 50 088
Trade and other payables 67 615 50 475 55 358
Bank overdrafts 31 410 21 183 32 490
Total liabilities 217 549 181 851 209 492
TOTAL EQUITY & LIABILITIES 456 673 419 684 441 215
Number of shares in issue at period end 329 311 210 329 311 210 329 311 210
Net asset value per share (cents) 71.9 71.6 69.6
Net tangible asset value per share 57.6 57.4 55.4
(cents)
Condensed Consolidated Statement of Cash Flows
Unaudited Unaudited Audited
6 months 6 months 12 months
June 2012 June 2011 Dec 2011
R’000 R’000 R’000
Cash inflow from operating activities 25 723 34 398 50 228
Cash outflow on investing activities (23 659) (25 033) (64 146)
Cash (outflow)/ inflow from financing
activities (5 002) (8 040) 455
Total cash movement for the period (2 938) 1 325 (13 463)
Cash at beginning of period (27 620) (14 157) (14 157)
Cash at end of period (30 558) (12 832) (27 620)
Condensed Consolidated Statement of Changes in Equity
Unaudited Unaudited Audited
6 months 6 months 12 months
June 2012 June 2011 Dec 2011
R’000 R’000 R’000
Total comprehensive income for the period 7 610 1 157 (5 101)
Dividends paid to minorities (366) (105) (105)
Foreign currency translation reserve 16 - 53
Share based payment expense 141 - 95
Equity at beginning of period 231 723 236 781 236 781
Equity at end of period 239 124 237 833 231 723
Made up as follows:
Share capital issued 33 33 33
Share premium 175 458 175 458 175 458
Share based reserves 264 113 123
Foreign currency translation reserve 69 - 53
Retained income 60 930 60 287 53 638
Non controlling interest 2 370 1 942 2 418
Equity at end of period 239 124 237 833 231 723
Condensed Consolidated Segment Report
Unaudited Unaudited Audited
6 months 6 months 12 months
June 2012 June 2011 Dec 2011
R’000 R’000 R’000
Gross revenue
Waste management 181 881 155 888 310 223
Metals recovery 12 817 10 771 21 809
Organics 16 131 14 115 40 415
Landfill 46 680 40 216 83 544
257 509 220 990 455991
Profit/ (Loss) before interest and
taxation
Waste management 14 712 3 625 2 686
Metals recovery (1 701) (2 006) (3 414)
Organics (5 778) (1 648) (2 718)
Landfill 7 095 5 169 5 704
14 328 5 140 2 258
Depreciation
Waste management 11 046 12 440 23 149
Metals recovery 1 603 1 954 3 682
Organics 1 369 1 658 3 073
Landfill 6 468 3 588 7 881
20 486 19 640 37 785
The preparation of the group’s condensed consolidated financial results was
supervised by the group financial director, AP Broodryk, CA (SA)
OVERVIEW
We are pleased to report an improvement in performance over both six month periods
in the prior year. A number of important projects were completed during the first
six months of this year and certain of the measures previously taken to grow
revenue and reduce costs began to bear fruit.
The growth in revenue was a result of net growth in our client base but more
importantly, a focus on industries where our brand, our client relationships and
our specific expertise provided an opportunity to grow premium service offerings to
major clients.
We completed the move to the central hub in Germiston during the period. This has
resulted in cost savings and synergies and we anticipate further benefits from this
centralisation.
The new cell at the FG landfill was commissioned in January as a B-lined site in
terms of the new Waste Act and we accepted the first load of waste in February.
Volumes into the landfill have increased steadily and the facility forms an
important part of a holistic service offering to our clients. We made a significant
investment in the construction of the new cell to ensure that it met and exceeded
all relevant current and anticipated environmental and regulatory standards. This
conservative approach is proving to be valuable to our clients in providing high
levels of comfort regarding the ethical disposal of their waste.
The Group generated less cash from operating activities than in the comparative
period, primarily as a number of major debtors paid directly after the period end.
The cash generated during the period was invested in equipment needed for new
business, development and improvement of our facilities and applied to reduce
interest bearing borrowings. Returns on assets are monitored carefully and fixed
asset acquisitions to expand operations are carefully evaluated to ensure they meet
the Group’s benchmarks before investments are made.
The waste management business grew revenue by 16.7% over the corresponding period
in the prior year. Profit before interest and taxation rose from R3.6m to R14.7m.
External landfill cost decreased as a consequence of diversions to the FG landfill,
this saving was however offset by an increase in the fleet, and thus in fixed
vehicle cost, and an increase in fuel cost. Payroll cost increased as a result of
an industry wide wage increase at a rate above inflation and a decision to invest
in senior people, both in existing parts of the business and in new initiatives.
Operating cost increased at a lower rate than revenue but were affected by higher
sales and advertising expenditure.
Revenue in the waste management business grew at a rate above the increase in cost
and this positive leverage resulted in the significant increase in profit. While
there will always be a variable cost element associated with growth, we will
continue to look to leverage off our existing asset base to produce higher returns.
Revenue in the organics business increased over the comparative period, however the
loss incurred in the operation rose substantially. Although this business is
seasonal with the majority of sales and income in the second half of the year,
given the magnitude of the loss a detailed review of the operation is being
performed with a consequent decision expected before the end of the calendar year.
As reported previously the metals recovery business has been scaled down. Revenue
increased over the first six months in the prior year but was down on the second
six month period. The loss reduced from that in the first six months of the prior
year, and the business was cash flow positive. Metals recovery forms an important
part of a complete service offering to our clients but will continue to be run on a
low risk basis with a minimum of allocated capital and restricted stock levels.
The landfill business showed solid growth over the same period in the previous
year, partly as a result of the new cell at FG landfill coming on stream. Profit
before interest and taxation grew by 37%. Pleasingly, the division won a number of
new landfill contracts during the period. Maintenance programmes and the quality of
the equipment used in the business have improved, however the level of maintenance
costs remains a cause for concern.
PROSPECTS
Market conditions remain difficult and significant effort is required to achieve
profitable growth. Competitive pressures are high and we will continue to target
efficiencies in order to preserve margins.
We have invested heavily in the business, both in physical assets and in people,
and we anticipate benefits from this. The FG landfill should continue to be a
source of growth, we will leverage off our existing asset base and the Germiston
hub which is working well and should result in further cost savings.
We are cautiously optimistic regarding the future. We operate in a demanding
environment where we feel downturns in our clients’ businesses very quickly, and
there are still a number of areas in our business which require attention. We will
continue to apply the strategies that have resulted in the improvements to the
Group and we expect solid progress.
DIVIDEND
The Group will not pay a dividend for the period.
Platinum Waste Resources (Pty) Ltd, a partly owned subsidiary, paid dividends of
R315 000 to non-controlling shareholders. Interwaste Cleaning (Pty) Ltd, a partly
owned subsidiary, paid dividends of R51 000 to non-controlling shareholders.
SUPPLEMENTARY NOTES
Interwaste is a South African registered company. The condensed consolidated
interim financial statements of the Company comprise the Company and its
subsidiaries and the Group’s interest in jointly controlled entities.
STATEMENT OF COMPLIANCE
The condensed consolidated interim 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 the Companies
Regulations, 2011.
BASIS OF MEASUREMENT
The condensed consolidated interim financial statements are presented 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 interim financial statements by all Group
entities.
GOING CONCERN
The condensed consolidated interim 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.
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
23 August 2012
AH Willcocks AP Broodryk
Chief Executive Financial Director
COROPORATE INFORMATION
Non-executive directors: A Kawa (Chairperson), PF Mojono, GR Tipper, BL Willcocks
Executive directors: WAH Willcocks (MD), A Broodryk (FD), LC Grobbelaar
Registration number: 2006/037223/06
Registered address: P O Box 73503, Fairlands, 2030
Company secretary: Allen de Villiers
Telephone: (011) 323 7300 Facsimile: 086 576 8152
Transfer secretaries: Computershare Investor Services (Pty) Limited
Designated Adviser: Grindrod Bank Limited
Date: 23/08/2012 08:50:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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