• Change of culture needed

    The right leadership will help SA shed its culture of violence, says Mandi Smallhorne.

  • 10 tips to find bargains

    Susan Erasmus gives advice on how bargain hunters can get the most bang for their buck.

  • Inside Labour

    Labour's bitter breaches need to be seen in historical context, says Terry Bell.

See More

A reputation trashed... an opportunity stashed

May 06 2010 00:00 Marc Hasenfuss
<p>IF THE INCREASINGLY audible whispers from my little band of associates is anything to go b(u)y then small waste management company Interwaste is probably worth a closer look. It's always difficult punting companies where a corporate reputation has largely been rubbished. In that regard, Interwaste hasn't enjoyed the steadiest showing on the AltX, having fallen short of initial forecasts and then not quite sustaining its comeback strategy. </p>
<p>The year to end-December 2009 wasn't exactly a bed of manure either, with clients cutting back production (which means less waste) and the onset of some vicious competition (which prompted Interwaste to leave some margin squashing opportunities on the table). The numbers don't make for pretty reading: turnover was down 14% at R407m, taxed profits down more than a third to R26m and short-term debt (overdraft and borrowings) topping R75m. </p>
<p>But there were some positives. Operational cash flow was a reassuring R40m and the gross trading margin was held above 40%. While there was a significant cash outflow, a hefty amount was spent on bolstering the underlying businesses (which encompass waste management, compost manufacturing and landfills). </p>
<p>So it's encouraging to see Interwaste geared for growth, especially since the profit momentum picked up significantly in the second half of its 2009 financial year. </p>
<p>While it's clear clients stretched their payment terms in 2009, Interwaste has reported net cash outflow has been stabilised and that cash was generated in the first months of its 2010 financial year. In addition, it started to see growth in revenues from existing clients, which hopefully also means there will be some success in attracting new clients and creating new sources of revenue. </p>
<p>Considering Interwaste - which has a tangible net asset value of 63c/share - is trundling along at a historic earnings multiple of eight times, there can't be too much downside if we can rely on management's comments about its prospects. </p>
<p><img src='http://www.fin24.com/downloads/Media/article_images/fweng_img/2007/sep/ee_int060510.gif'> </p>




Read Fin24’s Comments Policy

24.com publishes all comments posted on articles provided that they adhere to our Comments Policy. Should you wish to report a comment for editorial review, please do so by clicking the 'Report Comment' button to the right of each comment.

Comment on this story
Comments have been closed for this article.

Company Snapshot

We're talking about:


Johannesburg has been selected to host the Global Entrepreneurship Congress in 2017. "[The congress] will ensure that small business development remains firmly on the national agenda and the radar screen of all stakeholders, the Small Business Development minister said.

20 self-made teenage millionaires

From selling lemonade to building webpages, these young entrepreneurs made a pretty fortune!


Luxury living

Top 10 richest musicians of all time
10 most expensive cars In the world
10 of the most expensive things that will leave your jaw hanging!
Seven of the most expensive children's toys ever made

Money Clinic

Money Clinic
Do you have a question about your finances? We'll get an expert opinion.
Click here...

Voting Booth

How do you see your boss? He/sheis:

Previous results · Suggest a vote