Tuesday, 26 April 2011

Low U.S. Dollar Shades IWG's Second Quarter Results

International Water-Guard (TSX-V: IWG)
Basic Shares: 38.1 million
Fully Diluted: 45.6million


The low U.S. dollar ate away at International Water Guard's (IWG) second quarter fiscal 2011 results but the market seemed to shrug off the relatively flat financial news in anticipation of near-term announcements on IWG's mergers and acquisition work.

Sales in the second quarter, which ended March 31st, 2011, were just over $1 million, a drop of about $100 thousand from the same quarter last year.

IWG still reported net earnings of $14 thousand but that was compared to net earnings of $54 thousand in the same quarter last year.

Overall, the six month sales to March 31st dropped just $22 thousand, compared to the same period in the previous year, to settle at $2.1 million.

The market didn't budge. In fact, there were no shares traded at all on a day that was generally not kind to small caps.

Perhaps the steady share price came because IWG announced last month that it was putting a restructuring proposal forward for shareholder approval at its annual meeting today.

That caused Fundamental Research to speculate in an update report that "this restructuring plan could be an indication that the company is close to completing an acquisition or asset sale."

Fundamental has been consistently pointing out how the market is not giving a fair evaluation to IWG in light of its relatively strong financial position with no debt and money in the bank.
So in its last report, Fundamental went further by stating:

"The proposed restructuring, we believe, would provide greater transparency and possibly unlock the value of IWG's operating business."

Fundamental ended its report sticking with its previous fair value share price of $0.30 for IWG, compared to the market price at the day of the report of $0.07, the same share price for today's close.