| Wed 21 Feb 2001, 0:00 | | Enviroserv Holdings Limited Interim Results |
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ENVIROSERV HOLDINGS LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1994/000280/06)
("EnviroServ")
INTERIM ANNOUNCEMENT FOR THE SIX-MONTH PERIOD ENDED 31 DECEMBER 2000
Abridged Group Income Statement
Six-month Six-month
period ended period ended Year ended
31 December 31 December 30 June
2000 1999 2000
(unaudited) Percentage (unaudited) (audited)
R'000 change R'000 R'000
Revenue 170 530 5 162 910 331 608
Operating profit before
depreciation 29 731 29 893 53 101
Depreciation (13 567) 2 (13 292) (18 075)
Operating profit 16 164 (3) 16 601 35 026
Finance costs (22) (98) (1 327) (1 738)
Share of result of associate
company 373 - -
Profit before taxation 16 515 8 15 274 33 288
Taxation (3 822) (3 556) (9 310)
Net profit attributable to
ordinary shareholders 12 693 8 11 718 23 978
Abridged Group Balance Sheet
31 December 31 December 30 June
2000 1999 2000
(unaudited) (unaudited) (audited)
R'000 R'000 R'000
Property, plant and equipment 169 655 165 833 165 406
Investments 3 373 - -
Current assets 107 503 87 456 108 876
Inventory 6 167 5 934 6 098
Accounts receivable 74 151 67 891 66 240
Net bank and cash 27 185 13 631 36 538
280 531 253 289 274 282
Equity and liabilities
Capital and reserves 122 128 111 385 115 436
Ordinary share capital and
share premium 68 181 74 182 74 182
Retained earnings 53 947 37 203 41 254
Non-current liabilities 90 047 73 060 82 245
Deferred taxation 17 455 9 158 13 877
Long-term provisions 67 379 57 935 62 833
Deferred income 5 213 5 967 5 535
Current liabilities 68 356 68 844 76 601
Accounts payable 68 789 68 844 67 366
Shareholders for dividend - - 8 209
Taxation (433) - 1 026
280 531 253 289 274 282
Abridged Statement of Changes in Equity
31 December 31 December 30 June
2000 1999 2000
(unaudited) (unaudited) (audited)
R'000 R'000 R'000
Share capital
Ordinary shares 1 130 1 173 1 173
At beginning of period 1 173 1 173 1 173
Share buy-back (43) - -
Share premuim 67 051 73 009 73 009
At beginning of period 73 009 73 009 73 009
Share buy-back (5 958) - -
68 181 74 182 74 182
Distributable reserves
At beginning of period 41 254 25 485 25 485
Profit attributable to
ordinary shareholders 12 693 11 718 23 978
Ordinary dividend - - (8 209)
53 947 37 203 41 254
Shares in issue at period-end 113 028 342 117 276 476 117 276 476
Weighted average number of
shares in issue during period 116 370 391 117 276 476 117 276 476
Earnings per share (cents) 10,9 9 10,0 20,4
Headline earnings
per share (cents) 11,2 12 10,0 22,1
Net asset value per share (cents) 108 14 95 98
Operating margin (%) 9,5 10,2 10,6
Contingencies
Suretyship for bank overdrafts 25 023 25 854 29 968
Capital commitments
Approved and contracted for 54 979 11 442 -
Approved not yet contracted for 16 716 25 013 53 786
Abridged Group Cash Flow Statement
Six-month Six-month
period ended period ended Year ended
31 December 31 December 30 June
2000 1999 2000
(unaudited) (unaudited) (audited)
R'000 R'000 R'000
Cash generated by operations 31 450 30 792 70 433
Movement in working capital (6 555) (2 522) (26 886)
Movement in deferred income (322) (239) (671)
Cash flow from operations 24 573 28 031 42 876
Finance costs (22) (1 327) (1 738)
Taxation paid (1 703) (733) (740)
Dividends paid (8 209) (5 864) (5 864)
Cash retained from
operating activities 14 639 20 107 34 534
Additions to property,
plant and equipment (15 662) (22 200) (30 605)
Proceeds on disposal of
property, plant and equipment 1 044 403 1 690
Additions to investments (3 373) - -
(3 352) (1 690) 5 619
Movement in long-term liabilities - - (6 425)
Share buy-back (6 001) - -
Movement in cash and
cash equivalents (9 353) (1 690) (806)
Balance at beginning of period 36 538 15 321 37 344
Balance at end of period 27 185 13 631 36 538
Reconciliation of headline earnings
Profits attributable to
ordinary shareholders 12 693 11 718 23 978
Adjusted by:
Loss on disposal of fixed assets 404 13 2 774
13 097 11 731 26 752
Taxation on above adjustments (121) (4) (832)
12 976 11 727 25 920
COMMENTS
Group overview
EnviroServ has again showed an improved performance with a 12% increase in
headline earnings per share for the six months to 31 December 2000. Conditions
in our markets have generally remained tough - with limited work being awarded
by Government and Local Authorities, as well as our clients in the industrial
waste markets remaining under pressure in the current economic climate.
Although operating profit is marginally down from R16,6 million to R16,2
million for the period, our margin has been maintained at an acceptable level
of 9,5%. Revenue has grown by 5% for the period. Finance charges were reduced
substantially during the period - with operating cash flows remaining strong.
Headline earnings were further enhanced as a result of the Group's share
buy-back programme. The Group bought back some 3,6% of its own shares during
the latter part of the six-month period.
Review of Operations
Ongoing improvements
* The Group has embarked on a fleet replacement programme to introduce 95 new
vehicles into our fleet at a cost of R72 million.
* We have negotiated an outsourcing service agreement with a commercial vehicle
supplier for the maintenance of our vehicles.
* The Group is in the process of introducing new IT systems, which will improve
the information flow and access throughout our business, at a cost of R5
million.
* We have been awarded our first major contract in our Process Management
Division.
Industrial Waste management
The Industrial Waste division consists of our landfill sites, our waste
transporter Waste-tech, and our Hazmat clean-up team.
This division has reported improved results and has grown its revenue by about
8%. The Group is currently experiencing problems at our Aloes hazardous waste
disposal facility in the Eastern Cape due to a dispute with the Port Elizabeth
Municipality regarding our right to dispose of landfill effluent into the
Municipal sewer. The site has been closed since mid-August 2000 and caused a
reduction in operating profit of more than R2 million for the division. We are
actively engaging the Municipality to resolve this matter. Besides Aloes, all
of the Group's other landfill sites reported results in line with expectations.
The transport and collection part of this business reported relatively flat
earnings as working costs increased with the age of our fleet. The Group is
currently embarking on a R72 million truck replacement programme, which will
include the outsourcing of our vehicle maintenance functions. In total, we will
have introduced 95 new vehicles into our fleet by about August 2001, for which
long-term debt has been raised. These new vehicles should improve the current
cost and efficiency levels during our next financial year.
SanuMed
SanuMed is the Group's medical waste collection and disposal division. As
reported during the previous financial period, the Group was not successful in
obtaining two contracts awarded on tender by provincial authorities to emerging
contractors. These lost contracts have reduced the profitability of this
division. EnviroServ has however managed to secure substantial new work in
Gauteng on a sub-contracting basis, which has contributed towards replacing
lost revenue. We have also been successful in obtaining a new permit for an
incineration facility in Bloemfontein. This facility should be constructed and
operational by May 2001.
Domestic Waste
Our Domestic Waste division consists of our landfill management division and
Wade Refuse which collects domestic waste. Losses in this division are still
well contained. In the short term, privatisation opportunities do not seem
imminent. The Group is also experiencing delayed payment problems with some
local authorities - particularly with the Town Council of Randfontein. However,
we are confident that all amounts will be settled.
Sediba
Sediba is the Group's water and sewage management division. This business has
continued to perform well and has shown good growth compared to the six months
ended 31 December 1999. Part of Sediba's strategy is to grow acquisitively in
order to achieve the critical mass required to become a major player in our
target market. Some good acquisition opportunities have been identified and
this division should continue to grow and improve its performance.
Process Management
This division provides clients with on-site treatment of hazardous and
non-hazardous industrial effluent. During the past six months this division
acquired a minority stake in Chargold (Pty) Limited, which beneficiates carbon
and other waste types. Chargold has performed well and contributed positively
to earnings during the period. Process Management has also secured a ten-year
contract to build and operate an on-site incineration facility for a major
client's paper pulp waste stream. Revenue from this contract would start after
the granting of a permit and construction of this facility is completed by June
2002. Prospects for this division remain exciting.
SHARE BUY-BACK
The Company was authorised by its shareholders at the last annual general
meeting to buy-back up to 10% of its own shares on the open market. To date
EnviroServ has bought back 4 248 134 shares (3,6%) and will continue to apply
surplus cash to buying back shares up to the authorised limit.
PROSPECTS
The Group will continue to focus on growing revenues while attempting to
maintain its profit margin. Our drive to contain costs and improve efficiencies
is ongoing.
The two major projects we are currently embarking on, replacing the older
vehicles in our fleet and installing our new IT systems, are expected to
contribute positively to our growth and cost containment in the next financial
year. We are also pro-actively focusing on our business development initiatives
to enhance their effectiveness.
During October 2000 The Bidvest Group acquired a strategic shareholding of
approximately 25% of EnviroServ's then issued share capital. We are confident
that there will be a number of opportunities which can be jointly explored. We
are currently establishing a working relationship with their BidServ Division
and will in future co-operate with them on projects and joint opportunities.
CHANGES IN DIRECTORATE
Brian Joffe was appointed to the Board on 1 November 2000 as a non-executive
director. With effect from 7 February 2001, Des Gordon will assume the role of
Chief Executive of the EnviroServ Group. Gordon has been the Group's Financial
Director for the past four years. The outgoing CEO, Alistair McLean, will
assume responsibility for business development within the Group. Over the past
four years, McLean has successfully overseen the merging of a number of
acquired businesses into a single streamlined operation.
The streamlining and consolidation process required a strong internal focus to
ensure a successful transition. The Board now believes that this process is
complete, and that McLean can now devote his full attention to finding and
developing new opportunities for the Group.
Dividend
In line with the Group's dividend policy to declare an annual dividend after
publication of its final audited results, no interim dividend has been declared
D K Gordon A McLean
Chief Executive Director
Johannesburg
20 February 2001
Registered office Transfer secretaries
18 Dusseldorf Street Computershare Services Limited
Apex, Benoni 4th Floor, Edura House
PO Box 2207 41 Fox Street
Benoni 1500 Johannesburg 2001
Directors: M R Maruma (Non-executive Chairman), D K Gordon (Chief Executive), A
McLean*, T D Denyssen, E K Motebang, D Lavarinhas, B Joffe (Non-executive)
*British
