| Tue 14 Aug 2001, 0:00 | | Enviroserv Holdings Limited - Audited Results |
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Registration number 1994/000280/06) ("Enviroserv")
AUDITED RESULTS FOR THE YEAR ENDED 30 JUNE 2001
* Revenue up 15%
* Headline earnings up 19%
* Dividend up 14%
Abridged Group Income Statement
Year ended Year ended
30 June Percentage 30 June
2001 change 2000
R'000 R'000
Revenue 379 887 15 331 608
Operating profit
before depreciation 67 178 53 101
Depreciation (29 302) (18 075)
Operating profit 37 876 8 35 026
Finance costs (1 557) (1 738)
Share of result of
associate company 1 214 -
Profit before taxation 37 533 33 288
Taxation (8 719) (9 310)
Profit before non-trading items 28 814 23 978
Non-trading items after taxation (25 935) -
Net profit attributable to
ordinary shareholders 2 879 23 978
Earnings per share (cents) 2,6 20,4
Headline earnings per share
(cents) 26,2 19 22,1
Dividends per share (cents) 8,0 14 7,0
Weighted average number
of shares in issue
during the period 111 027 056 117 276 476
Analysis of non-trading
items after taxation
Write down of investments 4 256 -
Devaluation of properties 11 165 -
Goodwill written off 10 514 -
25 935 -
Reconciliation of headline earnings
Profits attributable to
ordinary shareholders 2 879 23 978
Adjusted by:
Non-trading items 25 935 -
Loss on disposal of fixed assets 317 2 774
29 131 26 752
Taxation on above adjustments (95) (832)
29 036 25 920
Abridged Group Balance Sheet
Year ended Year ended
30 June Percentage 30 June
2001 change 2000
R'000 R'000
Assets
Non-current assets 188 453 165 406
Property, plant and equipment 177 091 165 406
Goodwill 1 884 -
Investment in associate 9 478 -
Current assets 116 508 108 876
Inventory 5 388 6 098
Accounts receivable 95 025 66 240
Net bank and cash 16 095 36 538
304 961 274 282
Equity and liabilities
Capital and reserves 99 107 115 436
Ordinary share capital
and share premium 60 262 74 182
Retained earnings 38 845 41 254
Non-current liabilities 90 181 82 245
Deferred taxation 14 226 13 877
Environmental remediation
Provisions 66 467 62 833
Long-term borrowings 4 547 -
Deferred income 4 941 5 535
Current liabilities 115 673 76 601
Accounts payable 69 795 55 282
Short-term provisions 29 703 12 084
Short-term borrowings 813 -
Shareholders for dividend 8 444 8 209
Taxation 6 918 1 026
304 961 274 282
Shares in issue at
period end 105 548 829 117 276 476
Net asset value per
share (cents) 89 (9) 98
Abridged Group Statement of Changes in Equity
30 June 2001 30 June 2000
R'000 R'000
Share capital
Ordinary shares 1 055 1 173
At beginning of year 1 173 1 173
Share buy - back (118) -
Share premium 59 207 73 009
At beginning of year 73 009 73 009
Share buy - back (13 802) -
60 262 74 182
Distributable reserves
At beginning of year 41 254 25 485
Profit distribution from
Employee Share Trust 3 156 -
Profit attributable to
ordinary shareholders 2 879 23 978
Ordinary dividend (8 444) (8 209)
38 845 41 254
Abridged Group Cash Flow Statement
30 June 2001 30 June 2000
R'000 R'000
Cash generated by operations 76 020 70 433
Movement in working capital 1 253 (4 863)
Movement in deferred income (594) (671)
Cash flow from operations 76 679 64 899
Finance costs (1 557) (1 738)
Taxation paid (2 478) (740)
Dividends paid (8 209) (5 864)
Cash retained from
operating activities 64 435 56 557
Additions to property,
plant and equipment (47 048) (30 605)
Proceeds on disposal of property,
plant and equipment 3 293 1 690
Acquisition of subsidiaries
and new business (24 072) -
(3 392) 27 642
Movement in long-term liabilities 4 548 -
Utilised from environmental
remediation provisions (8 492) (6 425)
Movement in short-term borrowings 813 (22 023)
Share buy-back (13 920) -
Movement in cash and cash equivalents (20 443) (806)
Balance at the beginning
of the period 36 538 37 344
Balance at the end of the period 16 095 36 538
COMMENTS
Overview
EnviroServ achieved strong results for the 12 months ended 30 June 2001 with
headline earnings of 26,2 cents per share (2000: 22,1 cents). Headline
earnings growth of 19% and organic revenue growth of 11% were achieved
despite a tough market with industrial waste clients still under pressure
and limited new work being awarded by Government and Local authorities.
Operational Review
Operating profit improved 8% to R37,9m and operating cash flow improved by
R11,8m to R76,7m. Revenue and operating profit were boosted by an
exceptional performance from the industrial division, which benefited from
improved volumes, increased efficiencies and a better revenue mix. Several
major projects had a favourable impact on our results as some of our blue
chip clients strive towards increased environmental standards.
Our Aloes hazardous landfill facility in the Eastern Cape has been closed
since August 2000 following a dispute with the Port Elizabeth Municipality
(PEM), and has impacted results negatively. The dispute is now resolved and
the site is expected to re-open during the next financial year. EnviroServ
was also granted an extension of the lease for this site.
Our landfill management contracts division and our domestic waste collector
continued to perform poorly. The single biggest factor affecting performance
in these businesses remains a lack of sufficient work.
The process management division's growth strategy has delivered positive
results. During the year, this division has taken a minority stake of 35% in
Chargold, a company which beneficiates carbon waste products. We have also
been awarded a 10-year contract to commission an energy plant, which uses a
client's paper pulp waste as fuel for the plant.
Performance in our medical waste business was subdued due to the current
trend by Provincial Authorities of awarding contracts to small and medium
empowerment contractors. However, work secured on a sub-contract basis
helped to reverse this negative trend, and we have also obtained a new
permit for an incineration facility in Bloemfontein.
The Group's water and sewage management business continued to show good
growth, with revenue again showing an improvement over last year.
Non-Trading Items
During the year, the Group has written down certain of its fixed
investments. These write-offs have had no effect on cash flow, are non-
recurring, and are excluded from profits for purposes of calculating
headline earnings per share. The total amount of non-trading items written
off was R25,9m.
The first item included in this category was R11,2m, which is the amount by
which the Group's properties were devalued to reflect them at fair market
value on the balance sheet.
The balance of the amounts written off relate to the Group's investment in
Imvello Drum. EnviroServ disposed of Imvello Drum in January 1999, but
remained liable as guarantor for Imvello's overdraft facilities. Imvello was
facing liquidity problems and EnviroServ resumed control with effect from 1
January 2001. An amount of R4,3m - the unpaid balance of the original
disposal price - and R10,5m of goodwill arising on the resumption of control
have been written off.
The prudent approach followed in making these adjustments to the carrying
value of these assets, ensures that the Group's balance sheet remains
strong.
Share Buy-Back
The buy back of 10% of the Group's shares at prices of between 105c and 145c
has enhanced earnings. At the next Annual General Meeting, shareholders will
be requested to authorise further share buy-backs. These will be subject to
suitable price levels and levels of surplus cash.
Empowerment Initiative
EnviroServ is currently involved in negotiations to strengthen our Black
Economic Empowerment initiatives.
EnviroServ does not expect these negotiations to have a material impact on
its net asset value or earnings per share if successfully concluded. The
company is however of the opinion that the successful conclusion of this
initiative will assist EnviroServ in growing its business over the medium to
long term. We expect to make an announcement in this regard shortly.
Prospects
Although activity levels in our businesses will benefit from an improvement
in economic conditions in South Africa, we have also embarked on several
initiatives, which we believe will have a positive effect on future
earnings.
* We are in the process of introducing 95 new vehicles into our fleet at a
cost of R72m, which will improve efficiencies and service levels.
* We are completing a R5m upgrade of our IT systems and will be introducing
a Customer Relationship Management system during the year. These initiatives
will improve information flow and access while supporting improved customer
service levels.
* The Bidvest Group acquired a 27% shareholding in EnviroServ during October
2000. The fostering of our relationship with this group and their Bidserv
division will create additional selling opportunities for EnviroServ.
Changes in Directorate
During the year a number of new appointments have been made to the board of
directors. On 1 November 2000 Brian Joffe was appointed as a non-executive
director. On 7 August 2001 Muriel Dube, Joe Pamensky and Lindsay Ralphs were
appointed as non-executive directors and Raymon Rocher as Group Financial
Director.
Declaration of Dividend
The directors have resolved to declare dividend No. 3 of 8 cents (2000: 7
cents) per ordinary share, being the final dividend for the year ended 30
June 2001. The last day to trade "CUM" the dividend in order to participate
in the dividend will be Friday, 28 September 2001. The shares of EnviroServ
will commence trading "EX" the dividend from the commencement of business on
Monday, 1 October 2001, and the record date will be Friday, 5 October 2001.
Dividend cheques/transfers will be posted/ initiated on or about Monday, 8
October 2001.
Annual Report
Annual Reports will be posted to shareholders on or about 27 August 2001.
For and on behalf of the Board:
M R Maruma D K Gordon
Chairman Chief Executive
13 August 2001
Directors
MR Maruma* (Chairman), DK Gordon (Chief Executive), TD Denyssen,
MBN Dube*, B Joffe*, D Lavarinhas, A McLean (British), EK Motebang,
JL Pamensky*, LP Ralphs*, RP Rocher. *Non-Executive
Registered Office
18 Dusseldorf Street, Apex, Benoni. PO Box 2207, Benoni 1500
Transfer secretaries
Computershare Services Limited, 4th Floor, Edura House
41 Fox Street, Johannesburg 2001
