| Tue 12 Feb 2002, 0:00 | | Enviroserv Holdings Limited - Interim Announcement |
|
ENVIROSERV HOLDINGS LIMITED
(Registration number 1994/000280/06)
JSE Share code: ENV
ISIN: ZAE000010989
("EnviroServ")
INTERIM ANNOUNCEMENT FOR THE SIX-MONTH PERIOD ENDED 31 DECEMBER 2001
Abridged Group Income Statement
Six-month Six-month
period ended period ended Year ended
31 December 31 December 30 June
2001 2000 2001
(unaudited) Percentage (unaudited) (audited)
R'000 change R'000 R'000
Revenue 182 902 7 170 530 379 887
Operating profit
before depreciation 32 224 8 29 731 67 178
Depreciation (16 035) 18 (13 567) (29 302)
Operating profit 16 189 16 164 37 876
Finance costs (1 446) (22) (1 557)
Share of result of
associate company 707 373 1 214
Amortisation of goodwill (495) - (117)
Profit before taxation 14 955 (9) 16 515 37 416
Taxation (1 793) (3 822) (8 719)
Profit before
non-trading items 13 162 4 12 693 28 697
Non-trading items
after taxation - - 25 818
Net profit attributable
to ordinary shareholders 13 162 4 12 693 2 879
Headline earnings
per share (cents) 12,95 16 11,15 26,15
Earnings per share (cents) 12,47 14 10,91 2,59
Operating margin (%) 8,9 9,5 10,0
Headline earnings 13 668 5 12 976 29 036
Weighted average
number of shares in
issue during the period 105 548 848 116 370 391 111 027
056
Headline earnings
Profits attributable to
ordinary shareholders 13 162 12 693 2 879
Adjusted by:
Write-down of
fixed investments - - 15 421
Goodwill amortised 495 - 10 514
Loss on disposal of
fixed assets - net of tax 11 283 222
13 668 12 976 29 036
Abridged Group Balance Sheet
31 December 31 December 30 June
2001 2000 2001
(unaudited) (unaudited) (audited)
R'000 R'000 R'000
Assets
Non-current assets 246 169 173 028
188 453
Property plant and equipment 225 801 169 655 177 091
Goodwill 2 072 - 1 884
Investments 18 296 3 373 9 478
Current assets 87 138 107 503 116 508
Inventory 4 675 6 167 5 388
Accounts receivable 82 463 74 151 95 025
Net bank and cash - 27 185 16 095
333 307 280 531 304 961
Equity and liabilities
Capital and reserves 112 269 122 128 99 107
Ordinary share capital
and share premium 60 262 68 181 60 262
Retained earnings 52 007 53 947 38 845
Non-current liabilities 134 315 90 047 90 181
Deferred taxation 12 240 17 455 14 226
Environmental remediation provisions 72 042 67 379 66 467
Long-term borrowings 45 297 - 4 547
Deferred income 4 736 5 213 4 941
Current liabilities 86 723 68 356 115 673
Accounts payable 63 367 52 054 69 795
Short-term provisions 13 940 16 735 29 703
Short-term borrowings
and bank overdraft 10 298 - 813
Shareholders for dividend - - 8 444
Taxation (882) (433) 6 918
333 307 280 531 304 961
Net asset value per share (cents) 106 19 105 89
Abridged Group Statement of Changes in Equity
31 December 31 December 30 June
2001 2000 2001
(unaudited) (unaudited) (audited)
R'000 R'000 R'000
Share capital
Ordinary shares 1 055 1 130 1 055
At beginning of period 1 055 1 173 1 173
Share buy-back - (43) (118)
Share premium 59 207 67 051 59 207
At beginning of period 59 207 73 009 73 009
Share buy-back - (5 958) (13 802)
60 262 68 181 60 262
Distributable reserves
At beginning of period 38 845 41 254 41 254
Profit distribution from
Employee Share Trust - - 3 156
Profit attributable to
ordinary shareholders 13 162 12 693 2 879
Ordinary dividend - - (8 444)
52 007 53 947 38 845
Abridged Group Cash Flow Statement
Six-month Six-month
period ended period ended Year ended
31 December 31 December 30 June
2001 2000 2001
(unaudited) (unaudited) (audited)
R'000 R'000 R'000
Cash generated by operations 39 692 31 450 76 020
Movement in working capital (4 977) (6 555) 1 253
Movement in deferred income (205) (322) (594)
Cash flow from operations 34 510 24 573 76 679
Finance costs (1 446) (22) (1 557)
Taxation paid (10 905) (1 703) (2 478)
Dividends paid (8 444) (8 209) (8 209)
Cash retained from operating activities 13 715 14 639 64 435
Additions to property,
plant and equipment (61 613) (15 662) (47 048)
Proceeds on disposal of property,
plant and equipment 8 384 1 044 3 293
Acquisition of investments and
associated companies (24 569) (3 373) (24 072)
(64 083) (3 352) (3 392)
Movement in long-term liabilities 40 750 - 4 548
Utilised from long-term provisions (2 247) - (8 492)
Share buy-back - (6 001) (13 920)
Movement in cash and cash equivalents (25 580) (9 353) (21 256)
Balance at beginning of period 15 282 36 538 36 538
Balance at end of period (10 298) 27 185 15 282
COMMENTS
Group overview
EnviroServ has delivered satisfactory results for the six-month period
with a 16,1% improvement in headline earnings per share of 12,95 cents
(2000: 11,15 cents).
OPERATIONAL REVIEW
Operating profit before depreciation improved by 8% to R32,2m
(2000: R29,7m). As expected, the depreciation charge increased due to our
fleet replacement programme. This increase was however offset by the
productivity gains associated with our new fleet.
Operating profit was negatively impacted by a loss of R3,1m from our drum
recycling business, Enviro Drum which was acquired by the Group on 1 January
2001. The operating margin has decreased to 8,9% (2000: 9,5%). The balance
of our businesses performed to expectation and achieved an operating margin
of 9,6%, which compares well with the 9,5% achieved in the period to
December 2000.
The Group's cash generating ability remains strong with R39,7m generated
by operations (2000: R31,5m). This performance has limited the extent of
additional debt in a period where R86m was spent on assets and investments.
EnviroServ Waste Management
Our Industrial Division, which continues to form the backbone of our
business, has again delivered a strong performance with a number of major
new projects being awarded. We are already seeing the benefits of our
vehicle replacement programme, with improved performance and service levels
from the renewed fleet more than off-setting the associated increase in
depreciation and finance charges.
The Industrial Division's Aloes landfill facility in the Eastern Cape
remains closed, but as stated at year-end, we expect this facility to be
reopened during the current financial year and significant progress has been
made in this regard.
The Process Management Division, which addresses clients' needs to re-
use, recover and re-cycle waste materials, is progressing well with its
growth strategy. The investment in a minority shareholding in Chargold last
year, is delivering a positive contribution to earnings.
Enviro Drum
The poor performance of this division is mainly due to unavoidable delays
in implementing the necessary restructuring which was effected during
December 2001. The business is now better positioned to improve performance
in the next six months and management believes Enviro Drum will provide
acceptable returns to the Group in the medium term, and does not anticipate
further operating losses in this business for the next six months.
Millennium Waste Management
Our Landfill Management, Domestic Waste Collection, Medical Waste
Collection and Water & Sewage Management businesses were all disposed of
during the period under review to Millennium Waste Management (Millennium),
an empowerment company in which EnviroServ has a 47% shareholding. The
implementation of the transaction was effective 1 July 2001 and EnviroServ
has proportionately consolidated 47% of Millennium's results for the full
six-month period under review.
The agreements and Competition Commission approval were only finalised in
November 2001 and consequently the performance of these businesses did not
materially benefit from the change in ownership. Millennium has already
achieved some measure of success in its marketing efforts and encouragingly
Millennium has recently been awarded some new contracts. Improved earnings
and cashflows from these businesses are anticipated in the medium to long-
term.
Conquip
During October 2001 the Group acquired a plant-hire company known as
Conquip, a market leader in the hire of compaction equipment which is used
extensively by EnviroServ in its operations. This acquisition has given the
Group access to additional specialised equipment and expertise, which are
necessary to our future success. The results of Conquip have had no material
impact on EnviroServ's results for the period.
SHARE BUY-BACK
During the previous financial year, the Group bought back 10% of its own
shares. This reduction in the number of shares in issue has enhanced
earnings per share for the period. The shareholders have authorised the
company to acquire a further 20% of the shares in issue. No further shares
have been acquired in the period under review, and future buy-backs will be
subject to suitable price levels and levels of surplus cash.
PROSPECTS
* The Group's focus going forward will be to continue on growing market
share in the industrial sector, improving revenues and retaining strict cost
control measures. We are confident that this focus will enable us to deliver
good results in this area.
* Eliminating the losses in Enviro Drum remains a key factor in improving
future results. The Group has already addressed a number of the issues
inhibiting performance in this business and results are being closely
monitored.
* Our empowerment initiative through Millennium is currently a major focus
area and the success of its businesses is a key element of EnviroServ's
future growth plans.
* Maintaining and growing our relationship with Bidvest through their 27%
shareholding remains a priority and the continued optimisation of joint
selling opportunities will continue to impact positively on our results.
CHANGES IN DIRECTORATE
At the Group's Annual General Meeting on 19 September 2001, Mr Alistair
McLean, one of the founders of EnviroServ and the previous Chief Executive
of the company, was appointed as Chairman. Mr Rufus Maruma, the Group's
retiring Chairman, retains his seat on the board as a non-executive
director.
FINANCIAL STATEMENTS
Financial Statements of the company have been prepared in accordance with
statements of generally accepted accounting practice consistant with those
used at 30 June 2001, the company's financial year end.
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.
A McLean D K Gordon
Chairman Chief Executive
Benoni
11 February 2002
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:
A McLean (British) (Chairman), D K Gordon (Chief Executive), T D Denyssen,
M B N Dube*, B Joffe*, D Lavarinhas, M R Maruma*, E K Motebang, J L
Pamensky*, L P Ralphs*, R P Rocher *Non-executive
Secretary:
O Deftereos (ACIS.CA(SA))
--------------------------------------------------------------------------------
