| Tue 13 Aug 2002, 0:00 | | Enviroserv - Audited Results For The Year Ended 30 |
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ENVIROSERV - AUDITED RESULTS FOR THE YEAR ENDED 30 JUNE 2002
ENVIROSERV HOLDINGS LIMITED
(Registration number 1994/000280/06) ("EnviroServ")
Share code: ENV ISIN: ZAE 000010989
Audited results for the year ended 30 June 2002
* Headline EPS up 17%
* Headline earnings up 11%
* Operating profits up 13%
Abridged Group Income Statement
Year ended Year ended
30 June 2002 % 30 June 2001
R`000 change R`000
Revenue 377 946 (1) 379 887
Operating profit before
Depreciation 74 553 11 67 178
Depreciation (31 594) 8 (29 302)
Operating profit 42 959 13 37 876
Net finance costs (6 939) (1 557)
Share of profit of associate
company 1 399 1 214
Amortisation of goodwill (1 008) (852)
Profit before taxation 36 411 (1) 36 681
Taxation (4 695) (8 719)
Profit before non-trading
items 31 716 13 27 962
Non-trading items after
taxation - 25 083
Net profit attributable to
ordinary shareholders 31 716 2 879
Headline earnings
per share (cents) 30,59 17 26,15
Earnings per share (cents) 30,05 2,59
Dividends proposed (cents) - 8,0
Operating margin (%) 11,4% 10,0%
Weighted average number of shares in
issue during the period 105 548 829 111 027 056
Number of shares in issue at
end of period 105 548 829 105 548 829
Headline earnings
Net profit attributable to
ordinary shareholders 31 716 2 879
Adjusted by:
Non-trading items - net of tax - 25 083
Amortisation of goodwill 1 008 852
(Profit)/loss on disposal of
fixed assets - net of tax (435) 222
32 289 11 29 036
Abridged Group Statement of Changes in Equity
Year ended Year ended
30 June 2002 30 June 2001
R`000 R`000
Ordinary share capital and share premium
Ordinary shares 1 055 1 055
At beginning of period 1 055 1 173
Share buy - back - (118)
Share premium 59 207 59 207
At beginning of period 59 207 73 009
Share buy - back - (13 802)
60 262 60 262
Distributable reserves
At beginning of period 38 845 41 254
Profit distribution from
Employee Share Trust - 3 156
Net profit attributable to
ordinary shareholders 31 716 2 879
Ordinary dividend - (8 444)
At end of period 70 561 38 845
Abridged Group Balance Sheet
As at As at
30 June 2002 % 30 June 2001
R`000 change R`000
Assets
Non-current assets 263 504 188 453
Property, plant and equipment 242 830 177 091
Goodwill 2 140 1 884
Investments in associate
and joint venture 18 534 9 478
Current assets 107 664 109 979
Inventory 4 474 5 388
Accounts receivable 92 480 88 496
Cash and cash equivalents 10 710 16 095
Total assets 371 168 298 432
Equity and liabilities
Capital and reserves 130 823 99 107
Ordinary share capital
and share premium 60 262 60 262
Distributable reserves 70 561 38 845
Non current liabilities 136 632 90 181
Deferred taxation 10 643 14 226
Environmental remediation
provisions 79 220 66 467
Long-term borrowings 42 238 4 547
Deferred income 4 531 4 941
Current liabilities 103 713 109 144
Accounts payable and
provisions 86 401 92 969
Current portion of long-term
borrowings 16 229 813
Shareholders for dividend - 8 444
Taxation 1 083 6 918
Total equity and liabilities 371 168 298 432
Net asset value per
share (cents) 124 39 89
Abridged Group Cash Flow Statement
Year ended Year ended
30 June 2002 30 June 2001
R`000 R`000
Cash generated by operations 89 858 78 521
Movement in working capital (16 337) (1 249)
Movement in deferred income (410) (594)
Cash flow from operations 73 111 76 678
Finance costs (6 939) (1 557)
Taxation paid (13 824) (2 479)
Dividends paid (8 444) (8 209)
Cash retained from operating activities 43 904 64 433
Additions to property, plant and
equipment (98 272) (47 045)
Proceeds on disposal of property,
plant and equipment 7 154 3 293
Disposal of operations 15 901 -
Acquisition of investments,associated company
and joint venture (24 006) (24 072)
(55 319) (3 391)
Movement in long-term liabilities 37 691 4 547
Utilised from environmental
remediation provisions (3 173) (8 492)
Movement in short term borrowings 15 416 813
Share buy - back - (13 920)
Movement in cash and cash equivalents (5 385) (20 443)
Balance at the beginning of the period 16 095 36 538
Balance at the end of the period 10 710 16 095
Comments
Introduction
EnviroServ`s results for the year have shown a 17% improvement in
headline earnings per share to 30,6 cents (2001: 26,2 cents per
share) and operating profit was up 13,4% to R43,0 million (2001:
R37,9 million) in spite of relatively flat market conditions.
Revenue decreased by approximately 1% mainly as a result of the
disposal of 53% of the Group`s domestic waste operations to the
Black Economic Empowerment company, Millennium Waste Management
(Millennium). Almost R45 million of revenue being disposed of to
Millennium was replaced by growth and acquisitions.
Results from most of the Group`s operations were in line with
expectations and operating margin now stands at 11,4% compared to
the 10% achieved in the previous financial year. Growth in
earnings has however been suppressed by losses incurred from the
drum recycling business, Enviro Drum.
The Group`s cash generating ability remains strong with R89,9
million generated by operations (2001: R78,5 million). These cash-
flows have allowed the Group to continue making investments into
the ongoing improvement and upgrading of our operating assets,
particularly in the areas of vehicle replacement and fleet renewal
and in replacing existing IT systems. These investments have
already resulted in an improvement in operating margins, and has
positioned us well for future growth. The Group has incurred
borrowings of R47,8 million, but with net borrowings currently
standing at 36,5% of equity, and operating income 6 times covering
finance costs current debt levels are relatively undemanding.
EnviroServ Waste Management
The Industrial Division has continued to be the main contributor
to the Group`s revenue and profit. During the current year,
EnviroServ completed the integration of 87 new vehicles at a cost
of
R69,6 million into our fleet. The introduction of these new
vehicles has delivered a number of benefits to the Group. These
benefits include increased operating efficiencies, the better use
of technology through the integration of the vehicle systems with
our new IT systems and enhancing our image through the increased
visibility of our vehicles.
Our Aloes Hazardous Waste disposal facility in Port Elizabeth has
remained closed for the entire year under review. During the year
the Group has had to complete an extensive Environmental Impact
Assessment and permitting process for a leachate storage facility.
The permitting process and the construction of the facility has
been completed, and the site is planned to re-open by the end of
August 2002.
The Process Management Division, which addresses clients` needs to
re-use, recover and re-cycle waste materials is progressing well,
with the investment in a minority shareholding in Chargold also
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 and essential
equipment upgrades and maintenance during the year. Enviro Drum is
being substantially re-positioned to align it with EnviroServ`s
business model, offering its clients a "responsible container
management" solution. Providing this environmentally responsible
service is its key differentiator, and this model is facilitating
good growth in our client base.
The business is now better positioned to improve performance and
management believes Enviro Drum will grow into a valuable part of
EnviroServ`s comprehensive service offering. Losses in the second
six months of the current financial year have been significantly
reduced compared to the first six months, with the business likely
to return to profitability in the short term.
Millennium Waste Management
The Group further addressed empowerment in the domestic waste
businesses this year, which is a critical component in this part
of the business. Enviroserv disposed of its Landfill Management,
Domestic Waste Collection, Medical Waste Collection and Water &
Sewage Management businesses to Millennium.
Millennium is 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 year under review.
Millennium has already achieved some success in its marketing
efforts and has recently been awarded a number of new contracts.
Interim measures aimed at optimising operating effectiveness in
these businesses have resulted in good improvements in trading
results. Improved earnings and cash flows from these businesses
are anticipated in the medium to long-term.
Acquisition
The Group has acquired a plant-hire company known as Conquip, a
leader in the hire of compaction equipment. This acquisition has
given the Group access to additional specialised equipment and
expertise as compaction equipment is used widely in our
operations. The results from Conquip have been strong for the 9
months since its inclusion in the Group.
Future
EnviroServ`s focus will be on improving general service levels
across the various business units and in particular in the
Industrial Waste Business.
The Group aims to improve cross-selling in the industrial business
through the strengthened relationship with Bidvest and the
Integrated Service Solution offering that has been established
with them. An improved performance is also expected from the
domestic waste business through offering the entire domestic waste
service package through Millennium.
We will continue improving our facilities to ensure continued high-
level service to all clients. These measures will include the
upgrade of the industrial waste disposal technologies and
facilities, re-engineering the waste business and introducing
superior domestic healthcare waste collection technology.
EnviroServ can now boast a fleet of modern vehicles, and an
information system that will enable us to maximise our service
offering and efficiencies. The marketing efforts in gaining
acceptance for Millennium in the market place are already
providing returns. The Group is ideally positioned for the future
through its strong balance sheet that is uncluttered by intangible
assets and has acceptable levels of gearing.
Changes in directorate
Danny Denyssen retired as a director on 12 August 2002. Pierre
Fourie was appointed an executive director on 13 May 2002.
Financial statements
Financial statements of the Group have been prepared in accordance
with Statements of South African Generally Accepted Accounting
Practice consistent with those used at 30 June 2001 except in
regard to certain properties previously considered to be
investment properties where new policies have been applied as
documented in the policy on property, plant and equipment below.
Ernst and Young has audited the Group financial statements. The
unqualified audit report is available for inspection at the
company`s registered office.
Distribution of share premium in lieu of a dividend
The directors have resolved to pay a cash distribution of 10 cents
per ordinary share payable out of share premium, in lieu of a
final dividend ("the distribution"), for the year ended 30 June
2002. The last day to trade "CUM" the distribution in order to
participate in the distribution will be Friday, 11 October 2002.
The shares of EnviroServ will commence trading "EX" the
distribution from the commencement of business on Monday, 14
October 2002, and the record date will be Friday, 18 October 2002.
Shareholders are advised that there will be no dematerialisation
or rematerialisation of shares from Monday, 14 October 2002 to
Friday, 18 October 2002 both days inclusive. Payment will be made
to shareholders on 21 October 2002.
For and on behalf of the Board:
A McLean DK Gordon
Chairman Chief Executive Officer
12 August 2002
Directors
A McLean (British) (Chairman), DK Gordon (Chief Executive), MBN
Dube*, P Fourie, B Joffe*, D Lavarinhas, MR Maruma*, EK Motebang,
JL Pamensky*, LP Ralphs*, R P Rocher
*Non-Executive
Secretary: O Deftereos (ACIS, CA(SA
Registered office
18 Dusseldorf Street, Apex, Benoni
PO Box 2207, Benoni 1500
Transfer secretaries
Computershare Investor Services Limited,
4th Floor, Edura House
41 Fox Street, Johannesburg 2001
Date: 13/08/2002 09:08:56 AM Produced by the JSE SENS Department
