| Tue 11 Feb 2003, 8:40 | | Enviroserv Holdings Limited - Interim Announcement |
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Release Date: 11/02/2003 07:30:21 Code(s): ENV
EnviroServ Holdings Limited - Interim announcement for the six-months ended
31 December 2002
EnviroServ Holdings Limited
(Registration number 1994/000280/06) ("EnviroServ")
Share code: ENV ISIN: ZAE 000010989
Interim announcement for the six-months ended 31 December 2002
* Revenue up 22%
* Operating profits up 49%
* Headline EPS up 21%
* Cash generated by operations up 25%
Abridged Group Income Statement
Six-month Six-month
period ended period ended Year ended
31 December 31 December 30 June
2002 2001 2002
(unaudited) Percentage (unaudited) (audited)
R`000 change R`000 R`000
Revenue 223 406 +22 182 902 377 946
Operating profit before
depreciation 42 799 32 224 74 553
Depreciation (18 607) (16 035) (31 594)
Operating Profit 24 192 +49 16 189 42 959
Net finance costs (4 373) (1 446) (6 939)
Share of profit of
associate company 390 707 1 399
Amortisation of goodwill (578) (495) (1 008)
Profit before taxation 19 631 +31 14 955 36 411
Taxation (3 144) (1 793) (4 695)
Net profit attributable to
ordinary shareholders 16 487 +25 13 162 31 716
Headline earnings per
share (cents) 15,6 +21 12,9 30,6
Earnings per share
(cents) 15,6 +25 12,5 30,0
Operating margin (%) 10,8% 8,9% 11,4%
Weighted average number
of shares in issue
during the period 105 548 829 105 548 829 105 548 829
Number of shares
in issue at end
of period 105 548 829 105 548 829 105 548 829
Reconciliation of
headline earnings
Profits attributable to
ordinary shareholders 16 487 13 162 31 716
Adjusted by:
Amortisation of goodwill 578 495 1 008
(Profit)/loss on
disposal of fixed
assets - net of tax (589) 11 (435)
16 476 +21 13 668 32 289
Abridged Group Statement of Changes in Equity
31 December 31 December 30 June
2002 2001 2002
(unaudited) (unaudited) (audited)
R`000 R`000 R`000
Share capital
Ordinary shares 1 055 1 055 1 055
Share premium 48 652 59 207 59 207
At beginning of period 59 207 59 207 59 207
Cash distribution (10 555) - -
49 707 60 262 60 262
Distributable Reserves
At beginning of period 70 561 38 845 38 845
Net profit attributable to
ordinary shareholders 16 487 13 162 31 716
87 048 52 007 70 561
Abridged Group Balance Sheet
Year ended
31 December 31 December 30 June
2002 2001 2002
(unaudited) (unaudited) (audited)
R`000 R`000 R`000
Assets
Non-current assets 268 600 246 169 263 504
Property, plant and equipment 246 001 225 801 242 830
Goodwill 4 365 2 072 2 140
Investments and associate 18 234 18 296 18 534
Current assets 101 576 87 138 107 664
Inventories 6 481 4 675 4 474
Accounts receivable 95 095 82 463 92 480
Cash and cash equivalents - - 10 710
Total assets 370 176 333 307 371 168
Equity and liabilities
Capital and reserves 136 755 112 269 130 823
Ordinary share capital
and share premium 49 707 60 262 60 262
Distributable reserves 87 048 52 007 70 561
Non-current liabilities 135 782 134 315 136 632
Deferred taxation 10 561 12 240 10 643
Environmental remediation
Provisions 80 621 72 042 79 220
Long-term borrowings 40 268 45 297 42 238
Deferred income 4 332 4 736 4 531
Current liabilities 97 639 86 723 103 713
Accounts payable and
provisions 71 099 77 307 86 401
Current portion of
long-term borrowings 19 804 9 876 16 229
Short-term borrowings and
bank overdraft 2 461 422 -
Taxation 4 275 (882) 1 083
Total equity and liabilities 370 176 333 307 371 168
Net asset value per share
(cents) 130 106 124
Debt/equity ratio (%) 46 50 37
Abridged Group Cash Flow Statement
Six-month Six-month
period ended period ended Year ended
31 December 31 December 30 June
2002 2001 2002
(unaudited) (unaudited) (audited)
R`000 R`000 R`000
Cash generated by operations 49 671 39 692 89 858
Movement in working capital (19 924) (4 977) (16 337)
Movement in deferred income (199) (205) (410)
Cash flow from operations 29 548 34 510 73 111
Net finance costs (4 373) (1 446) (6 939)
Taxation paid - (10 905) (13 824)
Distribution/Dividends paid (10 555) (8 444) (8 444)
Cash retained from
operating activities 14 620 13 715 43 904
Additions to property,
plant and equipment (23 421) (72 405) (98 272)
Proceeds on disposal of property,
plant and equipment 2 232 2 712 7 154
Disposal of operations - 15 901 15 901
Dividend received from
associate company 307 - -
Acquisition of investments and
associated companies (2 459) (24 006) (24 006)
(8 721) (64 083) (55 319)
Movement in long-term
liabilities (1 970) 39 937 37 691
Utilised from environmental
remediation provisions (6 055) (2 247) (3 173)
Movement in short-term
Borrowings 3 575 9 876 15 416
Movement in cash and
cash equivalents (13 171) (16 517) (5 385)
Balance at the beginning
of the period 10 710 16 095 16 095
Balance at the end
of the period (2 461) (422) 10 710
Comments
Group overview
The Board is pleased to report EnviroServ`s results for the six-month period
to December 2002, which showed growth in both revenue and earnings. Revenue
increased 22% to R223,4 million (December 2001: R182,9 million) and headline
earnings per share improved 21% to 15,6 cents (December 2001: 12,9 cents).
Operating profit of R24,2 million was up 49% (December 2001: R16,2 million)
due to the increase in revenue and a higher operating margin of 10,8%. Net
finance costs were R2,9 million higher due to an increase in average debt
following the purchase of our new vehicle fleet, certain items of plant and
new businesses. All aspects of the Group`s operations have shown improvement
over the same period in 2001.
The Group continued to generate strong cashflow, with cash generated by
operations improving by 25% to R49,7 million (December 2001: R39,7 million).
The Group`s balance sheet remains sound with a 23% improvement in Net Asset
Value, and gearing at a comfortable level of 46%.
Acquisitions
With effect from 1 July 2002, the Group`s empowerment joint venture
Millennium Waste Management, acquired the water operations division of
Bateman Project Holdings Limited. Bateman Water Operations is a leader in
the water and sewage industry in South Africa, and was incorporated into our
Sediba division. Sediba now has the appropriate critical mass, operational
expertise and empowerment credentials to grow effectively in the South
African market.
The results of this new business have added R7,7 million to the Group`s
revenue and R1,1 million to operating profits for the six-month period.
The Group has also acquired the spills response division of Abzorbit CC with
effect from 1 January 2003. Abzorbit is currently the leading spills
response business in KwaZulu-Natal, where EnviroServ previously had a
limited presence.
Review of operations
EnviroServ Waste Management (Pty) Ltd
Waste-tech
The Industrial division performed well during the period with good growth in
both revenue and operating margins as some of our earlier initiatives, such
as our asset renewal programme, continue to improve our service levels and
reduce costs. Waste-tech particularly benefited from these initiatives and
the advantages of the new fleet to increase its performance.
Dispose-tech
Dispose-tech, which operates the Group`s permitted waste disposal sites and
incineration facilities, in turn delivered good results on the increase in
volumes. Our hazardous waste facility in Port Elizabeth, Aloes, was re-
opened in September 2002 after being closed since August 2000. Following the
construction of an R11 million leachate management facility, the site has
returned to profitability and is able to accept the hazardous waste
generated in the region in an environmentally responsible manner.
Hazmat
Hazmat, our hazardous spills response division, strengthened its position as
the leader in its industry. Hazmat was involved in a number of successful
operations, including the clean up of the cargo vessel, Jolly Rubinho, which
ran aground off the coast of KwaZulu-Natal. The purchase of Abzorbit is
expected to further enhance this business by growing our market share and
skills base.
Process Management
The Group has invested in additional resources and expertise in our Process
Management division, which will enable us to address an ever-increasing
demand from the market to reduce, re-use and recover waste. Process
Management projects typically have long lead times, and this division is
expected to contribute towards the Group`s growth in the medium term.
Chargold
EnviroServ`s associate company, Chargold, reported lower than expected
earnings after experiencing start up problems in a Malaysian venture. The
remaining local operations performed in line with expectations. Exposure to
future losses in Malaysia is limited.
Conquip
Conquip, which hires compaction equipment into the waste, mining and
construction industries, reported strong results for the period as the
synergistic benefits from being incorporated into the Group are realised.
Additionally the advantages of having Conquip`s skills and resources within
the Group was reflected in the improved performance of the Group`s landfill
operations, which have outsourced all of their plant requirements to
Conquip.
EnviroDrum
Following a number of improvement initiatives, EnviroDrum reduced its
operating losses for the six months by R1 million. We are now able to
provide the only fully environmentally responsible container management
solution in the South African market. We are currently implementing a number
of further initiatives aimed at improving the professionalism of the
business. These initiatives have already resulted in EnviroDrum securing
contracts with higher value clients, and the business is expected to return
to profitability in the short-term.
Millennium Waste Management (Pty) Ltd
EnviroServ has a 47% shareholding in Millennium, with a black empowerment
partner and Millennium staff holding 47% and 6% of the company respectively.
Sediba
Sediba has reported substantially increased profits this period, which were
enhanced by the purchase of Bateman Water Operations by Sediba.
Landfill Management
Landfill Management continued with the improvements shown last year and has
returned to profitability. This division has benefited from the inclusion of
Conquip into the Group, which has enabled Landfill Management to optimise
their plant operations.
Wade Refuse
Wade Refuse had a disappointing six months with two substantial contracts
lost to councils that will no longer outsource this service. Wade Refuse
will benefit from the competitive advantage of our new side loader vehicles
which are able to operate more efficiently than the current domestic
collection technology available.
SanuMed
SanuMed has also shown an improvement from last year with an increase in
revenue and improved efficiencies that should continue once the Inkosi
Albert Luthuli Central Hospital in KwaZulu-Natal is fully operational.
Although not yet making a satisfactory return, we are confident that this
division is well positioned for the future.
Prospects
Looking forward, the Group will focus on key areas of the business to
enhance growth and returns to stakeholders and will include the following:
* Developing cross-selling opportunities between EnviroServ divisions
* Improving service levels across our businesses
* Optimising IT systems at the service interface
* Continuing our Customer Relationship Management programme
* Identifying and accessing growth markets
* Expanding the Group`s Process Management division
* Enhancing the marketing efforts in our joint venture Millennium
Financial statements
Financial statements of the Group have been prepared in accordance with
statements of Generally Accepted Accounting Practice consistent with those
used at 30 June 2002, the Group`s 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.
For and on behalf of the Board:
A McLean DK Gordon
Chairman Chief Executive Officer
10 February 2003
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*, RP Rocher
*Non-Executive
Secretary: O Deftereos (ACIS, CA(SA))
Registered office
18 Dusseldorf Street, Apex, Benoni
PO Box 2207, Benoni 1500
www.enviroserv.co.za
Transfer secretaries
Computershare Investor Services Limited,
70 Marshall Street, Johannesburg 2001
Date: 11/02/2003 07:30:00 AM Produced by the JSE SENS Department
