| Wed 18 Feb 2004, 8:45 | | Results for the six months ended 31 Dec 03 |
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Enviroserv - Interim Announcement For The Six-months Ended 31 December 2003
Release Date: 18/02/2004 07:45:01 Code(s): ENV
ENVIROSERV - Interim announcement for the six-months ended 31 December 2003
ENVIROSERV HOLDINGS LIMITED
(Registration number 1994/000280/06)
("EnviroServ")
Share code: ENV
ISIN: ZAE000010989
Interim announcement for the six-months ended 31 December 2003
- Headline EPS up 12% - Ongoing operating profits up 12% - Cash generated by
operations up 17%
Abridged Group Income Statement
Six-month Six-month Year
period ended period ended ended
31 December 31 December 30 June
2003 2002 2003
(unaudited) Percentage (unaudited) (audited)
R"000 change R"000 R"000
Revenue 229 882 3 223 406 426 086
Ongoing operations 219 431 4 211 776 403 677
Discontinued operation 10 451 11 630 22 409
Operating profit before
depreciation and
amortisation 45 236 6 42 799 84 327
Ongoing operations 49 806 12 44 312 90 048
Discontinued operation (4 570) (1 513) (5 721)
Depreciation and
amortisation (19 878) 7 (18 607) (30 951)
Operating profit 25 358 5 24 192 53 376
Net finance costs (4 083) (7) (4 373) (8 601)
Share of profit of
associate company 435 390 907
Amortisation of goodwill (845) (578) (1 509)
Profit before taxation 20 865 6 19 631 44 173
Taxation (2 960) (3 144) (7 262)
Net profit attributable
to ordinary shareholders 17 905 9 16 487 36 911
Headline earnings
per share (cents) 17,5 12 15,6 35,7
Earnings per share (cents) 17,0 9 15,6 35,0
Operating margin (%) 11% 11% 13%
Operating margin -
ongoing operations (%) 14% 12% 14%
Weighted average number
of shares in issue during
the period and at
end of period 105 548 829 105 548 829 105 548 829
Reconciliation of headline earnings
Net profit attributable
to ordinary shareholders 17 905 16 487 36 911
Adjusted by:
Amortisation of goodwill 845 578 1 509
Profit on disposal of property,
plant and equipment -
net of tax (172) (589) (766)
Net profit on discontinuance (82) - -
18 497 16 476 37 654
Abridged Group Statement of Changes in Equity
31 December 31 December 30 June
2003 2002 2003
(unaudited) (unaudited) (audited)
R"000 R"000 R"000
Share capital
Ordinary shares 1 055 1 055 1 055
Share premium 35 986 48 652 48 652
At beginning of
the period 48 652 59 207 59 207
Cash distribution (12 666) (10 555) (10 555)
37 041 49 707 49 707
Distributable Reserves
At beginning of the period107 472 70 561 70 561
Profit attributable to
ordinary shareholders 17 905 16 487 36 911
125 377 87 048 107 472
Abridged Group Balance Sheet
31 December 31 December 30 June
2003 2002 2003
(unaudited) Percentage (unaudited) (audited)
R"000 change R"000 R"000
Assets
Non-current assets 298 035 268 600 292 090
Property, plant
and equipment 271 790 246 001 264 868
Goodwill 7 876 4 365 8 859
Investment in
preference shares and
associate 18 369 18 234 18 363
Current assets 112 076 101 576 112 908
Inventory 6 969 6 481 6 596
Accounts receivable 105 107 95 095 102 618
Cash and cash equivalents - - 3 694
Total assets 410 111 370 176 404 998
Equity and liabilities
Capital and reserves 162 418 136 755 157 179
Ordinary share capital
and share premium 37 041 49 707 49 707
Distributable reserves 125 377 87 048 107 472
Non-current liabilities 147 037 135 782 133 817
Deferred taxation 10 405 10 561 13 688
Environmental
remediation provisions 99 664 80 621 87 428
Long-term borrowings 33 104 40 268 28 625
Deferred income 3 864 4 332 4 076
Current liabilities 100 656 97 639 114 002
Accounts payable
and provisions 75 012 71 099 85 937
Current portion of
long-term borrowings 15 351 19 804 23 148
Bank overdraft 8 173 2 461 -
Taxation 2 120 4 275 4 917
410 111 370 176 404 998
Net asset value per
share (cents) 154 19 130 149
Debt/equity ratio 35% 46% 31%
Net interest bearing debt 56 628 (9) 62 533 48 079
Abridged Group Cash Flow Statement
Six-month Six-month
period ended period ended Year ended
31 December 31 December 30 June
2003 2002 2003
(unaudited) (unaudited) (audited)
R"000 R"000 R"000
Cash generated by operations 57 988 49 671 103 362
Movement in working capital (13 998) (20 123) (10 639)
Cash flow from operations 43 990 29 548 92 723
Finance costs (4 083) (4 373) (8 601)
Taxation paid (9 040) - (383)
Distribution paid to
shareholders (12 666) (10 555) (10 555)
Cash retained from
operating activities 18 201 14 620 73 184
Additions to property,
plant and equipment (29 208) (22 408) (53 126)
Proceeds on disposal of
property, plant and equipment 4 822 1 219 1 614
Dividend received from associate - 307 307
Acquisition of subsidiaries - (2 459) (10 380)
(6 185) (8 721) 11 599
Movement in long-term
liabilities 4 479 (1 970) (13 613)
Spent from environmental
remediation provisions (2 364) (6 055) (11 921)
Movement in short-term
borrowings (7 797) 3 575 6 919
Movement in cash and
cash equivalents (11 867) (13 171) (7 016)
Balance at the beginning
of the period 3 694 10 710 10 710
Balance at the end of
the period (8 173) (2 461) 3 694
Introduction
The board is pleased to announce the Group"s results for the six months ended 31
December 2003, with headline earnings per share increasing by 12% to 17,5 cents
(2002: 15,6 cents per share).
Revenue from ongoing operations increased by 4% to R219,4 million (2002: R211,8
million) in a weak industrial waste market. Despite difficult market conditions,
the Group"s strong focus on efficiencies resulted in a 12% increase in operating
profit from ongoing operations before depreciation and amortisation to R49,8
million (2002: R44,3 million) and an improvement in operating margins from 12%
to 14%.
Cash generated by operations was R58,0 million (2002: R49,7 million). Net
interest bearing debt increased by R8,5 million during the period after capital
expenditure of R29,2 million, largely for plant and vehicles and a cash
distribution to shareholders of R12,7 million.
EnviroServ Waste Management (Pty) Ltd
Waste-tech
The industrial collection business performed well during the first six months,
particularly given the pressures our market has found itself under due to a
strong rand and weak growth in the manufacturing sector.
Waste-tech"s reputation as the market"s most respected service provider secured
a number of environmental clean-ups for blue-chip clients. The continued drive
to invest in people and improve systems and equipment has allowed further
improvements in margins and profits. Waste-tech is currently piloting a number
of initiatives to be implemented before the end of the financial year that will
further enhance its service offering to clients.
Hazmat
The hazardous spills response division produced a solid set of results for the
six-month period. Abzorbit, which was acquired in January 2003, has been
effectively incorporated into the Group and has enabled a broader service
offering to customers in the coastal regions. The focus remains on increasing
share of the highly specialised hazardous spills market on a national basis.
Dispose-tech
Dispose-tech, the operators of the Group"s permitted waste treatment,
destruction and disposal facilities, achieved similar results to the comparative
period despite handling significantly higher volumes of waste during this
period. The mix of waste to landfill sites changed to larger volumes of lower
value waste compared with the previous six months. Improved efficiencies and
innovative operational developments enabled this business to maintain its
margins without compromising standards.
The leachate treatment plants at the Aloes site in Port Elizabeth and the
Holfontein site in Springs are both at detailed design stage and are expected to
be commissioned this year. These treatment facilities will enable an
environmentally responsible treatment solution for the sites" effluent emissions
and place Dispose-tech amongst the leaders in leachate treatment and management
worldwide.
Process Management
The Process Management division, which develops solutions for waste reduction,
re-use and recovery, has been working closely with blue-chip clients to develop
unique and tailored solutions to achieve lower costs and reduce the
environmental impact of their operations. While formal agreements are already
in place for many of the projects, revenue will only flow through from next year
due to these projects taking up to three years from acceptance, through
development to implementation.
Conquip
The compaction plant hire division showed good revenue growth for the period
although margins fell slightly. This was due to a significant increase in the
depreciation charge from newly acquired equipment and a large clean-up contract
that required the use of subcontractors at relatively low margins.
Millennium Waste Management (Pty) Ltd
Sediba
The Group"s water and sewage division continued to increase its market
penetration and grow revenue and profits. Last year"s acquisition in this
business has been effectively incorporated into the Group and has provided
valuable input to the Process Management division regarding effluent treatment.
Sediba"s laboratory achieved a first within the waste management industry by
gaining the prestigious ISO 17025 accreditation in October 2003, and is
currently undergoing the LGW SETA training accreditation process, expected to be
completed later this year. These accreditations will give Sediba a significant
competitive advantage.
Landfill Management
Landfill Management, the division that manages disposal sites on behalf of third
parties, continued its strong growth from last year. Healthy margins have been
maintained and this relatively small, but profitable business is well positioned
to maintain meaningful growth going forward.
Wade Refuse
Wade Refuse has again delivered a poor performance with a decline in revenue and
a loss of profitability. This was largely due to the delays in the issuing of
new tenders and continued problems within the tendering processes of the local
authorities. The Group remains confident that the domestic waste collection
market will improve and that Wade Refuse will return to acceptable performance
levels in the medium term.
SanuMed
Over the past year the Group focused on improving its service offering and
efficiencies in the healthcare risk waste collection division. Although SanuMed
is not yet providing adequate returns, the short-term prospects of this division
look promising. Some consolidation in a highly overtraded market is expected and
there are a number of large provincial tenders currently under adjudication,
which, if successful, will add substantial revenue to this division. During the
year, SanuMed will also be introducing re-useable containers and sophisticated
tracking systems to improve efficiencies and service to customers.
Discontinued operation
EnviroDrum, which specialised in responsible container management and drum
reconditioning, closed its loss making steel drum reconditioning division in
December 2003. No further losses will arise from this division. The division was
unable to adequately improve its performance, despite the many initiatives to
improve efficiencies and the quality of the reconditioned steel drums offered to
the market. EnviroDrum will continue the profitable portion of the business that
manages the cleaning of plastic containers.
Prospects
The Group is currently developing numerous exciting initiatives to continue
improving efficiencies and the quality of service to customers. Management are
confident that these initiatives will enable the business to grow existing
clients and gain a share of new market segments. Should the South African
economy strengthen, the Group is well positioned to manage any increase in
demand for waste management services, particularly in the mining and
manufacturing sectors.
Investment in people will continue to be an area of focus this year, with
training and education planned for staff at all levels within the Group. The
Group has already seen how past efforts in the development of its staff have
increased productivity and is committed to continuing this process into the
future.
The Group expects to continue delivering improved performance for the full year.
Financial statements
Financial statements of the Group have been prepared in accordance with South
African Statements of Generally Accepted Accounting Practice consistent with
those used at 30 June 2003, 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 Group Chief Executive Officer
18 February 2004
Directors
A McLean (British) (Chairman), DK Gordon (Chief Executive), MBN Dube*, P Fourie,
E Gombault, 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 1501
PO Box 2207, Benoni 1500
www.enviroserv.co.za
Transfer secretaries
Computershare Limited,
70 Marshall Street, Johannesburg 2001
