waste solutions for a sustainable future

Transcription

1 Enviroserv booklet 2/21/06 6:27 PM Page 1 waste solutions for a sustainable future INTERIM ANNOUNCEMENT FOR THE SIX-MONTH PERIOD ENDED 31 DECEMBER 2005

2 Enviroserv booklet 2/21/06 6:27 PM Page 2 01 FINANCIAL HIGHLIGHTS 02 INCOME STATEMENT 03 BALANCE SHEET contents 04 STATEMENT OF CHANGES IN EQUITY 05 CASH FLOW STATEMENT 06 RECONCILIATION OF THE TRANSITION FROM SA GAAP TO IFRS 07 COMMENTARY

3 Enviroserv booklet 2/21/06 6:27 PM Page 1 ENVIROSERV HOLDINGS LIMITED ENVIROSERV HOLDINGS LIMITED financial statements FINANCIAL HIGHLIGHTS Revenue up 29% Operating profit up 53% Diluted headline earnings per share up 31% REVENUE (R 000) DILUTED HEADLINE EARNINGS PER SHARE (cents)

4 Enviroserv booklet 2/21/06 6:27 PM Page 2 ENVIROSERV HOLDINGS LIMITED financial statements ABRIDGED GROUP INCOME STATEMENT Six-month Six-month Year period ended period ended ended 31 December 31 December 30 June 2005 Percentage (Unaudited) change (Restated) (Restated) R 000 R 000 R 000 Revenue Operating profit before depreciation, amortisation and environmental remediation provisions Depreciation, amortisation and environmental remediation provisions (47 553) 53 (30 993) (59 292) Operating profit Finance income Finance costs (5 634) (5 821) (10 878) Share of profit of associate company Profit before taxation Taxation (7 917) (1 921) (7 180) Net profit attributable to ordinary shareholders Diluted headline earnings per share (cents) 24, ,8 45,1 Diluted earnings per share (cents) 23, ,8 37,1 Headline earnings per share (cents) 26, ,6 48,8 Earnings per share (cents) 24, ,6 40,1 Operating margin 11% 9% 9% Weighted average number of shares in issue during the period diluted Weighted average number of shares in issue during the period net of treasury shares Shares in issue at end of the period net of treasury shares Reconciliation of headline earnings Net profit attributable to ordinary shareholders Adjusted by: Impairment of goodwill Impairment of property Impairment of plant and equipment Loss/(Profit) on disposal of property plant and equipment (97) (930) Taxation on aforementioned adjustments (631) 29 (76) Headline earnings

5 Enviroserv booklet 2/21/06 6:27 PM Page 3 ABRIDGED GROUP BALANCE SHEET 31 December 31 December 30 June 2005 Percentage (Unaudited) change (Restated) (Restated) R 000 R 000 R 000 ASSETS Non-current assets Property, plant and equipment Intangible assets Investment in preference shares and associate Current assets Inventories Accounts receivable Employee benefits Cash and cash equivalents Total assets EQUITY AND LIABILITIES Capital and reserves Ordinary share capital and share premium Foreign currency translation reserve (184) (3 953) (132) Distributable reserves Non current liabilities Deferred taxation Environmental remediation provisions Interest-bearing borrowings Deferred income Current liabilities Accounts payable and provisions Current portion of interest-bearing borrowings Bank overdraft Taxation (3 393) Total equity and liabilities Net asset value per share (cents) Debt/equity ratio 33% 45% 18% Net interest bearing debt (16)

6 Enviroserv booklet 2/21/06 6:27 PM Page 4 ENVIROSERV HOLDINGS LIMITED financial statements ABRIDGED GROUP STATEMENT OF CHANGES IN EQUITY 31 December 31 December 30 June (Unaudited) (Restated) (Restated) R 000 R 000 R 000 Share capital Ordinary shares At beginning of period Issued during period Share premium At beginning of period Issued during period Share-based payments Share options (2 019) Cash distribution (16 775) (13 834) (13 834) Treasury shares (12 178) (9 046) (13 309) Prior period (13 309) (10 649) (10 649) Current period (2 660) Foreign currency translation reserve At beginning of period (132) (1 887) (1 887) Currency translation differences during period (52) (2 066) (184) (3 953) (132) Distributable Reserves At beginning of period Profit attributable to ordinary shareholders

7 Enviroserv booklet 2/21/06 6:27 PM Page 5 ABRIDGED GROUP CASH FLOW STATEMENT 31 December 31 December 30 June (Restated) R'000 R'000 R'000 Cash generated by operations Movement in working capital (24 572) (27 432) (23 535) Cash flow from operations Spent from environmental remediation provisions (7 501) (17 615) (23 239) Net finance costs (5 585) (5 821) (9 010) Taxation paid (3 724) (3 359) (4 759) Distribution paid to shareholders (16 775) (13 834) (13 834) Cash retained from operating activities (7 994) Additions to property, plant and equipment (59 070) (23 243) (49 353) Proceeds on disposal of property, plant and equipment Dividend received from associate Contractor claim received Acquisition of subsidiaries, associates and operations (8 000) (15 944) (16 097) (32 845) (46 760) Proceeds from issue of share capital Net financing effects of employee share incentive trust (2 540) Options on own equity (2 019) Movement in interest-bearing borrowings Movement in current portion of interest-bearing borrowings (26) (5 743) Movement in cash and cash equivalents (5 788) Net foreign exchange difference (52) (2 066) Balance at beginning of period Balance at end of period (3 607)

8 Enviroserv booklet 2/21/06 6:27 PM Page 6 ENVIROSERV HOLDINGS LIMITED financial statements RECONCILIATIONS OF THE TRANSITION FROM SA GAAP TO IFRS Six-month Year period ended ended 31 December 30 June R 000 R 000 Profit attributable to shareholders as previously reported under SA GAAP IFRS adjustments (1 176) (2 352) Property, plant and equipment (net of tax) (170) (339) Share-based payments (1 006) (2 013) As reported under IFRS Property, plant Deferred Retained Share and equipment tax earnings premium R 000 R 000 R 000 R July 2004 As previously reported (13 219) ( ) (38 277) IFRS adjustments (683) (822) Share-based payments 822 (822) Property, plant and equipment (683) As reported under IFRS (13 021) ( ) (39 099) 31 December 2004 As previously reported (14 533) ( ) (43 389) IFRS adjustments (922) (1 828) Share-based payments (1 828) Property, plant and equipment (922) As reported under IFRS (14 266) ( ) (45 217) 30 June 2005 As previously reported (22 006) ( ) (43 389) IFRS adjustments (1 161) (2 835) Share-based payments (2 835) Property, plant and equipment (1 161) As reported under IFRS (21 670) ( ) (46 224) 06

9 Enviroserv booklet 2/21/06 6:27 PM Page 7 COMMENTARY ON THE DECEMBER 2005 INTERIM RESULT EnviroServ delivered strong results for the six months to December Headline earnings increased 36% to R27,4 million (2004: R20,1 million), diluted headline earnings per share increased 31% to 24,5 cents (2004: 18,8 cents) and headline earnings per share increased 27% to 26,1 cents (2004: 20,6 cents). During the six-month period EnviroServ experienced improved market conditions, which together with a concerted sales drive, underpinned revenue growth of 29%. The improvement in revenue enabled the operating margin to increase to 11% (2004: 9%) and operating profit to increase by 53% to R38,6 million (2004: R25,2 million). Cash generated by operations was R89.1 million, an improvement of 48% on the comparative period (R60,1 million). R24,6 million of cash was invested in working capital to fund increased activity, R47,9 million was invested in replacing vehicles, plant, equipment and landfill cells and a further R11,2 million was expended on assets for new projects and to accommodate the group s growth. The group s effective tax rate has increased to 23% as much of the growth in earnings was attributable to South African operations that are subject to a higher rate of tax than the group s international companies. On 1 October 2005 EnviroServ acquired an environmental absorbent product distribution business from Zorbit Environmental CC. This operation fits well with the hazardous response business and is already showing good synergies. Its profits in the three months to December have been in line with management s expectations. REVIEW OF OPERATIONS EnviroServ Waste Management (Pty) Limited EnviroServ Waste Management continued the strong performance shown in the six months to June 2005 to deliver an excellent result in the six months to December The company achieved strong revenue growth across all regions largely due to an increase in waste management requirements from major customers and additional resources employed in sales and marketing that have driven volumes and market share. Towards the end of the six-month period the company embarked on a major contract to remove and landfill a large hazardous waste stockpile in Cape Town, which had a positive effect on revenue and profits. This contract will be completed early in the next six months. EnviroServ Waste Management continued to focus on partnering with its key customers to provide total waste solutions tailored to customers specific needs. This was achieved through close co-operation between the different service divisions co-ordinated by the recently formed regional Commercial teams. Conquip, the specialist compaction hire business, delivered a good operational performance despite a lack of revenue growth. This was achieved through operational efficiencies and replacing ageing plant. Operations outside of South Africa have continued to perform well. The domestic waste contract in Luanda is growing. The contract to manage Mozambique s only hazardous landfill facility is progressing satisfactorily and the business has now expanded to provide waste transport services in the region. EnviroServ Waste Management continues to invest in exploring and developing foreign opportunities. 07

10 Enviroserv booklet 2/21/06 6:27 PM Page 8 ENVIROSERV HOLDINGS LIMITED financial statements COMMENTARY continued In September 2005 EnviroServ Waste Management signed an agreement with Japan Carbon Finance Limited to sell carbon emission credits emanating from a gas extraction project at the Chloorkop landfill site. This project will reduce carbon emissions from the site as well as contributing to the group s earnings once operations begin as planned in the next financial year. Millennium Waste Management (Pty) Limited ( Millenium ) Millennium reported an operating loss for the six-month period as it suffered a further decline in revenue and a fall in tender opportunities from local authorities and increased competition from small operators. Sediba, the water and sanitation division, was particularly effected as local authorities are choosing to rather in-source despite a serious lack of capacity. PROSPECTS EnviroServ is well-positioned to achieve sustainable growth in revenue and profits due to the positive impact of initiatives established over the past years. EnviroServ s higher growth experienced over the past six months should continue into the second sixmonth period, and then more moderately into the medium term. Management will continue to focus on reducing the losses from Millennium Waste Management, controlling costs and improving efficiencies in all aspects across the Group. EnviroServ is focused on developing partnerships with larger customers and expanding the basket of waste treatment options. Opportunities outside of South Africa s borders for the skills and services offered by EnviroServ are promising and plans are in place to seek out and develop these opportunities to the benefit of the group. During this past period, as part of this initiative, a number of international tenders have been submitted on behalf of the group. Due to the nature of tenders, there is no certainty as to what extent EnviroServ will be successful, however winning these tenders could add significantly to the group s results going forward. CHANGES IN DIRECTORATE Pierre Fourie resigned from the board as an executive director on 31 October We would like to express our appreciation for his valuable contribution. On 22 November 2005 Patrick Francis Crowley was appointed to the board as an independent non-executive director. APPRECIATION We would like to thank the members of the board for their enthusiasm and input over this period and on behalf of the board we extend our appreciation to our dedicated staff and managers who have worked hard to achieve this good result. FINANCIAL STATEMENTS The interim financial statements were prepared in accordance with International Financial Reporting Standards (IFRS) with effect from 1 July The opening balance sheet of 1 July 2004 and the comparative income statements for the year ended 30 June 2005 and the period ended 31 December 2004 were restated, where 8

11 Enviroserv booklet 2/21/06 6:27 PM Page 9 COMMENTARY continued appropriate, having considered the transitional arrangements provided by IFRS1 First Time Adoption of International Financial Reporting Standards. The reconciliations as required in terms of IFRS1 indicating the effect of the transition from SA GAAP to IFRS have been provided. DIVIDEND In line with the group s dividend policy to declare an annual distribution or dividend after publication of its final audited results, no interim dividend has been declared. PRESENTATION TO INVESTORS A full copy of the presentation to investors and analysts can be viewed on the company s website Directors A McLean (Chairman), D K Gordon (Chief Executive) P F Crowley*, M B N Dube*, E Gombault, B Joffe* D Lavarinhas, E K Motebang, J L Pamensky* L P Ralphs*, R P Rocher, A C Salomon* *Non-executive Secretary: O Deftereos (ACIS, CA(SA)) Registered Office 18 Dusseldorf Street, Apex, Benoni 1500 Reg no. 1994/000280/06 ISIN: ZAE Share code: Env Sponsor Investec Bank Limited 100 Grayston Drive, Sandton 2196 PO Box , Sandton 2146 Transfer Secretaries Computershare Investor Services 2004 (Pty) Limited 70 Marshall Street, Johannesburg 2001 A McLean Chairman D K Gordon Chief Executive 20 February

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