waste solutions for a sustainable future

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

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

1997 1998 1999 2000 2001 2002 2003 2004 2005 1997 1998 1999 2000 2001 2002 2003 2004 2005 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) 350 25 300 250 200 20 15 150 10 100 50 5 0 0 01

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 2004 2005 (Unaudited) change (Restated) (Restated) R 000 R 000 R 000 Revenue 343 950 29 267 434 578 745 Operating profit before depreciation, amortisation and environmental remediation provisions 86 136 53 56 237 113 818 Depreciation, amortisation and environmental remediation provisions (47 553) 53 (30 993) (59 292) Operating profit 38 583 53 25 244 54 526 Finance income 49 1 868 Finance costs (5 634) (5 821) (10 878) Share of profit of associate company 780 1 584 2 269 Profit before taxation 33 778 61 21 007 47 785 Taxation (7 917) (1 921) (7 180) Net profit attributable to ordinary shareholders 25 861 35 19 086 40 605 Diluted headline earnings per share (cents) 24,5 31 18,8 45,1 Diluted earnings per share (cents) 23,1 30 17,8 37,1 Headline earnings per share (cents) 26,1 27 20,6 48,8 Earnings per share (cents) 24,7 26 19,6 40,1 Operating margin 11% 9% 9% Weighted average number of shares in issue during the period diluted 111 840 626 107 061 663 109 460 978 Weighted average number of shares in issue during the period net of treasury shares 104 876 369 97 491 953 101 226 978 Shares in issue at end of the period net of treasury shares 105 334 139 101 947 280 103 606 626 Reconciliation of headline earnings Net profit attributable to ordinary shareholders 25 861 19 086 40 605 Adjusted by: Impairment of goodwill 1 065 2 501 Impairment of property 6 115 Impairment of plant and equipment 1 102 1 193 Loss/(Profit) on disposal of property plant and equipment 1 075 (97) (930) 28 038 20 054 49 484 Taxation on aforementioned adjustments (631) 29 (76) Headline earnings 27 407 36 20 083 49 408 02

Enviroserv booklet 2/21/06 6:27 PM Page 3 ABRIDGED GROUP BALANCE SHEET 31 December 31 December 30 June 2005 Percentage 2004 2005 (Unaudited) change (Restated) (Restated) R 000 R 000 R 000 ASSETS Non-current assets 356 034 332 450 323 611 Property, plant and equipment 312 997 297 842 288 833 Intangible assets 31 253 23 844 23 330 Investment in preference shares and associate 11 784 10 764 11 448 Current assets 247 487 162 645 223 544 Inventories 14 063 9 436 10 638 Accounts receivable 186 189 150 091 176 002 Employee benefits 2 755 3 118 1 624 Cash and cash equivalents 44 480 35 280 Total assets 603 521 495 095 547 155 EQUITY AND LIABILITIES Capital and reserves 230 486 199 250 221 334 Ordinary share capital and share premium 17 494 37 407 34 151 Foreign currency translation reserve (184) (3 953) (132) Distributable reserves 213 176 165 796 187 315 Non current liabilities 216 360 162 427 172 391 Deferred taxation 21 104 14 266 21 670 Environmental remediation provisions 112 435 94 557 102 364 Interest-bearing borrowings 79 820 50 152 45 155 Deferred income 3 001 3 452 3 202 Current liabilities 156 675 133 418 153 430 Accounts payable and provisions 115 565 93 650 126 530 Current portion of interest-bearing borrowings 34 961 36 010 30 293 Bank overdraft 4 783 3 607 Taxation 1 366 151 (3 393) Total equity and liabilities 603 521 495 095 547 155 Net asset value per share (cents) 219 12 195 214 Debt/equity ratio 33% 45% 18% Net interest bearing debt 75 084 (16) 89 769 40 168 03

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 2005 2004 2005 (Unaudited) (Restated) (Restated) R 000 R 000 R 000 Share capital Ordinary shares 1 236 1 236 1 236 At beginning of period 1 236 1 181 1 181 Issued during period 55 55 Share premium 28 436 45 217 46 224 At beginning of period 46 224 39 099 39 099 Issued during period 18 946 18 946 Share-based payments 1 006 1 006 2 013 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 1 131 1 603 (2 660) 17 494 37 407 34 151 Foreign currency translation reserve At beginning of period (132) (1 887) (1 887) Currency translation differences during period (52) (2 066) 1 755 (184) (3 953) (132) Distributable Reserves At beginning of period 187 315 146 710 146 710 Profit attributable to ordinary shareholders 25 861 19 086 40 605 213 176 165 796 187 315 04

Enviroserv booklet 2/21/06 6:27 PM Page 5 ABRIDGED GROUP CASH FLOW STATEMENT 31 December 31 December 30 June 2005 2004 2005 (Restated) R'000 R'000 R'000 Cash generated by operations 89 118 60 067 126 632 Movement in working capital (24 572) (27 432) (23 535) Cash flow from operations 64 546 32 635 103 097 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 30 961 (7 994) 52 255 Additions to property, plant and equipment (59 070) (23 243) (49 353) Proceeds on disposal of property, plant and equipment 2 820 421 5 632 Dividend received from associate 444 2 345 Contractor claim received 8 500 Acquisition of subsidiaries, associates and operations (8 000) (15 944) (16 097) (32 845) (46 760) 3 282 Proceeds from issue of share capital 19 000 19 000 Net financing effects of employee share incentive trust 1 722 (2 540) Options on own equity (2 019) Movement in interest-bearing borrowings 34 665 20 276 15 279 Movement in current portion of interest-bearing borrowings 4 668 (26) (5 743) Movement in cash and cash equivalents 4 469 (5 788) 29 278 Net foreign exchange difference (52) (2 066) 1 755 Balance at beginning of period 35 280 4 247 4 247 Balance at end of period 39 697 (3 607) 35 280 05

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 2004 2005 R 000 R 000 Profit attributable to shareholders as previously reported under SA GAAP 20 262 42 957 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 19 086 40 605 Property, plant Deferred Retained Share and equipment tax earnings premium R 000 R 000 R 000 R 000 1 July 2004 As previously reported 291 821 (13 219) (148 017) (38 277) IFRS adjustments (683) 198 1 307 (822) Share-based payments 822 (822) Property, plant and equipment (683) 198 485 As reported under IFRS 291 138 (13 021) (146 710) (39 099) 31 December 2004 As previously reported 298 764 (14 533) (168 279) (43 389) IFRS adjustments (922) 267 2 483 (1 828) Share-based payments 1 828 (1 828) Property, plant and equipment (922) 267 655 As reported under IFRS 297 842 (14 266) (165 796) (45 217) 30 June 2005 As previously reported 289 994 (22 006) (190 974) (43 389) IFRS adjustments (1 161) 336 3 659 (2 835) Share-based payments 2 835 (2 835) Property, plant and equipment (1 161) 336 824 As reported under IFRS 288 833 (21 670) (187 315) (46 224) 06

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 2005. 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 2005. 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

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 2005. 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 2005. 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

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 www.enviroserv.co.za 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: ZAE000010989 Share code: Env Sponsor Investec Bank Limited 100 Grayston Drive, Sandton 2196 PO Box 785700, 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 2006 9

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