in environmentally responsible waste management
enviroserv holdings ltd 2003annual report
leadership
in environmental ly responsible waste management
This report is printed on environmentally friendly Naturalis paper.
Glossary of terms
Airspace – The area contained within a landfill cell available for the disposal of waste.
BPEO – “Best Practicable Environmental Option.” The outcome of a systematic consultative
procedure that emphasises the protection of the environment. It establishes, for a given set
of objectives, the option that provides the most benefit or least damage to the environment
as a whole at acceptable cost.
CAIA – Chemical and Allied Industries Association.
Cell – This is the basic landfill unit within the landfill site into which waste is disposed.
Closure – The act of terminating the operation of a landfill. Closure is preceded by rehabilitation and
followed by post closure monitoring.
Domestic waste – Primarily household waste and garden refuse.
Duty of care – This requires that anyone who generates, transports, treats or disposes of waste must
ensure that there is no unauthorised transfer or escape of waste from their control, and
must retain documentation describing both the waste and any related transactions.
The person retains responsibility for the waste generated or handled.
Encapsulation – The procedure for disposing of high hazardous wastes, not suitable for direct landfilling,
by isolating the wastes in sealed, reinforced concrete cells located in a demarcated and
independently lined area of a Class H hazardous landfill site.
Hazardous waste – Waste, other than radioactive waste, which is legally defined as hazardous in the state in
which it is transported or disposed of, determined by the chemical reactivity, toxic,
explosive, corrosive or other characteristics which cause, or are likely to cause, danger to
health or the environment when improperly treated, stored, transported or disposed of.
Healthcare risk waste – Infectious waste emanating primarily from hospitals, clinics, surgeries, chemists and
sanitary services.
Industrial waste – Hazardous and non-hazardous waste in either a dry or liquid form from industrial and
commercial generators.
Landfill site – The area permitted for waste disposal on which landfill cells and other structures required
for the safe disposal of waste are constructed.
Leachate – An aqueous solution arising when water percolates through decomposing waste and as a
result of the biodegradation of the waste. It contains final and intermediate products of
decomposition, various solutes and waste residues.
Local authorities – Municipalities, district councils and government institutions.
OHSA – Occupational Health and Safety Act.
SHERQ – Safety, Health, Environment, Risk and Quality.
ISO 9001 – Specifies requirements for a quality management system where an organisation needs to
demonstrate its ability to consistently provide product that meets customer and applicable
regulatory requirements, and aims to enhance customer satisfaction through the effective
application of the system, including processes for continual improvement of the system and
the assurance of conformity to customer and applicable regulatory requirements.
ISO 14001 – Specifies requirements for an environmental management system, to enable an organisation
to formulate a policy and objectives taking into account legislative requirements and
information about significant environmental impacts.
ISO 17025 – Specifies the general requirements for the competence to carry out tests and/or calibrations,
including sampling.
Note to reader: If there are any terms used in this report with which you are unfamiliar,
you may e-mail [email protected].
enviroserv holdings ltd ann
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EnviroServ’s vision of leadership inenvironmentally responsible waste management is not just a statement for effect. It is the code we live by.
Since inception, our focus on driving positive change has been unwavering. There have been many instances of whereEnviroServ has not only met legislative requirements, butexceeded them.
This year’s Annual Report demonstrates how leadership forms a core part of the way we do business.
Section 1: Highlights the different aspects of leadershipacross the Group by presenting examples of thoseaccomplishments we are particularly proud of.
Section 2: Reports back to all our stakeholders on the year under review, providing a frank appraisal of oursuccesses, our failings and our growth path into the future.
Section 3: This section on sustainable development illustrateshow our practices are based on listening and responding to our wide base of stakeholders. Evidences EnviroServ’scommitment to caring and doing things right.
Section 4: Accounts for our financial delivery demonstratingour track record of growth through our income statement andcash flows and the fundamental strength of our balance sheet.
Letter to stakeholders
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Cash generated by operations(R millions)
110
100
90
80
70
60
50
40
30
20
10
0
99 00
01
02
98
03
Revenue*
(R millions)
450
400
350
300
250
200
150
100
50
0
9900
01
02
98
03
14
12
10
8
6
4
2
0
Distribution/dividends per share(cents)
40
35
30
25
20
15
10
5
0
Headline earnings per share(cents)
98
9900
01
02
03
99
00
01
02
03
98
* Revenue figures have been restated in the graphs for the period 1998 – 2001 on a pro-forma basis to reflect the disposal of 53% of ourdomestic waste operations to an empowerment joint venture, Millennium Waste Management (Pty) Ltd.
2
% change 2003 2002 2001 2000 1999 1998
Income statement
Revenue 13 426,1 377,9 379,9 331,6 342,9 340,1
Operating profit 24 51,9 42,0 37,0 35,0 32,4 17,8
Headline earnings 17 37,7 32,3 29,0 25,9 23,5 9,5
Share statistics
Earnings per share (cents) 16 35,0 30,1 2,6 20,4 19,1 (5,1)
Headline earnings per share (cents) 17 35,7 30,6 26,2 22,1 20,1 8,1
Distribution/Dividend per share (cents) 20 12,0 10,0 8,0 7,0 5,0 –
Key ratios and financial data
Return on shareholders’ equity (%) 26,1 28,1 27,1 24,1 25,7 10,9
Return on total assets (%) 13,8 12,8 13,2 12,9 9,1 4,4
Operating margin (%) 12,5 11,4 10,0 10,6 9,5 5,2
Net interest bearing debt 1 48,1 47,8 – – – 37,1
Debt/equity ratio (%) 30,6 36,5 – – – 44,5
Interest cover (times) 6,2 6,2 24,3 20,2 3,5 1,7
Cash generated by operations 15 103,4 89,9 78,5 70,4 70,2 69,8
Market capitalisation 69 232,2 137,2 136,2 75,1 118,5 134,9
R millions
Financial highlights
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EnviroServ Waste Management (Pty) Ltd, our operating subsidiary focused primarily on the industrial waste market.Waste-tech manages, collects, sorts and separates recyclables and transports and disposes of hazardous andnon-hazardous industrial waste. Hazmat offers a 24-hour support service for emergency clean-ups, hazardousmaterial spillage containment and on-site remediation. Dispose-tech treats and disposes of waste at permittedEnviroServ waste disposal sites and incineration facilities. Conquip is a major player in the hire of compactionequipment in the waste, construction and mining industries. EnviroDrum provides environmentally acceptabledrum reconditioning. Process Management provides on-site solutions to re-use, recycle and reduce wastethrough innovative technologies and installations. Chargold specialises in processes which beneficiate carbonwaste products.
Millennium Waste Management (Pty) Ltd is a company in which EnviroServ owns 47%, our empowermentpartner Lungisa owns 47% and the remainder is owned by the Millennium Employee Share Trust. Sediba provides a total water and sewage management solution. Wade Refuse provides a domestic wastecollection service. SanuMed provides services for the safe collection and disposal of healthcare risk waste.Landfill Management manages general waste disposal facilities.
47%
Division Division Division Division
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Division Division 100% 100% Division
100%
Division 35%
Group structure
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Revolutionary landfill equipment
Landfill operations consist of a number of majorprocesses, including dumping, spreading,shredding, compacting and covering waste. Theseoperations are typically carried out by threeseparate, expensive machines: a trash compactor, afront-end loader and an articulated dump truck.
EnviroServ’s Conquip Hire division has created theRef-u-Mech System which is the first of its kind andhas several unique design features. This uniquesystem consists of a package of three tools that areeasily fitted and interchangeable onto one machinewhich can perform all the major landfill operations.
A major reduction in the plant capital outlay forsmaller sites is achieved without compromising onoperating standards.
This product has given Conquip Hire andMillennium Waste Management’s LandfillManagement division a competitive edge in themarket of small to medium landfill sites.
Leachate treatment
Our hazardous landfill sites are designed andconstructed to prevent contamination. As waste on
landfill sites biodegrades, leachate is generated andstored in dams. Long-term storage of leachateincreases some of the inherent operating risks such as the potential contamination of soil andgroundwater. This, together with the cost ofconstructing lined dams occupying valuable spacewithin areas permitted for landfill operationscontinues to be a real challenge for our business.
Intensive research over a five-year period hasresulted in a cost-effective and sustainable solutionfor both the stockpile of leachate and the leachatecurrently generated. Leachate will be treated inthree separate treatment steps – a chemical step, a mechanical step, and a biological step. The combination of these three steps results in an inert effluent.
Construction on a large-scale plant is planned tocommence in September 2003, with commissioningscheduled for early 2005. The new plant will resultin increased efficiencies and avoid significant future costs.
Vehicle performance tracking, overloadprotection and bin trackingEnviroServ’s Waste-tech division runs a fleet ofvehicles to collect and transport non-hazardous and
leadership in cutting-edge waste management technology
Since inception, EnviroServ has implemented leading-edge technology in its operations to ensure it meets and mostly exceeds the requirements of waste legislation.
Pressure continues to mount on companies to ensure they handle their waste in aresponsible manner. EnviroServ’s ongoing investment in sustainable technologies forwaste treatment and disposal has positioned it well to continue providing a superiorwaste management service. Recent developments have further increased efficienciesand improved delivery to clients.
Over the next few pages we outline some of the latest technological advancesimplemented in our business:
Leading technology
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Ref-u-Mech System with the Ref-u-Pac roller attached.
hazardous waste material. A new vehicleperformance tracking system has beenimplemented to reduce long-term vehicle costs andimprove logistical management. The system enablesthe Group to manage driver behaviour and monitorvehicle routes in real-time, optimising service costsand improving service delivery. Additional benefitswill be derived when integration with our new ITsystems is complete.
A real-time vehicle overload protection warning hasbeen added to the performance tracking system.This will assist both EnviroServ and clients tocomply with the National Road Transport Act, and toreduce the long-term effect of overloading on wearand tear of vehicles and the National road network.
New bin tracking technology is also beingintroduced to improve the control, utilisation andmaintenance of containers. The system will beintegrated with EnviroServ’s IT systems to ensureefficient bin stock control and collections.
Asbestos stripping
Asbestos stripping has become an issue of greatconcern to government, labour and industry.
EnviroServ’s hazardous materials handling unit,Hazmat Support Services, is accredited andregistered with the Department of Labour as a legalasbestos handler and is the first unit in Africa to betrained and accredited in technologies for theEuropean Union DTA qualification (“ExpertSupervisor for Asbestos Removal”). Hazmat SupportServices now has the competitive advantage ofbeing the only unit in South Africa equipped to stripasbestos for marine salvage companies and many ofthe multi-national companies operating in Africa.
Re-useable healthcare risk waste containers
SanuMed has offered commercial healthcare riskwaste (HCRW) treatment services for 15 years.
A new vehicleperformance trackingsystem has beenimplemented to reducelong-term vehicle costsand improve logisticalmanagement.
leadership in cutting-edge waste management technology continued
Side loader.
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Pending legislation has prompted certaingovernment and private healthcare clients to askfor reusable healthcare risk waste containers, andin response SanuMed will soon start a pilotoperation in Gauteng. The new container systemis environmentally friendly, more robust,significantly reduces the risk of needle-stickinjuries and spills and will reduce the totalvolume incinerated as containers are notdestroyed. Our service will be further enhancedthrough the introduction of Waste trackingtechnology with the new system as each newcontainer will be fitted with a bin tracking device.
The system is expected to add significant benefitsto our clients, while improving the cost-effectiveness of SanuMed’s operations.
Incineration of healthcare risk wasteAn independent study commissioned by theGroup in 2002 by a leading expert in healthcarerisk waste treatment technologies recommendedthat the most appropriate solution for thetreatment of healthcare risk waste in South Africawas destruction in a high-temperature two-stageincinerator fitted with environmental gas cleaningsystems (EGCS). The benefits of incineration overalternative “non-burn” technologies are:
• safety: not dependent on waste segregationor shredding at source, or at any stage ofthe treatment;
• completeness: deals with a wider spectrumof waste including anatomical and limitedchemical and pharmaceutical wastesincluding Creutz Jacobs syndrome (Madcow disease);
• waste reduction: ability to reduce wastevolumes by up to 85%;
• internationally proven technology: use ofhigh-temperature incinerators fitted with
EGCS endorsed by the EU and USEnvironmental Protection Agency;
• Compliance: complies with local andinternational regulatory requirements.
In line with this recommendation, Dispose-tech will be investing approximately R20 million inupgrading the company’s high temperatureincinerators to comply with the strictest national and international standards.
“Side loader” refuse collection system
Wade Refuse launched a side loader refusecollection system, the first of its kind to be fullyimplemented in South Africa. This system allowswaste to be loaded from both sides of a vehicle,significantly increasing productivity and cost-effectiveness. The containers are demountable andact as storage containers that can be efficiently bulktransported to the landfill site, even after hourswhen collection may not be possible.
Asset management
Historically, many municipalities do not haveadequate asset registers and maintenance orreplacement programmes for their water andsewage plants. Sediba has developed a proprietaryproduct that is able to assess, register, develop andimplement a detailed asset managementprogramme for water and sewage works. Thistechnology will allow Sediba to penetrate themunicipal market where partnerships with privatesector companies have not been fully embraced.
Wade Refuse launched arevolutionary new refusecollection system, the first of its kind to be fullyimplemented in South Africa.
Side loader.
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1945 The first private waste company to be
registered in South Africa is part of the EnviroServ
Group. Crystal Properties (Pty) Ltd was incorporated
on 6 December 1945. The name was later changed
to Purle Industrial Waste Properties (Pty) Ltd and
grew to become Waste-tech, which became part of
EnviroServ in 1997.
1971 EnviroServ became the first company to
operate a commercial hazardous waste landfill site
in South Africa.
1984 Wade Refuse was the first private company
to offer door-to-door domestic waste collection
contracts in townships such as Kwathema, Tsakane
and Soweto in Gauteng.
1989 Waste-tech launched the first commercial
healthcare risk waste management service in South
Africa, then known as the Medical Waste division.
Leading the way
1990 Holfontein H:H landfill became the first
engineered high hazardous commercial waste
disposal site designed and licenced according to
the Department of Water Affairs’ Minimum
Requirements.
1992 Chemi-Waste Service was the first collection
and disposal service for small volumes of hazardous
waste, such as laboratory and pharmacy waste.
1996 EnviroServ becomes the first, and remains
the only, waste management company to be listed
on the JSE Securities exchange.
2001 EnviroServ pioneered a new hazardous
waste solution that involved using custom-designed
silos in encapsulating drums.
The Shongweni Landfill Facility became the first
landfill site to achieve the NOSA 5 star occupational
health and safety grading.
Leading applicationsleadership in innovation
EnviroServ does not only invest in relevant technology. It invests significant time andexpertise in making sure that the way it applies its technology and assets drives growththrough unique offerings to clients and that it always adheres to the strictest environmentalstandards and legislation.
Many of our applications are offered to the market long before legislation requires it,making EnviroServ a leader in the waste management field.
We outline some of our achievements:
10
2003 EnviroServ became the first waste management group to close and rehabilitate a hazardous waste
landfill site that met all the new Minimum Requirements for Waste Disposal by Landfill, published by the
Department of Water Affairs and Forestry in 1998.
Hazmat Support Services became the first in Africa to achieve EU accreditation as expert supervisors for
asbestos removal.
EnviroServ became the first waste company to introduce electronic tracking on its large inventory of containers,
such as skips and bins, which will significantly improve control and allow the group to achieve better utilisation
of its bins and improve its service to clients.
Waste-tech truck with encapsulation silos in background.
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Edwin MotebangHuman Resources and Industrial Relations Director
Edwin joined Wade Refuse in 1992 as sales director.After EnviroServ’s merger with Waste-tech in 1997,he became the Industrial Relations Manager. In2000, he became HR and IR Director.
“One should never stop learning and developing.EnviroServ has always given me sufficient time tostudy and learn more. Development is vital tocontinually improve one’s performance. Thisorganisation empowers its people to become the nextleaders, resulting in a low turnover of staff.”
Esmé GombaultGeneral Manager – Dispose-tech
Esmé joined as a Waste Consultant in 1988 andmoved into the technical department within a year.What was only a small technical department thenhas evolved into the high-tech waste treatment anddisposal division that now operates as Dispose-tech,with an annual turnover in excess of R150 million.Esmé was recently appointed as the Group’sTechnical Director.
EnviroServ is a service business. Although our technology and assets are crucial for optimal client service, it is our people who allow us to deliver cost-effectively,successfully and on time.
Our corporate value of teamwork indicates the importance we place on workingtogether to achieve our goal of quality service delivery and adding value to our clients.We have a particularly strong focus on skills development and training, allowingpeople to grow in the organisation.
The fact that 88% of our top management worked their way up through theorganisation bears testimony to our culture of development and the Group’s ability toretain a base of relevant skills.
We outline a few examples:
“EnviroServ has a strong culture of freedom toprogress. Our Chairman said to me a number of yearsago that gender should not be an issue. If you believeyou have what it takes and you are prepared to put inthe work and do what is required, the job’s yours.”
Thabiso Taaka
General Manager – Millennium Sales and Marketing
Thabiso joined Waste-tech in 1995 as a wasteconsultant in the Gauteng Sales Team. During 2001,Thabiso completed the Management AdvancementProgramme at Wits Business School and wasappointed to the Operational Board. In the same year,EnviroServ developed its joint venture partnership withLungisa Enviro Consultants to form Millennium WasteManagement and Thabiso was appointed to hiscurrent position.
“A growing and developing organisation should beleading its people along a growth path, which is verymuch the case at EnviroServ. It allows people todevelop, resulting in a team of dedicated andcommitted employees. EnviroServ gives the besttraining and experience to its staff.”
leadership in development
Leading people
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Avril Kidd
Regional General Manager – KwaZulu-Natal
Avril joined EnviroServ in 1989 as a Waste
Consultant, immediately after graduating from
university. Avril was General Manager of Waste-Tron
when it was acquired by EnviroServ in 1996. She
became Regional General Manager KwaZulu-Natal
in 1999 and was appointed the Group’s Waste-tech
brand manager soon thereafter.
“The opportunities at EnviroServ are there for
anyone, without prejudice. If you have the passion
for the business and the courage and willingness to
get your hands dirty, you will be trusted with
responsibility. And there is plenty of support.”
Skills development and training
EnviroServ believes that training and development of
all its employees is a business imperative for
sustained success in service delivery markets. To
this end, EnviroServ has embarked on a major drive
to develop skills at all levels.
From top, left to right:
Esmé Gombault, Thabiso Taaka, Avril Kidd, Edwin Motebang.
The implementation of the Group’s Skills
Development Plan in 2000 is producing good
results. In the past year, 803 employees
(approximately 67% of employees) underwent
training and attained various courses in
competencies such as sales, marketing,
management and practical operations.
Two learnership programmes, Adult Basic
Education and Training, and the Professional
Driver Programme, have received a very good
response from our employees and are being
expanded. Seven learnerships will be offered
during the new year, involving 202 employees
and 28 unemployed learners.
Whenever possible, we promote staff from within
the Group in line with our Employment Equity
Policy. Succession planning for middle and
senior management is an area receiving close
attention to provide the necessary resources for
future growth.
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EnviroServ anticipates the changing needsof our clients and is able to offer solutionsat all levels of the waste hierarchy.
Review by Chairman and CEO
manner. To ensure continued future growth,
EnviroServ has developed several high-tech
solutions for dealing with waste in a globally
accepted way.
Technology & Application: EnviroServ believes in
investing smartly in new technology. Research and
development is undertaken throughout our business
divisions to create cost and operational efficiencies
for our customers and improve on their methods of
waste management. Significant time and expertise is
also invested in the application of new technology to
ensure the Group meets customer and legal
requirements.
People: EnviroServ recognises that its people are its
most important asset. The Group has developed a
passionate culture with a strong emphasis on
freedom of expression and opportunities for
development within the organisation. We focus on
education and training and encourage employees at
all levels to further develop skills and enhance their
knowledge. This culture of a steadfast focus on
EnviroServ successfully delivered a strong
performance for the year despite challenging market
conditions, once again proving our leading position
in the waste management industry and our
relentless focus on continuously improving the way
we do business.
Revenue for the period increased by 13% to
R426,1 million, operating profit before amortisation
of goodwill increased by 24% to R53,4 million and
operating margin improved from 11,4% to 12,5%.
Strategic Focus
Throughout this Annual Report, we indicate how
EnviroServ makes its vision of leadership in
environmentally responsible waste management an
integral part of our lives.
I outline a few of the key points below.
Sustainability: Sustainable growth is key to the waste
management industry. With the advent of the triple
bottom line, our customers are increasingly under
pressure to account for waste in a sustainable
Chairman’s review
Alistair McLean
16
delivery has again allowed the group to deliver good
results in a tough year.
Legislation
Changing legislation is a core part of waste
management as the Government continues with
efforts to protect and sustain the environment.
September 2002 saw Johannesburg playing host to
the World Summit on Sustainable Development,
which culminated in the adoption of the Political
Declaration and Implementation Plan. The latter
focused on several key areas such as water and
sanitation and energy and health, which could be
potentially beneficial to EnviroServ’s service offering.
Several new laws promulgated during the period
under review are of relevance to EnviroServ’s
operations such as the amendment of the
definition of “waste”, in terms of the Environment
Conservation Act 73 of 1989 which will now include
building rubble as waste. However, we believe some
of the most significant developments with respect to
environmental issues have been the draft legislation
laws tabled this year. The most significant of these
draft laws from EnviroServ’s perspective are:
• The National Environmental Management:
Air Quality Bill, which proposes significantly
amending the current air quality regulatory
framework. This Bill will have a significant
impact for the Group’s healthcare risk waste
incinerator commissions, requiring substantial
investment in Environmental Gas Cleaning
Systems; and
• The proposed National Environmental
Management Act Second Amendment Bill,
(“NEMA Second Amendment Bill”), which will
review the requirements for undertaking
environmental impact assessments.
There are also draft amendments proposed for the
Transportation of Dangerous Goods chapter in the
National Road Traffic Act 93 of 1996. These are
set to enhance the existing regulatory framework
with respect to how hazardous or dangerous goods
are loaded, transported and off-loaded on or
from vehicles.
Despite the continual introduction of new legislation
around waste management and the ongoing efforts
of government to improve in this area, the policing
of legislation continues to be a problem. However,
there were some positive developments in the
period under review amongst our client-base in
terms of self-legislation and the monitoring of
methodologies applied to the management of waste.
Stakeholders of EnviroServ’s blue-chip client base
demand appropriate waste management,
increasingly placing the Group in a unique position
to service these clients.
Empowerment
We are continually looking at improving our
empowerment credentials. Some of EnviroServ’s
initiatives in this regard include:
• Zader Investments (Pty) Ltd, a Black
Empowerment company holding 8,5% of the
Group’s shares; and
Sustainable growth is key to the waste managementindustry. With the advent of the triple bottom line, our customers are increasingly under pressure to account for waste in a sustainable manner.
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Chairman’s review continued
• the creation of Millennium Waste Management
(Pty) Ltd, a joint venture company owned 47%
by the Group, 47% by Lungisa Enviro
Consultants (a Black Empowerment company),
and 6% by Millennium’s staff, the majority of
whom are Historically Disadvantaged
Individuals. EnviroServ in 2001 disposed of
four of its divisions, primarily involved in the
domestic waste market and healthcare risk
waste market.
Human Resources
Training and development continues to be a major
area of focus at EnviroServ. Our Skills Development
Plan initiated in 2000 has ensured that
approximately 67% of our staff have received
training and attained various qualifications.
New leadership programmes are being introduced
next year, while existing programmes will
be expanded.
We continue to promote staff from within the Group
in line with our Employment Equity Policy, which is
aligned with the requirements of the Employment
Equity Act.
The Group developed a five year equity plan which
has set equity targets which the Group intends to
achieve by the end of 2005.
Progress against this plan is monitored by the
board, and we are pleased to report that we are well
positioned to achieve our targeted equity
percentages of a minimum of 50% representation of
Previously Disadvantaged Individuals (PDI) at each
level of management. Our progress to date is
outlined below:
• Top management – 36% PDI representation.
This comprises all directors within the Group
and general managers.
• Senior management – 41% PDI
representation. This category includes the
regional management teams who, together
with the regional managers are responsible for
the success of the region under their control.
• Middle management – 48% PDI
representation. Included at this level are depot
managers and area managers who are not
neccesarily involved with strategic issues but
are in charge of the day to day operations
within their control.
• Junior management – 85% PDI
representation. This is the entry level for
managerial functions. This is a fertile ground
for development to higher managerial positions
in the Group.
Directorship and Corporate Governance
EnviroServ continues to endorse the requirements of
King II on Corporate Governance. The Board
currently comprises five non-executive directors and
seven executive directors, including Esmé Gombault
who was appointed director of EnviroServ on
18 August 2003. Esmé has played a significant role
in the development of Dispose-tech and EnviroServ
over the 15 years she has been with the Group and
I welcome her to the board.
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Prospects
Our macro economic outlook remains cautiously
optimistic. Recovery in global demand, reduction of
local interest rates and the emergence of the local
manufacturing sector from a recessionary period
will increase business activity. A rising demand for
more advanced waste disposal methodologies is
also likely to continue opening up further
opportunities for the Group within South Africa
and in neighbouring countries.
EnviroServ is well positioned through our
technological capabilities, passionate people and
operational focus to service the growing demand for
expertise in the waste management industry. This is
likely to drive sustainable growth for the Group into
the future.
Government proposals for a balanced scorecard
approach to evaluating empowerment companies
should prove beneficial to the Group as this
approach will take into account empowerment on a
wider basis, looking at factors beyond only
shareholding, such as the Group’s focus on its
people and communities.
Appreciation
Thank you to my fellow board members for their
valued input and well done to the management
team and staff for an outstanding result. Your
unwavering passion to this business continues to
fill me with pride.
Introduction
The traditional waste management industry in South Africa, which consisted of a collection anddisposal service, has evolved over recent years toprovide workable, cost-effective and sustainablesolutions to waste producers within South Africa and the African continent.
In October 2001, the Department of EnvironmentalAffairs and Tourism stated in the PolokwaneDeclaration, which was established during theNational Waste Summit, that it intends to reducewaste generation by 50% and waste disposal by25% before 2012. It also intends to develop a zero waste plan by 2022.
The markets we serve are conscious of these goalsand our clients look for a service provider that isable to lead the way to sustainable and responsiblewaste solutions and practices. Waste managementrequires new and innovative solutions that add valueto our environment and our clients.
EnviroServ has anticipated the changing needs ofour clients and is able to offer solutions across thewaste cycle. Although we are still dedicated tolandfill through two of our divisions, Dispose-techand Waste-tech, we are also able to offer solutionshigher up the waste hierarchy, further improving ourrevenue-generating ability. (see graphic opposite)
Higher up the waste hierarchy, initiatives such asrecycling allow for the reduction of landfill wastewithout reducing Group revenue as clients areprepared to pay a premium for sustainablesolutions. Lower down, international experienceindicates that landfill will remain a necessary part of waste disposal for many years to come. Throughongoing improvements and innovations, the Groupcontinues to improve landfill operations, allowing it to deal with waste in a globally acceptablemanner. These improvements have uniquelypositioned EnviroServ in the South African market as a provider of high-level solutions to a broadspectrum of clients.
Our vision of “Leadership in environmentallyresponsible waste management” is clearly illustratedthroughout this report. We report on key initiatives ineach of our divisions, which demonstrate ourleadership in technology, operations, development of our people and social responsibility.
Performance highlights
Our established position in the South African waste market has enabled the Group to deliver astrong result for the year ended 30 June 2003.Headline earnings per share increased by 17% to35,7 cents per share (2002: 30,6 cents per share).Revenue increased by 13% to R426,1 million (2002: R377,9 million), and an improved margin
Chief executive’s review
Des Gordon
20
resulted in a 24% increase in operating profit beforeamortisation of goodwill to R53,4 million (2002: R43,0 million). A combination of improvedcost control and a shift away from high-volume,low-margin work resulted in the operating marginincreasing to 12,5% for the year (2002: 11,4%).
Continuing strong operating cash flows have
resulted in net interest bearing debt being
maintained at R48,1 million (2002: R47,8 million),
after investing R63 million in new businesses and
expanding our asset base. Our debt/equity ratio has
fallen to 31%, and is well within the levels
management believes appropriate for the Group.
Acquisitions
Millennium Waste Management (Pty) Ltd acquired
the Water Operations division of Bateman Project
Holdings Limited with effect from 1 July 2002.
Bateman Water Operations is a leader in the water
and sewage industry in South Africa and was
incorporated into the Sediba division. Sediba now
has the appropriate critical mass, operational
expertise and empowerment credentials to grow
effectively in the South African market.
With effect from 1 January 2003 the Group acquired
the Spills Response division of Abzorbit CC. Abzorbit
is the leading spills response business in KwaZulu-
Natal, where EnviroServ previously had a limited
presence in this kind of business.
Both of these acquisitions are performing in line
with expectations.
Operational review
EnviroServ Waste Management
Waste-tech
The industrial collection business had a year of
moderate growth as the performance of the
manufacturing industry worsened in the second
half of the financial year. Mining clients also saw
conditions deteriorate as highly volatile exchange
rate fluctuations negatively impacted their
operations. In spite of these negative market forces,
this division has been able to record growth in
earnings through various operational initiatives.
Improved utilisation and cost efficiency were
achieved with our new fleet through the
implementation of several new technologies.
Our established position in the South African waste market hasenabled the Group to deliver a strong result for the year ended30 June 2003.
Waste disposal
Waste treatment
Waste recycling
Waste re-use
Wasteminimisation
Waste avoidance
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Chief executive’s review continued
Our KwaZulu-Natal region successfully achieved ISO 14001 accreditation, as we began our plannedrollout of this programme throughout the company.
The effective way in which Waste-tech has adoptedthe onerous new National Road Transport Act hasprovided a competitive advantage in our offering toclients. The requisite operational agreements placestringent requirements on waste generators tocontrol the transportation of their waste.
Waste-tech’s hazardous materials responsebusiness, Hazmat Support Services, hasstrengthened its position as the leader in its fieldwith the purchase of Abzorbit, which increased theskills base as well as the geographical coverage ofHazmat. During the year, Hazmat was involved in anumber of successful high profile projects, includingthe clean-up of the stricken cargo vessel JollyRubino which ran aground off the coast of KwaZulu-Natal.
Dispose-tech
The Dispose-tech division, which operates theGroup’s permitted waste treatment, destruction anddisposal facilities, has been centralised through anational management structure. This has enabledgreater focus on the highly specialised technicalaspects inherent in this business. Dispose-techexperienced a modest increase in revenue, but astrong improvement in margins as some high-volume, low-margin waste streams were replacedwith more profitable volumes. Our hazardous wastelandfill site at Shongweni in KwaZulu-Natal achievedISO 14001 accreditation in July. This programme isbeing rolled out to all sites nationally.
The Group’s incineration facilities remain strategic tothe disposal of healthcare risk waste in South Africaand are systematically being upgraded asEnviroServ strives to attain international standards
The Dispose-tech divisionhas been centralisedthrough a nationalmanagement structurewhich has enabled greaterfocus on the highlyspecialised technicalaspects inherent in this business.
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Some of the new Waste-tech fleet.
and practices. All of these facilities are about to be
fitted with environmental gas cleaning systems to
ensure new legislative requirements are met.
Process Management
This division focuses on waste reduction, re-use and
recovery. During the year, the team has been further
strengthened through the appointment of people
with experience in chemical process engineering and
project management. Process Management projects
are long-term due to the need for in-depth
evaluation, followed by an infrastructural roll-out
programme to ensure the appropriate beneficiation
of the waste stream. The Process Management
division currently has a number of projects in
different stages of progress and is therefore expected
to contribute significantly towards the Group’s
growth in the medium term.
EnviroDrum
This division, specialising in responsible
container management through drum
reconditioning, has reported very poor results
for the year and has negatively impacted
EnviroServ’s Group result. During the year, the
operation re-engineered many of its systems
and processes to improve effectiveness. In
particular, systems were changed to improve
levels of quality, production throughput and a
higher level of used drum procurement. The
short-term impact of these improvements was,
however, impacted by a high level of
Landfill will remain a necessary part of waste disposal formany years to come. Through ongoing improvements andinnovations, the Group continues to improve landfilloperations, allowing it to deal with waste in a globallyacceptable manner.
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Articulated dump truck being loaded by a front end loader at the Holfontein Hazardous Landfill site.
Chief executive’s review continued
management changes. Various alternativesregarding the future of this business are currentlyunder investigation.
Conquip Hire
Conquip, which hires compaction equipment to the
waste, mining and construction industries, reported
strong results for the period as the synergistic
benefits resulting from incorporation into the Group
were realised. Additionally, the benefits of having
Conquip’s skills and resources within the Group have
improved the efficiencies of other divisions that have
outsourced their plant requirements to Conquip.
Millennium Waste Management Joint Venture
Sediba
The Group’s water and sewage division has made
significant progress with its growth strategy through
the purchase of Bateman Water Operations. This
acquisition has added a highly experienced and
competent team to Sediba’s existing operations.
Revenue and profits have increased substantially as
the critical mass and national footprint required to
make Sediba an important player in this industry
was achieved. Significant progress has been made
towards accrediting its laboratory with ISO 17025,which is expected early in the next financial year.
Sediba is now considered to be one of the top threeprivate operators in this sector in South Africa,providing services to more than two million SouthAfricans and managing more than two million litresof water and waste-water per day.
Landfill Management
Landfill Management, which manages disposal sites
on behalf of third parties, performed well in 2003.
Increased efficiencies and growth in revenue have
improved profitability. Access to newly developed
technology through the Group’s plant hire company,
Conquip, and cross-selling opportunities from the
entire Millennium Group’s services should lead to
continued growth in the forthcoming year.
Wade Refuse
The domestic collection business has not performedwell during the year under review. A number ofsubstantial contracts with local councils have notbeen renewed as councils continue to in-sourcewaste collection services. Our domestic wasteoperations continue to suffer from the slow pace of
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Holfontein Hazardous Landfill site.
Our operations are currentlyundergoing intense changeto move from a traditionalproduct focus to becomingmore customer-centric.
privatisation of these services. However, a newsense of urgency with regard to service deliverydoes appear to be manifesting within various localauthorities. Problems created through a lack ofcritical skills and resources, together with an everaging and deteriorating asset base, will encouragelocal authorities to consider sustainable servicedelivery from private companies. Although it is verydifficult to operate efficiently in this environment, theGroup is consistently improving its service offeringthrough the use of new technology and sustainablebusiness practices. The Group believes that thisinvestment will enable Wade Refuse to showimprovements in the future. We are confident thatgreat opportunities for the Millennium business willarise in the medium term.
SanuMed
The healthcare risk waste collection division,SanuMed, delivered good growth in revenue thisyear. However, it did not achieve satisfactory returnslargely due to a lack of critical mass in some of theregions in which it operates. To profitably grow thisdivision going forward, SanuMed is investing in newequipment, such as re-usable plastic containers, andnew technology, such as automated bin tracking.
Prospects
We expect South Africa’s manufacturing sector to
emerge from its recessionary period, which could
result in a strong rebound on the back of lower
interest rates and a recovery in global demand.
If these markets improve, the increased waste
generation will positively impact on the Group’s
results going forward. EnviroServ’s ongoing
technological improvements and refinements to its
knowledge-based offer will ensure it continues to
buffer tough markets.
Our operations are currently undergoing intense
change to move from a traditional product focus to
becoming more customer-centric. We will achieve
this through focusing on tailor-made solutions and
by using our recently implemented IT systems to
improve customer delivery. The combination of
expected market growth and ever increasing service
delivery levels should result in good growth for our
industrial waste related operations.
Going forward, we expect a growing demand for
expertise in the waste industry as legislation
becomes increasingly stricter and more prescriptive.
This will increase the barriers to entry and
drive waste generators to outsource their waste
programmes. The Group’s track record shows that
it is well positioned to deliver services to the
evolving waste market.
Appreciation
My sincere appreciation to the Executive Team for
their hard work and to the Chairman and non-
executive directors for their guidance and counsel.
To our loyal and dedicated staff, my sincere thanks
for your incredible energy, effort and above all –
passion – for what we do. I look forward to another
exciting year as we grow our business together.
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Top: SanuMed employee loading healthcare risk waste.
Left: Wade Refuse rear end loader in action.
1. Alistair McLean (54)Executive Chairman
Alistair has served as Executive Chairman of the EnviroServ Groupsince February 2001 and is responsible for strategic managementand new business development. Before this, he was Chief Executivefor four years. He has been involved in EnviroServ since 1986, whenhe became a major shareholder.
2. Des Gordon (42) Chief Executive BComm; CA(SA)
Des was appointed Chief Executive in February 2001. Prior to this, heserved as Financial Director for four years. Des spent five years as theGroup Financial Manager for Group Five Limited after five years’experience in the auditing profession with Ernst & Young.
3. Raymon Rocher (35)Financial DirectorBComm; CA(SA)
Raymon spent three years with KPMG and then gained two years’experience as Group Accountant at Group Five Limited. He joinedEnviroServ as Group Financial Manager in 1997, and was appointedas Financial Director in 2001.
4. Pierre Fourie (41)Operations DirectorBEng; MBL
Pierre spent seven years as Production and Operations Manager withLyttelton Engineering Works. He was also General Manager andManaging Director for I&J and Pat Cornick respectively. He joinedEnviroServ in 2000 and was appointed a director in 2002.
5. Delia Lavarinhas (30)Property DirectorHigher Diploma in Design, Project Management; MAP
Delia worked for a large construction company and did freelanceconsulting for approximately three years. She joined EnviroServ in2000 as Property Director and also serves as Brand Manager forWade Refuse.
6. Edwin Motebang (57)HR and IR DirectorDiploma in Labour Law: Advanced Labour Relations SkillsDevelopment
Edwin joined EnviroServ in 1992 as Sales Director. Following themerger with Waste-tech in 1997, he became the Industrial Relations(IR) Manager. In 2000, he became HR and IR Director.
7. Esmé Gombault (39) Technical DirectorBSc Chemistry
Esmé joined EnviroServ as a Waste Consultant in 1988 following twoyears as a Pollution Control Officer with DEAT. Esmé later becameGeneral Manager of the Dispose-tech division. She was appointed adirector in 2003.
8. Muriel Dube (29)Non-executiveBHons Social Sciences
Muriel has been with Billiton Coal since 2000 where she serves
as Environmental Strategy Advisor. She gained experience in the
field of environmental management during four years with the
Department of Environmental Affairs and Tourism as a Director, has
co-chaired the National Committee on Climate Change and served
on the Board of Directors of the National Nuclear Regulator. She
was appointed to the EnviroServ board in 2001.
9. Brian Joffe (56)Non-executiveCA(SA)
Brian spent three years with Levitt Kirson Gross prior to holding a
position as Chief Executive of EW Tarry plc, which was listed on the
London Stock Exchange in August 1983. Over the following five
years Brian held various chairmanships until 1988 when he became
executive chairman of Bid Corporation Limited prior to its listing on
the JSE as The Bidvest Group Limited. Brian was one of the Sunday
Times top five business men in 1992 and a past recipient
of the Jewish Business Achiever of the Year Award. Brian was
appointed in 2000.
10. Joe Pamensky (73)Non-executiveCA(SA); OMSG
Joe has over forty years’ experience in the financial, insurance and
banking industries and is the recipient of numerous business
awards. He serves as a non-executive director of The Bidvest Group
Limited, as well as numerous other public and private companies,
and was appointed as a non-executive in 2001.
11. Lindsay Ralphs (47)Non-executiveBComm; BAcc; CA(SA)
Lindsay gained accounting experience at Price Waterhouse before
leaving in 1981 to join EW Tarry plc where he moved on to become
Joint Managing Director. He joined The Bidvest Group in 1992 as
Operations Director and is currently Chairman of The Bidserv
division. Lindsay also serves as a director of The Bidvest Group
Limited. He was appointed to the board in 2001.
12. Rufus Maruma (44)Non-executiveSTD (Dip); BSc Ped; BA (Hons); MSc; MAP
Rufus has 20 years experience in the environmental services and
waste management industries including a period as Chairman of the
EnviroServ Group. He was involved with the United Nations Council
for Sustainable Development and is a representative of the World
Council for Sustainable Development. Rufus is also a director of
Group Five Limited, Stewart Scott International and is Chairman of
the Phalaborwa Mining Company.
Board of directors
From top, left to right:
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1. Thabiso Taaka (30)*General Manager – Millennium Sales and MarketingMAPJoined EnviroServ in 1996
2. Dawie Krugel (41)Regional General Manager – GautengBScJoined EnviroServ in 2003
3. Alan Oosthuizen (39)*Regional General Manager – Western CapeDip Civil EngineeringJoined EnviroServ in 1995
4. Rhyno Gouws (40)(*alternate)Operations Manager – Western CapeBAgric Admin; Road Transport DiplomaJoined EnviroServ in 1991
5. Craig Hurle-Hill (44)General Manager – Conquip HireNTC5 Heavy CurrentJoined Conquip in 1986
6. Avril Kidd (35)*Regional General Manager – KwaZulu-Natal BScJoined EnviroServ in 1989
From top, left to right:
7. Kieron Geoghegan (48)*General Manager – Strategic Growth ProjectsBA; LLB; BCommJoined Conquip in 1985
8. Benoît Le Roy (42)General Manager – SedibaDip Chem Eng; Dip Bus ManagementJoined EnviroServ in 2002
9. Barry Miles (46)*General Manager – Strategic Growth ProjectsCivil Engineering Technologist; MBA Joined EnviroServ in 1999
10. Stuart McMullan (41)*Regional General Manager – Eastern CapeDip Cost AccountingJoined EnviroServ in 1985
11. Jeff le Roux (45)Group Marketing ManagerMSc; HDE; CPMM; CM(SA)Joined EnviroServ in 2002
12. Ronald Duigan (41)General Manager – Process Management BSc Eng (Chem); MBAJoined EnviroServ in 2002
Senior management
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* Director of EnviroServ Waste Management (Pty) Ltd
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EnviroServ’s sustainability in a fast-changing market islargely due to an ability to anticipate change and adaptquickly to the evolving needs of our clients. We arepositioned in a unique environment where third and firstworld collide, challenging the Group to be both innovativeand forward thinking in response to environmental needs.
One of the crucial challenges to a waste management group operating in Africa is finding ways to work togetherwith neighbouring communities, often living close to wastesites. Waste management tends to evoke strong emotionsand we have worked hard at finding ways of interactingeffectively, ensuring that sustainable change is achievedwherever EnviroServ operates.
Sustainability report
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Social responsibility
Monitoring committees
All EnviroServ’s hazardous waste landfill facilities
and healthcare risk waste treatment facilities have
established monitoring committees to monitor and
ensure compliance with the facility permit issued by
the Department of Water Affairs and Forestry and
Department of Environment and Tourism.
These committees consist of representatives from
National, Provincial and Local Authorities, members
of Local Committees and interest groups. Various
government representatives visit our facilities on a
regular basis to ensure that requirements are met
and that we comply with legislation.
Furthermore, EnviroServ has been a member of the
Responsible Care Initiative since 1997, and
renewed its commitment again this year.
Responsible Care is an international forum
dedicated to fostering a culture and ethic of
sustainable development and cleaner technologies.
Community projects
A few of our community projects are
described below:
Umlazi landfill facility closure and football field
The Umlazi landfill site, situated in Durban,
KwaZulu-Natal, is the first hazardous waste landfill
site in South Africa to be closed and rehabilitated in
accordance with the Minimum Requirements
(DWAF, 1998). It is also the first hazardous waste
landfill to be rehabilitated with the active
involvement of a community based environmental
monitoring committee. The success of the Umlazi
project is the result of a combined effort by
EnviroServ, the authorities and the local community
to reconcile conflicting expectations and demands.
One of the key requirements of the closure design
was that the neighbouring community be involved in
all aspects of the closure and rehabilitation.
The community was kept involved by organising
regular environmental monitoring committee
meetings, guided by independent facilitator Pravin
Singh. Community feedback resulted in the
consultants adjusting certain aspects of the closure
design to suit labour intensive construction methods,
as opposed to traditional plant construction.
Capping was also required to prevent soil erosion.
The low permeability soil required for the capping
layers was sourced at a nearby borrow area. The
use of the borrow area had to be negotiated with the
community, which included the design and
construction of a football field on hand-over. The
football field, including subsoil drainage system and
grassing, was handed over to the community in
March 2003.
Facilitator Pravin Singh said:
“The Umlazi landfill site is a true success story.
It provides a graphic example of how commitment to
negotiation and fostering a good relationship with all
role players, and in particular surrounding
communities, can help achieve success for all.”
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“It is not just about sewing twopieces of material together, it isabout people realising that theyhave an opinion, that they arecreative and tapping into thatcreative nature.”Celia de Villiers, Arts in Action project co-ordinator.
Top: Angie Mamaru.Above: Intuthuku Sewing Club member working her art.
Intuthuku Sewing Club
As many of the Dispose-tech workers come from the
nearby Etwatwa township near Benoni, EnviroServ
decided to approach the community to identify a
skills development project that would become a
sustainable and empowered business. This led to
the start of the Intuthuku Sewing Club in 2002.
Arts in Action, a group of artists specialising in
collaborative interactive public arts, participatory
community projects and developmental
programmes concerned with social transformation
and change, was selected to assist.
The women work from home, allowing them thetime and flexibility to look after the needs of theirfamilies. A percentage of the revenue generatedfrom the sale of each handbag is banked by theclub to cover running costs, a percentage is putaside for future growth and the sewers earn apercentage from each bag they sell.
Themes explored in the panels includeenvironmental issues, the impact of HIV/AIDS andviolence against women and children in society. “I have realised that I am strong and that it isimportant for us to face our problems,” says projectmember Baby Mathobela. “That is why the messageon my first bag was ‘Hard times never kill’ ”.
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EnviroServ’s initial financial investment of R100 000
was used to purchase materials, three sewing
machines and to employ teachers and assistants.
The bags are selling successfully, and it is hoped
that the project will become self-sustaining in the
near future.
Empowerment partnerships
Chloorkop landfill facility recycling project
EnviroServ awarded a five-year tender to Mama She
Waste Recyclers to manage a recycling operation on
its Chloorkop landfill site in Thembisa. Chloorkop
receives waste from the surrounding areas of
Thembisa, Kempton Park, Edenvale and Midrand,
and it was believed that the introduction of a
recycling project at this site would not only serve to
extend the life of the landfill, it would also offer an
opportunity for employment to the local community.
The introduction of a recycling scheme of this
magnitude is a first in South Africa. The Department
of Water Affairs and Forestry (DWAF) strictly
prohibits recycling on landfill sites to safeguard
against injury from possible mismanaged waste. For
this reason, EnviroServ erected a seperate structure
and fenced off a designated area for the recyclers to
work within. The area is now managed by Mama
She to meet both DWAF and Occupational Health
and Safety Act standards.
Since its inception just two years ago, Mama She’s
buy-back centre in Elandsfontein has grown from
one warehouse to three, it permanently employs
250 people and manages a successful hawker
trade. Additional contracts include the removal of
waste for several office and retail complexes,
including the Eastgate Shopping Mall. The company
has a strong relationship with Mondi Paper, Consol
Glass and Collect-a-Can for the resale of its
recovered material.
“We firmly believe to be truly successful, one must
give back,” say Darren and Mariane Pillai, owners
of Mama She.
Malibongwe
Millennium Waste Management (Millennium)
pursues empowerment of community-based
organisations. To achieve this, Millennium entered
Social responsibility continued
“Very often we find that notmuch is required to make asignificant difference insomebody’s life. For instanceMonica, a community memberthat approached us with theidea to set up a buy-backoperation in her yard, wasprovided with a cash advanceand a collection agreementfrom her home. She is nowrunning a very successfulsmall business.”Darren and Marianne Pillai, Owners of Mama She.
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into a partnership with Malibongwe, a Section 21
company that deals with development projects for
women in urban and rural areas. Domestic
collection contracts are labour intensive and
Millennium saw collaboration with Malibongwe as a
means to create broad-based employment within
local communities through access to the
organisation’s 300 000 strong membership base.
The two entities are currently working together on
the Old Mutual Cape Town service contract, which
runs for three years. Any new tenders will be
submitted to councils as a partnership.
Rietfontein landfill facility
Millennium won a tender for the management of theRietfontein disposal site on behalf of the Ekurhulenicity council. The tender submission included astrong empowerment strategy for community-basedSMME’s, centred around the training and eventualoutsourcing of four key components to local serviceproviders. Millennium worked closely with thecouncil to identify local companies that would beeligible to render the service required.
Key criteria for assessment of local companiesincluded whether applicants were currentlyunemployed as Millennium was looking to createemployment in order to have maximum impact. Six service providers were chosen, with twocompanies created to provide labour, a dustsuppression service, a composting operation andcleaning services on site and security services. It is expected that these companies will work withMillennium on other contracts in the future.
“It is important to start small, to first build capacityand gain trust on both sides,” says Millennium’sThabiso Taaka.
A black entrepreneur manages the recycling
operation on site, selling to companies that purchase
recyclable materials.
Potchefstroom landfill facility
A similar initiative has been implemented at the
Potchefstroom landfill site where Millennium is
working with another Section 21 company to render
a five-year management contract on the site.
Tirisano is a region-wide, community-based
organisation with members in Potchefstroom,
Klerksdorp and Bothasville. Through its membership
base, Tirisano is able to provide a basket of services
that account for 40% of the full project value. Once
a good working relationship has been established,
Millennium hopes to incorporate Tirisano in other
projects in the region. Local community members
operate a simple waste sorting operation, with
recyclable paper and cardboard purchased by
recycling contractors. Some 60 – 70 tons of paper
waste is recovered every month.
Rural community skills development andempowerment
The Department of Water Affairs and Forestry was
mandated with providing water and sanitation to
South Africa’s underprivileged rural communities. In
1997, DWAF issued a tender for a build, operate,
train and transfer (BOTT) project in four provinces,
namely Limpopo, Mpumalanga, Eastern Cape and
KwaZulu-Natal. The Sediba Division is part of the
AquAmanzi consortium that was successful in
securing the KwaZulu-Natal portion of this project.
To date, the project has provided clean water to
approximately 850 000 people in areas from
Richards Bay through Zululand to the Drakensberg.
180 previously unemployed members of the Thembisacommunity have now found permanent employment as pickers atChloorkop. Last year Mama She paid out R1,3 million to thepickers at Chloorkop.
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Sediba was tasked with the operation, maintenance
and mentorship (OMM) component of the
programme.
The first phase of the project involved discussions
with the community to fully inform them of the
details of the project and to gain their support.
Community members were employed for the
construction phase of the project, which lasted
several months in most cases.
Once construction was complete, Sediba
commissioned the water treatment facilities and
undertook to train and empower local people to take
over the operation and maintenance functions over
a two-year period. “We recruited members from
the community and provided them with training and
supervision, allowing them to take over key
operational elements,” says Benoît Le Roy,
General Manager of Sediba.
Following training, personnel were employed by
Sediba for a two year period, after which the entire
OMM programme would be transferred to the
district municipalities. This process began last year,
with several projects having been successfully
transferred to date. About four to five people were
trained and hired per project, amounting to a total of
75 – 100 people across more than 20 projects.
DWAF received international recognition for the
success of the rural water project at the World Globe
Awards in Austria in March 2002.
Social responsibility continued
“We have put measures in place to ensure theysucceed, for if they fail, wefail. We provide support onsite and back-up training.Initially this calls for a duplication ofresources, but this is theprice we are prepared topay to foster empowermentand upliftment.” Thabiso Taaka, Millennium.
Members of the Gauteng region’s office cleaning team
currently undergoing the ABET programme.
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Holfontein landfill facility – skills transfer and empowerment
The communities surrounding the Holfontein landfill
facility have always been closely involved with the
site in terms of support and providing the site with
both skilled and unskilled labour.
However, the site has a limited ability to provide
permanent employment opportunities as the
required specialist skills and construction standards
have in many cases prevented the use of the
community’s emerging contractors.
In an attempt to address the high unemployment
rate in neighbouring communities, the site
management team, community representatives and
emerging contractors have developed a strategy to
slowly impart and develop the necessary skills
required in landfill construction and operation.
This envisaged process currently involves the
following phases:
• Encouraging large specialist construction
companies currently performing work at
Holfontein to use community labour, thereby
informally imparting skills and knowledge to
community individuals;
• Training and capacity building seminars
presented by site management and specialist
engineers;
• Hands-on training of community members in
specific specialist tasks; and
• Identifying small to medium sized contracts to
build capacity for the emerging contractors
and to build trust for EnviroServ in terms of
delivery, capability and quality of
workmanship.
Through ongoing collaboration and commitment, the
Group hopes to impart the necessary skills and
experience to the emerging contractors, enabling
them to become competent, and competitive role
players and role models, not only at Holfontein but
within the larger construction industry.
“We felt it was really important to develop community skills in amanner that would ensure long-term sustainability, an element thatis essential for the success of any developmental project.”Benoît Le Roy – General Manager of Sediba.
Safety, Health,Environment, Risk andQuality management
During the year EnviroServ continued towards itsgoal of implementating the SHERQ (Safety, Health,Environment, Risk and Quality) management systemthroughout the entire Group to ensure all operationalpractices meet internationally recognised standards.This system comprises the following:
• ISO 14001 (Environmental Management);
• ISO 9001 (Quality Management); and
• NOSA (Occupational Health and SafetyManagement).
These standards are all part of an internationallyrecognised model that ensures operationalprocedures result in products and services thatcomply with internal and external quality standards.Compliance is audited by an external AccreditedBody for certification and maintenance ofcertification.
The current implementation of these managementsystems has already enabled the Group to:
• clearly identify those aspects of business thathave an impact on health, safety and theenvironment;
• compile a comprehensive database on thelegal and industry standards it needs to meet;
• set objectives and targets to manage ourbusiness impacts;
• train our staff in all relevant SHERQ matters;and
• audit and review our compliance with nationallegal standards.
On completion of the implementation, thesemanagement systems will be fully integrated into ourIT system and will ensure compliance with localrequirements and legislation. The electronicmanagement system will allow real-time informationto be available at all levels within the organisation.
EnviroServ currently operates an internal auditingprogramme that is used as a tool to measure thelevels of compliance within all divisions, creating aheightened awareness of the need to comply withhealth, safety and environmental standards. Thisawareness has led to a significant drop in theaccident/incident rate and has resulted inEnviroServ not only achieving but also maintaininga preferential assessment rate with theCompensation Commissioner.
Health and safety
Occupational Health services over the past yearhave reflected EnviroServ’s commitment to creatinga healthy and safe environment for all employees,as well as ensuring compliance with currentlegislation. Close co-operation betweenmanagement, safety and environmental monitoringservices and Occupational Health has enabled earlydetection of unsafe or unhealthy exposures toensure precautionary measures are taken tosafeguard employees and the community.
A focused HIV programme commenced in theGauteng region. This first phase programmeensures that employees not only understand theunderlying pathology of HIV, but that they gain aclear insight into the macro economic impact of thedisease and the effect it will have on families if leftunchecked. The focus of the programme is to
Environmental review
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create an understanding of the individual’s role instemming the epidemic by knowing their HIV status.It is envisaged that this programme will be rolled outnationally in the near future.
Hygiene
The Occupational Hygiene Programme implementedby EnviroServ, fulfils the legal and moral obligationto ensure that health hazards associated with theGroup’s operations do not pose an unnecessary riskto employees or to members of the public.
The Programme was initiated by determining thehazards associated with each activity carried out inEnviroServ’s operations and a qualification of riskwas assigned within this recognition phase. Oncethe health hazard had been determined for eachactivity, the evaluation phase was implemented inwhich actual measurement of chemical, physicaland biological hazards was undertaken.
The control measures implemented as part of theProgramme take into account the hierarchy ofoccupational hygiene control. Substitution1,Engineering Control2 and Administrative Control3 arethe preferred methods. Personal ProtectiveEquipment is used as a last resort when for practicalreasons it is impossible to implement other types of control.
New Programme initiatives include:
• a procedure for the sampling and analysis ofunknown waste in-situ. The procedure is acost-effective way to determine a responsibleand safe disposal method; and
• a new methodology developed for the accuratedetermination of emission flux from landfillsites that will contribute to improved air qualitymonitoring and dispersion monitoring.
Environment
EnviroServ plans to continue offering waste solutionsthat lead the industry and exceed legislativerequirements. We fully support the efforts of ourGovernment towards waste minimisation andconsider it our duty to supply our clients withsolutions that achieve this goal.
We have embarked on three initiatives to achievewaste minimisation:
• Reduce liquids to landfill. This project toestablish alternative pre-treatmenttechnologies of the waste-streams prior todisposal to landfill was initiated with a goal toreduce the amount of liquids entering thelandfill sites.
• Leachate treatment. This initiative aims tominimise the Group’s long-term liabilityassociated with leachate generated by ourlandfills, through identifying suitable leachatetreatment technologies for each of our landfillsites. Two of our facilities will be equippedwith leachate treatment plants in the nextfinancial year.
• Incinerator upgrading, which involves anindependent review of the technologiesavailable for the treatment of healthcare riskwaste completed by an external expert. Thereview concluded that hi-tech incinerators,fitted with Environmental Gas CleaningSystems (EGCS) were the most suitable andcost effective option to offer our clients. Theroll-out programme to reach compliance withthe regional requirements in each provincehas started. Our Gauteng facility will be thefirst to be upgraded and equipped with EGCSto meet current and proposed legislation.
1 Substitution: The removal and/or replacement of chemicals or agents to mitigate or eliminate a risk or exposure.2 Engineering Control: The use of guards, barriers, silencing, extraction, ventilation, cooling etc, to design out exposure to risks.3 Admin Control: The rotation of personnel or correct placement of a person in a manner to lessen or minimise exposure to risk.
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The Environmental management system
(ISO 14001) which is currently being implemented
has already allowed EnviroServ to identify various
risks relative to surface water management, ground
water management, air quality management, soil
contamination, and employees. Management
procedures, including operational controls,
engineering and technological controls, monitoring,
as well as internal and external auditing have been
implemented to minimise the impact of each risk.
The system rollout progress is as follows:
• Saldanha depot achieved SABS ISO 14001
certification in 2000;
• KwaZulu-Natal region was successfully audited
by the SABS during July 2003 for compliance
with ISO 14001 and received certification in
August; and
• Gauteng, Western Cape and Eastern Cape are
scheduled for SABS ISO 14001 certification
in 2004.
Environmental review continued
Corporate governance
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General principles
The directors reaffirm their commitment to the
principles of transparency, accountability,
responsibility and integrity as advocated in the
King II Report on Corporate Governance for South
Africa. The directors of EnviroServ Holdings Limited
regard Corporate Governance as vital to the success
of the business of the Group and are unreservedly
committed to applying these principles in all
business dealings with relevant stakeholders.
The board is the focal point of EnviroServ Holdings
Limited’s Corporate Governance system and is
ultimately accountable and responsible for the
performance and affairs of the Group.
The board believes that the Group has been in
compliance with the King II Code of Corporate
Practice throughout the past financial year, to the
extent considered practical.
Ethical standards
The Group subscribes to the pursuit of the highest
ethical standards of behaviour and requires total
honesty and integrity from its employees. The
company’s vision of leadership in environmentally
responsible waste management is embodied in its
values of integrity, innovation, quality and teamwork.
These values have been distributed and enforced
throughout the Group as a set of integrated policies
and incorporate a disciplinary and performance
management code and the ethical standards
required of employees in their interaction with one
another and with all stakeholders. Having regard to
the provisions of the Insider Trading Act, policies
and procedures are in place covering the regulation
and reporting of transactions in securities of the
company by its directors and officers during “closed
periods” and at other times whenever warranted by
specific circumstances. The Group’s policies and
procedures are regularly reviewed to ensure they
promote best practice in Corporate Governance.
Risk management and internal control
The board of directors acknowledges that it is
responsible for the total process of risk
management, recognising the risks to which the
Group is exposed and ensuring that the proper
policies of control and mitigation are put in place.
The board is satisfied that there is in place an
adequate ongoing risk management process, which
identifies, evaluates and manages the significant
risks faced by the Group.
EnviroServ Holdings Limited and its subsidiaries
maintain systems of internal control over financial
reporting and over safeguarding of assets against
unauthorised acquisitions, use or disposal. These
systems are designed to provide reasonable
assurance to the Group and each subsidiary’s
management and boards of directors regarding the
preparation of reliable published financial statements
and the safeguarding of the Group’s assets.
The abovementioned systems of internal control,
which have been implemented at all key operations
and are tailored to suit the specific circumstances of
each business unit, provide reasonable rather than
absolute assurance that the Group’s business
objectives will be achieved within the prescribed risk
tolerance levels.
Furthermore, the effectiveness of an internal control
system can change with circumstances.
42
from that of the chief executive officer who hasoverall responsibility for the performance andmanagement of the Group.
There is no formally constituted nominationcommittee for the election of directors. The boardconsiders that such a committee is not required. It is policy for details of any proposed candidate tobe distributed to directors for formal consideration.
A formalised charter for the board, setting out itsresponsibilities and specific decision areas, will bedeveloped in the forthcoming year. The boardintends formalising a process for evaluating theeffectiveness of the board and its committees in theforthcoming year.
All directors are entitled to seek independentprofessional advice about the affairs of the Group atthe Group’s expense.
Board of directors
In the pursuit of good Corporate Governance, theboard has a balanced mix of executive, non-executive and independent non-executive directorswho bring to the board a wide range of expertise,including significant financial, environmental andcommercial experience and in the case of non-executive directors, independent perspectives andjudgement. The company’s current board comprisesseven executive, two non-executive, and threeindependent non-executive directors.
The board meets at least quarterly and sets theGroup’s objectives and strategies and exerciseseffective control over the other companies andoperations in the Group. The EnviroServ HoldingsLimited board is currently chaired by an executivechairman and the function of this office is separate
Details of attendance by directors at board meetings during 2003 are set out below:
Directors’ attendance at board meetings – 2002/2003
NAME 12 Aug’02 4 Nov’02 10 Feb’03 12 May’03 18 Aug’03
MDN Dube P P A P P
P Fourie P P P P P
E Gombault NAD NAD NAD NAD P
DK Gordon P P P P P
B Joffe P P P A P
D Lavarinhas P P P P A
MR Maruma P P P P P
A McLean P P P P P
EK Motebang P P P P P
JL Pamensky P A A P P
LP Ralphs P P P P A
RP Rocher P P P P P
A = absent P = present NAD = Not a Director at that time.
Corporate governance continued
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has also conferred the following powers upon the
members of the Audit Committee:
• To oversee the external and internal audit
functions and ensure the co-ordination
between the two;
• Examine interim and annual financial
statements before submission to the board
and prior to press announcements;
• Review significant cases of employee conflict
of interest, misconduct or fraud; and
• Consider other topics as defined by the board
from time to time.
The external auditors have unrestricted access to
the committee and the committee has unrestricted
access to the Group’s management, employees,
internal and external auditors and outside
consultants. The committee consists of an
independent non-executive chairman and two non-
executive directors. It meets at least three times
annually with the company’s management as well as
the internal and external auditors to discuss
accounting, auditing, internal control and financial
reporting matters.
The Group operates a 24 hours toll-free fraud
hotline with the assistance of Ernst & Young. All
reports are handled with complete confidentiality
and are brought directly to the attention of the
Audit Committee. The fraud hotline number is
083 652 5638.
The board has determined that the Audit Committee
has satisfied its responsibilities for the year under
review in compliance with its terms of reference.
Company secretary
All directors have access to the advice and services
of the Company Secretary, who is responsible to
the board for ensuring that appropriate procedures
are followed.
The Company Secretary has compiled a schedule
of legislation with which the Group must comply.
This will be converted into electronic format for
distribution and compliance by all operations
throughout the Group.
Internal audit
An internal audit function has been established
which reports directly to the Audit Committee. Its
terms of reference include an evaluation and
assessment of the Group’s compliance with its
internal control procedures and policies. In addition
to the above, a step by step audit process of
compliance with the company’s technical and
environmental policy is currently operational.
Remuneration committee and philosophy
The Remuneration Committee, which meets at least
annually, is responsible for ensuring that the Group’s
directors are fairly rewarded for their contributions to
the Group’s overall performance. The committee
consists of the executive chairman and two non-
executive directors. Current members are Messrs
MR Maruma (Chairman), L Ralphs and A McLean.
Audit committee
The Audit Committee has written terms of reference
that deal adequately with its membership, authority
and duties. It has been tasked with, inter alia,
ensuring that the systems of internal control within
the organisation are effective. The board of directors
44
Corporate governance continued
The chairman of the Audit Committee, or in his
absence, any one other member of the Audit
Committee shall be in attendance at annual general
meetings of members of the company and respond
to any questions relating to the work of the
Audit Committee.
Current members of the committee are
Messrs JL Pamensky (Chairman), LP Ralphs, and
Ms MBN Dube. Secretary O Deftereos.
Executive committee
The Executive Committee is chaired by the chief
executive officer and comprises senior executives
from the various business divisions. It meets
monthly and deals with strategic policy and
operational matters and where appropriate, refers
relevant issues to the board. The Executive
Committee holds monthly meetings with the
management of each division.
Employment participation and employment equity
An employment equity consultation forum
comprising designated members of EnviroServ’s
management team, staff and trade unions has been
established. This team consults and reaches
consensus regarding the issues identified in the
relevant Employment Equity and Skills Development
legislation and assists in the successful
implementation of the legislation.
A formal employment equity policy has been
adopted, which is aligned with the requirements of
the Employment Equity Act. There is continual
monitoring and enforcing of the Employment Equity
plan and the employment equity forum continually
monitors, implements and manages the progress to
ensure that the legislative provisions are upheld.
Investor and stakeholder relations
The Group’s stakeholders philosophy remains the
active pursuance of communication and dialogue
with the various interested parties and the different
stakeholder groups, providing objective, relevant
and transparent information timeously whilst
operating within the parameters of current
regulatory requirements.
Presentations, are made to institutional investors,
analysts and the media where appropriate.
A corporate website (www.enviroserv.co.za)
facilitates the dissemination of the latest Group
financial and historical information.
HIV/AIDS
The group ensures that the rights of affected
employees are consistent with the rights of other
employees, and is committed to provide a safe and
productive environment for all.
The group has commenced a focused HIV/AIDS
programme as part of its Safety, Health and
Environment Risk and Quality Management system.
Going concern
The directors have reviewed the Group’s budget and
cash flow forecast for the year to 30 June 2004.
On the basis of this review, and in the light of the
current financial position and existing borrowing
facilities, the directors have no reason to believe that
EnviroServ Holdings Limited will not be a going
concern in the period to the next financial
statements and have continued to adopt the going
concern basis in preparing the financial statements.
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2002
Re-invested in the Group
Government
Employees
Providers of capital
2003
Re-invested in the Group
Government
Employees
Providers of capital
Value added statement
for the year ended 30 June 2003
Value added is a measure of the wealth the Group has been able to create in its operations by adding value to the cost ofconsumables, products, and services purchased. The statement summarises the total wealth created and shows how it wasshared by employees and other parties who contributed to the Groups operations. The calculation takes into account theamounts retained and re-invested in the Group for the replacement of assets and development of operations.
2003 2002% R’000 R’000 %
Revenue 426 086 377 946Paid to suppliers for consumables and services (234 331) (206 002)
Total wealth created 100 191 755 171 944 100
Distributed as follows:Employees – Salaries, wages and other
employment costs 37 71 432 65 974 38Providers of capital 5 8 601 6 939 4
– finance cost of borrowings 8 601 6 939– dividends declared – –
Government 12 23 751 19 795 12
– S A normal and deferred taxation 7 262 4 695– PAYE and SITE 15 434 14 173– RSC levies 1 055 927
Re-invested in the Group to maintain and develop current and future operations 46 87 991 79 236 46
– retained earnings 36 911 31 716– depreciation and environmental remediation provisions 51 080 47 520
Total wealth distributed 191 755 171 944 100
48 Approval of annual financial statements
48 Report of the independent auditors
48 Statement by company secretary
49 Directors’ report
53 Accounting policies
56 Consolidated income statement
57 Consolidated balance sheet
58 Consolidated statement of changes in equity
59 Consolidated cash flow statement
60 Notes to the consolidated cash flow statement
62 Notes to the consolidated annual financial statements
70 Company annual financial statements
72 Annexure A – details of subsidiary
companies, joint ventures and associate
73 Ratios and statistics
Contents
Annual financial statements
48
Approval of Annual Financial Statements
The Group’s annual financial statements which appear on pages 49 to 72 were approved by the board on 18 August 2003 and are signed on its behalf by:
DK Gordon A McLeanChief Executive Officer Chairman
Report of the Independent Auditors
Statement by Company Secretary
In terms of Section 268G of the Companies Act, as amended, I, Orestis Deftereos, being the Company Secretary of EnviroServ Holdings Limited, certify that all returns required of a public company have, in respect of the year under review, been lodged with the Registrar of Companies and that all such returns are true, correct and up-to-date.
O DeftereosCompany Secretary 18 August 2003
To the members of EnviroServ Holdings Limited
We have audited the Group annual financial statements set out on pages 49 to 69 for the year ended 30 June 2003, and the company annual financial statements set out on pages 70 to 72. These financialstatements are the responsibility of the company’s directors. Our responsibility is to express an opinion onthese financial statements based on our audit.
Scope
We conducted our audit in accordance with statements of South African Auditing Standards. These standardsrequire that we plan and perform the audit to obtain reasonable assurance that the financial statements arefree of material misstatement. An audit includes:
• examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements;• assessing the accounting principles used and significant estimates made by management; and• evaluating the overall financial statements presentation.
We believe that our audit provides a reasonable basis for our opinion.
Audit opinion
In our opinion, the financial statements fairly present, in all material respects, the company and the Groupfinancial position at 30 June 2003 and the results of their operations and cash flow for the year then ended inaccordance with South African Statements of Generally Accepted Accounting Practice, and in the mannerrequired by the Companies Act in South Africa.
Ernst & Young JohannesburgChartered Accountants (SA) 18 August 2003
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Directors’ Report
The directors have pleasure in submitting the annual financial statements of the company together with theconsolidated annual financial statements of the Group for the year ended 30 June 2003. The directors are ofthe opinion that shareholders interests are best served by seperating the Group financial statements fromthose of the company.
Principal activities of the GroupEnviroServ Holdings Limited is an investment holding company whose subsidiaries are engaged in wastemanagement in southern Africa. The business of the Group includes all aspects of the transportation, disposaland management of waste streams.
Results of operationsThe results of operations and financial position of the company and the Group as at 30 June 2003 are set outin the accompanying financial statements on pages 49 to 72.
Share capitalAuthorised: 150 000 000 ordinary shares of 1 cent each being R1 500 000 (2002: R1 500 000)
Issued: 117 276 476 ordinary shares of 1 cent each of which 11 727 647 ordinary shares of 1 cent each areheld by a wholly owned subsidiary company in terms of a share buy-back. Shares held by the subsidiary donot vote and are not taken into account in the calculation of earnings per share.
Net issued share capital: R1 055 488 (2002: R1 055 488)
Further details of the authorised and issued share capital are given in note 13 to the financial statements.
Directorate Details and changes in the board of directors are listed hereunder:
Executive directorsMessrs A McLean, P Fourie, DK Gordon, EK Motebang and RP Rocher and Ms D Lavarinhas were directorsthroughout the year. Ms E Gombault was appointed director on 18 August 2003.
Non-executive directorsMessrs B Joffe and LP Ralphs were non-executive directors throughout the year.
Independent non-executive directorsMs MBN Dube and Messrs MR Maruma and JL Pamensky were independent non-executive directors throughoutthe year.
Directors’ interest in sharesThe shareholdings of the individual directors are as follows:
Beneficial Non-beneficial
Indirect 2003 2002 2003 2002
P Fourie 263 000 212 000 – –
E Gombault 358 000 – – –
DK Gordon 873 800 822 800 – –
D Lavarinhas 270 000 237 000 – –
A McLean 724 700 673 700 26 438 549 26 348 549
MR Maruma 1 081 952 1 081 952 – –
EK Motebang 448 000 448 000 – –
RP Rocher 439 000 388 000 – –
4 458 452 3 863 452 26 438 549 26 348 549
The following directors do not hold a beneficial or non-beneficial shareholding whether directly or indirectly.Messrs B Joffe, JL Pamensky, LP Ralphs and Ms MBN Dube. The company has not been informed of anymaterial changes in these figures since 30 June 2003 to the date of this report.
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Directors’ Report continued
Director’s emoluments for the year ended 30 June 2003
Motor Pension
Directors Fees Salary & travel Bonus contribution Other Total 2002
R’000 R’000 R’000 R’000 R’000 R’000 R’000 R’000
Executive
P Fourie – 459 123 195 64 58 899 67
E Gombault – – – – – – – –
DK Gordon – 643 160 273 86 95 1 257 1185
D Lavarinhas – 228 86 77 29 31 451 315
A McLean – 715 217 304 103 92 1 431 1240
EK Motebang – 339 127 144 44 88 742 635
RP Rocher – 455 120 193 61 64 893 723
Non-executive
MBN Dube 20 – – – – – 20 15
B Joffe – – – – – – – –
MR Maruma 37 – – – – – 37 53
JL Pamensky 30 – – – – – 30 50
LP Ralphs – – – – – – – –
Service contracts
No service contract exists between the company and any of its directors having notice periods exceeding onemonth or providing for compensation and benefits in excess of one month’s salary.
Property, plant and equipment
There was no change in the nature of the property, plant and equipment or in the policy regarding their use.The accompanying financial statements and notes thereto clearly set out the acquisition of property, plant andequipment during the year ended 30 June 2003.
Secretary
The office of secretary was held by Mr O Deftereos during the period covered by this report. The secretary’sbusiness and postal address are as follows:
Business address Postal address18 Dusseldorf Street, Apex, Benoni 1501 PO Box 2207, Benoni 1500
Subsidiary companies
A list of subsidiary and joint venture companies appears on page 72 of this report.
The interests of the company in the aggregate amounts earned by subsidiary companies, joint ventures andassociate companies after tax were:
30 June 2003 30 June 2002
R’000 R’000
Income 33 856 26 987
Losses 9 644 7 461
No special resolutions, the nature of which might be of significance to members in their appreciation of the state ofaffairs of the Group, were passed by any of the company’s subsidiaries during the year covered by this report.
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Share incentive schemeThe directors have established the EnviroServ Holdings Limited Share Incentive Trust under the provisions ofsection 38(2)(b) of the Companies Act on 14 May 1997.
The aggregate number of shares which may be made available for the purposes of the scheme shall be amultiple of 100 not exceeding 17 591 400 being 15% of the issued share capital of the company.
The aggregate number of shares which may be acquired by any one participant under the scheme shall notexceed 1 100 000 shares, being approximately 1% of the issued share capital of the company.
2003 2002
Number of shares available for allocation 1 July 2002 130 086 1 595 686
Number of shares acquired net of sales 1 039 438 –
Number of shares taken up by employees during the year (1 275 000) (2 136 000)
Number of shares re-acquired from employees 1 131 400 670 400
Number of shares available for allocation at 30 June 2003 1 025 924 130 086
Number of scheme shares held by employees at 30 June 2003 9 959 600 9 549 400
Distribution of share premium in lieu of a dividend
The directors have resolved to pay a cash distribution of 12,0 cents (2002: 10,0 cents) per ordinary sharepayable out of share premium, in lieu of a final dividend (“the distribution”), for the year ended 30 June 2003.The last day to trade “CUM” the distribution in order to participate in the distribution will be Friday, 17 October 2003. The shares of EnviroServ will commence trading “EX” the distribution from thecommencement of business on Monday, 20 October 2003 and the record date will be Friday, 24 October 2003. Share certificates may not be dematerialised or rematerialised from Monday, 20 October 2003 to Friday, 24 October 2003 both days inclusive. Payment will be made to shareholders on Monday, 27 October 2003.
General authority to permit the company to acquire its own shares
Shareholders are referred to the attached Notice of Annual General Meeting regarding the implementation of afurther buy-back programme. This will provide the board with the flexibility to re-purchase such shares as andwhen the best interests of the company require it to do so.
Directors’ responsibilities in relation to financial statements
The annual financial statements referred to in this report have been prepared by management in accordancewith South African Statements of Generally Accepted Accounting Practice and in compliance with theCompanies Act, No. 61 of 1973 (as amended.) They are based on appropriate accounting policies which havebeen consistently applied (except where disclosed) and which are supported by reasonable and prudentjudgements and estimates. The annual financial statements have been prepared on a going concern basis andthe directors have every reason to believe that the Group will be able to continue its operation for theforeseeable future.
The directors are of the opinion that the internal financial controls are adequate for preparing the financialstatements and maintaining accountability for assets and liabilities.
The directors believe that assets are safeguarded and used as intended with appropriate authorisation.
Nothing has come to the attention of the directors to indicate that any material breakdown in the functioning ofthese controls, procedures and systems has occurred during the year under review.
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Directors’ Report continued
Conversion to the STRATE (Share Transactions Totally Electronic) electronic settlement system
Shareholders are encouraged to deposit their shares in safe custody with a Central Securities Depository
Participant or a qualifying stockbroker. Paper share certificates will not lose their value with the move to the
STRATE system, but they are no longer acceptable for the purposes of settlement. Shareholders are within
their rights to retain their shares in paper form until they wish to sell them, but in the interests of efficiency and
security, are encouraged to convert them into electronic form.
Events subsequent to the year-end
No events have occurred from 30 June 2003 to date of this report that have a material impact on the earnings
of the company and the Group or its financial position at 30 June 2003.
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Accounting Policies
The financial statements are prepared on the historical cost basis and incorporate the following principalaccounting policies which are in accordance with Statements of South African Generally Accepted AccountingPractice and are consistent with those applied in the previous year except in regard to the adoption of AC133Financial Instruments: Recognition and Measurements at the beginning of the year. There was no materialimpact in the financial statements on adoption of the statement and hence no adjustment was done in theopening balance of distributable reserves.
Consolidation
SubsidiariesThe consolidated financial statements include those of the company and its subsidiaries. The results of anysubsidiaries acquired or disposed of during the year are included from the effective dates of acquisition andup to the effective dates of disposal.
At the date of acquisition of a subsidiary, the cost of the investment is allocated to the fair value of the individualidentifiable assets and liabilities of the subsidiary on the basis of fair value at the date of acquisition. Unrealisedincome arising from transactions within the Group and inter-company balances have been eliminated.
AssociatesAn associate company is one over which the company has the ability to exercise significant influence, but notcontrol, and which it intends to hold as a long-term investment. The Group’s share of post-acquisition resultsof associate companies are incorporated in the financial statements, using the equity method of accounting,from the effective dates of their acquisition until the effective dates of their disposal. The investment inassociates is carried in the balance sheet at cost plus post-acquisition changes in the Group’s share of netassets of the associate, less any impairment in value. The Group’s investment in associates includes goodwill(net of accumulated amortisation) on acquisition. Goodwill arising on the acquisition of associates is accountedfor in the same way as goodwill on the acquisition of subsidiaries.
Joint venturesJoint ventures are those investments in which the Group has joint control. The proportion of assets, liabilities,cash flows, income and expenses attributable to the interests of the Group in joint ventures has beenincorporated in the consolidated financial statements. The results of joint ventures are included from theeffective dates of acquisition and up to the effective dates of disposal.
GoodwillAny remaining difference between the purchase price of shares in subsidiaries, joint ventures or associatesand the net asset value is dealt with as follows:
• The excess of the net asset value of the identifiable assets over the purchase consideration is eitherrecognised in income on a systematic basis over the useful life of the identifiable net non-monetaryassets, or as future anticipated expenses are incurred, or it is recognised in income immediately when itexceeds the identifiable net non-monetary assets acquired.
• The excess of the purchase price over the net asset value is recognised as an asset and amortised on astraight-line basis over its useful life.
Goodwill is stated at cost less accumulated amortisation and any impairment in value.
Deferred taxationDeferred taxation is provided using a balance sheet liability method on all temporary differences betweencarrying amounts for financial reporting purposes and the amounts used for taxation purposes, exceptdifferences relating to goodwill not deductible for taxation purposes and the initial recognition of assets orliabilities which affect neither accounting nor taxable profit or loss.
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Accounting Policies continued
A deferred tax asset is recognised to the extent that it is probable that future taxable profits will be availableagainst which the associated unused tax losses and deductible temporary differences can be utilised. Deferredtaxation is calculated using taxation rates that have been enacted at balance sheet date. The effect ondeferred taxation of any changes in taxation rates is charged to the income statement, except to the extent thatit relates to items previously charged or credited directly to equity.
Property, plant and equipmentProperty, plant and equipment are stated at cost less accumulated depreciation and any impairment in value.Depreciation is provided for on the straight-line basis over the estimated useful life of an asset, except forfreehold landfill sites, which are depreciated on the basis of airspace consumed. Land is not depreciated. Thecarrying amounts are reviewed at each balance sheet date to assess whether they are recorded in excess oftheir recoverable amounts, and where the carrying amounts exceed this estimated recoverable amount, assetsare written down to their recoverable amount. Impairment losses are recognised in the income statement.
Depreciation rates:
Landfill sites – airspace consumedVehicles – 5 years Light delivery vehicles – 4 yearsPlant – 5 yearsComputers – 3 yearsOffice equipment – 5 yearsBins – 1 to 5 yearsBuildings – 10 to 30 years
InvestmentsInvestments are carried at fair value less any impairment in value.
Leased assetsPlant and equipment held under finance leases are capitalised, where substantially all the risks and rewardsassociated with ownership of an asset are transferred from the lessor to the Group as lessee, at the inceptionof the lease at the fair value of the leased property or, if lower, at the present value of the minimum leasepayments. Such assets are depreciated in terms of the aforementioned accounting policy for property, plantand equipment.
Lease finance charges, which are recognised in the income statement, are allocated to accounting periodsover the duration of the leases using the effective interest rate method, which reflect the extent and cost oflease finance utilised in each accounting period.
All other leases are treated as operating leases and the relevant rentals are recognised as an expense in theincome statement on a straight line basis over the lease term.
Borrowing costsBorrowing costs incurred in respect of assets which take a substantial period of time to prepare for theirintended use are capitalised during the period of construction. All the other borrowing costs are recognised inthe income statement in the period when incurred.
InventoriesInventories are valued at the lower of cost, determined on the weighted average basis, and net realisable value.Net realisable value is the estimated selling price in the ordinary course of business, less estimated costsnecessary to make the sale. Redundant and slow-moving inventories are identified and written down to netrealisable value. Write-downs to net realisable value and inventory losses are expensed in the period in whichthe write-downs or losses occur.
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Revenue recognitionRevenue is recognised to the extent that it is probable that the economic benefits will flow to the Group andthe revenue can be reliably measured.
The following specific recognition criteria are adopted:
• Revenue from waste collection, disposal services, plant hire, container management and administrationfees is recognised when the sale which gives rise to the revenue takes place.
• Dividends are recognised when the shareholder’s right to receive the payment is established.
Foreign exchange transactionsForeign exchange transactions are translated at the spot rate ruling at the date of the transaction. At balancesheet date monetary items are translated at rates then ruling. Exchange differences occurring on thesettlement of monetary items or on the reporting of outstanding monetary items, are brought into account inthe income statement for the period.
ProvisionsA provision is recognised when there is a legal or constructive obligation as a result of a past event for which itis probable that a transfer of economic benefits will be required to settle the obligation and a reliable estimatecan be made of the amount of the obligation.
Environmental remediation provisionsFull provision has been made for the net present value (NPV) of the Group’s minimum unavoidable costs, inrespect of closure liabilities at the Group’s landfill sites. The Group continues to provide for all post closurecosts over the life of its landfill sites, based on the airspace consumed in the period, since liabilities in relationto these costs increase as waste is deposited. Estimates are reviewed annually and any differences arising arebrought into account in the income for the period.
Research and development expenditureThis expenditure is charged against operating profit when incurred.
Retirement benefitsAll current contributions to retirement funds are charged against income as incurred.
DefinitionsEarnings per share – earnings divided by the weighted average number of net shares in issue.Headline earnings per share – headline earnings divided by the weighted average number of net shares in issue.Market price/net asset value – market value of the shares at the end of the year divided by shareholders’ equity.Closing price/earnings ratio – market value of shares at the end of the year divided by headline earnings.Closing distribution/dividend yield – distribution/dividends per share as a percentage of market value per shareat the end of the year.Headline earnings – as calculated in note 6.Current ratio – current assets divided by current liabilities. (A broad indicator of the Group’s short-term liquidity.)Return on shareholders’ equity – headline earnings as a percentage of average shareholders’ equity. (Anobjective measure of the Group’s profitability for shareholders.)Return on total assets – operating profit before goodwill amortisation as a percentage of average total assets. (A measurement of the effectiveness with which management uses the assets at its disposal.)Operating margin – operating profit before goodwill amortisation as a percentage of revenue.Debt/equity ratio – net interest bearing debt as a percentage of total shareholders’ equity.Interest cover – operating profit before goodwill amortisation divided by interest paid.Revenue per employee – revenue divided by number of employees.
Revenue 1 426 086 377 946Cost of operations 252 099 232 148
Gross profit 173 987 145 798Overheads and other expenses/(income) 122 120 103 847
Operating profit 2 51 867 41 951Net finance costs 3 8 601 6 939Share of profit in associate company 4 907 1 399
Profit before taxation 44 173 36 411Taxation 5 7 262 4 695
Net profits attributable to shareholders 36 911 31 716
Earnings per share (cents) 6 34,97 30,05Headline earnings per share (cents) 6 35,68 30,59
56
Consolidated Income Statement
for the year ended 30 June 2003
GROUP
2003 2002Note R’000 R’000
GROUP
2003 2002Note R’000 R’000
ASSETSNon-current assets 292 090 263 504
Property, plant and equipment 7 264 868 242 830Investment in preference shares 8 8 428 8 428Investment in associate 9 9 935 10 106Goodwill 10 8 859 2 140
Current assets 112 908 107 664
Inventories 11 6 596 4 474 Accounts receivable 12 102 618 92 480Cash and cash equivalents 3 694 10 710
Total assets 404 998 371 168
EQUITY AND LIABILITIESCapital and reserves 157 179 130 823
Ordinary share capital and share premium 13 49 707 60 262Distributable reserves 14 107 472 70 561
Non-current liabilities 133 817 136 632
Deferred taxation 15 13 688 10 643Environmental remediation provisions 16 87 428 79 220Long-term borrowings 17 28 625 42 238Deferred income 18 4 076 4 531
Current liabilities 114 002 103 713
Accounts payable 19 68 487 69 281Short-term provisions 20 17 450 17 120Current portion of long-term borrowings 21 23 148 16 229Taxation 4 917 1 083
404 998 371 168
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Consolidated Balance Sheet
as at 30 June 2003
GROUP
2003 2002Note R’000 R’000
Ordinary share capital and share premium 13Share capital
At beginning of year 1 055 1 055
At end of year 1 055 1 055
Share premiumAt beginning of year 59 207 59 207Cash distribution (10 555) –
At end of year 48 652 59 207
Distributable reserves 14At beginning of year 70 561 38 845Net profit attributable to ordinary shareholders 36 911 31 716
At end of year 107 472 70 561
58
Consolidated Statement of Changes in Equity
for the year ended 30 June 2003
GROUP
2003 2002Note R’000 R’000
CASH RETAINED FROM OPERATING ACTIVITIES 73 184 43 842
Cash generated by operations A 103 362 89 858Utilised to increase working capital B (10 639) (16 809)
Cash generated by operating activities 92 723 73 049Net finance costs (8 601) (6 939)Taxation paid C (383) (13 824)
Cash available from operating activities 83 739 52 286Distribution/dividend paid to shareholders D (10 555) (8 444)
CASH UTILISED IN INVESTING ACTIVITIES (61 585) (99 161)
Acquisitions of subsidiaries, associate and joint venture E (10 380) (23 944)Additions to property, plant and equipment (18 099) (26 010)Replacement of property, plant and equipment (35 027) (72 262)Proceeds on disposal of property, plant and equipment 1 614 7 154Dividend received from associate 307 –Disposal of operations F – 15 901
CASH EFFECTS OF FINANCING ACTIVITIES (18 615) 49 934
(Decrease)/increase in long-term liabilities (13 613) 37 691Utilised from environmental remediation provisions (11 921) (3 173)Increase in short-term borrowings 6 919 15 416
NET DECREASE IN CASH AND CASH EQUIVALENTS (7 016) (5 385)Balance at the beginning of year 10 710 16 095
Balance at the end of year G 3 694 10 710
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Consolidated Cash Flow Statement
for the year ended 30 June 2003
A. CASH GENERATED BY OPERATIONSOperating profit 51 867 41 951Adjusted for non-cash flow items:
Depreciation 30 951 31 594Provision for environmental remediation 20 129 15 926Profit on disposal of property, plant and equipment (1 094) (4 393)Impairment of property, plant and equipment – 3 772Amortisation of goodwill 1 509 1 008
103 362 89 858
B. UTILISED TO INCREASE WORKING CAPITALMovement in inventories (1 870) 13Movement in accounts receivable (7 546) (6 048)Movement in accounts payable (768) (10 364)Movement in deferred income (455) (410)
(10 639) (16 809)
C. TAXATION PAIDAmount owing at beginning of year (1 083) (6 918)On acquisition of subsidiary – (11)Current taxation charged per income statement (4 217) (7 978)Amount owing at end of year 4 917 1 083
(383) (13 824)
D. DISTRIBUTION/DIVIDEND PAID TO SHAREHOLDERSAmount owing at beginning of year – (8 444)Cash distribution from share premium (10 555) –Amount owing at the end of the year – –
(10 555) (8 444)
GROUP
2003 2002R’000 R’000
60
Notes to the Consolidated Cash Flow Statement
for the year ended 30 June 2003
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for the year ended 30 June 2003
GROUP
2003 2002R’000 R’000
E. ACQUISITIONS OF SUBSIDIARIES, ASSOCIATE AND JOINT VENTUREThe fair value of assets acquired and liabilities assumed were as follows:
SubsidiariesProperty, plant and equipment 383 11 516Accounts receivable 2 592 4 242Inventories 252 –Overdraft (9) (387)Deferred taxation – 300Accounts payable (3 271) (8 446)
(53) 7 225Intangibles acquired on acquisition 7 457 493
Net asset value acquired 7 404 7 718Overdraft acquired (9) (387)
Purchase consideration payable 7 413 8 105Amount outstanding previous year – paid 2 967 –Amount outstanding – (2 967)
Purchase consideration paid 10 380 5 138
Joint ventureProperty, plant and equipment – 5 250Inventories – 799Accounts receivable – 5 593Accounts payable – (4 169)Investment in preference shares – 8 428
Cash flow on acquisition – 15 901
AssociatePurchase consideration paid – 2 905
F. DISPOSAL OF OPERATIONSCertain divisions of the Group were disposed of to MillenniumWaste Management (Pty) Ltd:Property, plant and equipment – 11 171Inventories – 1 700Accounts receivable – 11 899Accounts payable – (8 869)
Cash flow on disposal – 15 901
G. CASH AND CASH EQUIVALENTSCash and cash equivalents included in the cash flow statement comprise the following balance sheet amounts:Bank balances and cash 3 694 10 710
62
Notes to the Consolidated Annual Financial Statements
for the year ended 30 June 2003
GROUP
2003 2002R’000 R’000
1. REVENUERevenue represents net invoiced sales to customers for services exclusive of value added tax.Waste services 368 496 338 864Container management 22 409 23 778Plant hire 35 181 15 304
426 086 377 946
2. OPERATING PROFITOperating profit is stated after:Amortisation of goodwill 1 509 1 008Auditors’ remuneration
Audit fee 1 336 780Other services 54 520
Profit on disposal of property, plant and equipment (1 094) (4 393)Impairment of property, plant and equipment – 3 772Depreciation and amortisation
Landfill sites 3 431 10 371Plant and vehicles 23 930 18 308Furniture and equipment 3 590 2 915
Directors’ remunerationServices as directors – non-executive 88 118Services as executives 5 673 5 168
5 761 5 286
Operating leasesProperties 1 367 1 385Plant and equipment 7 692 3 974
Fees for professional services 4 556 4 047Staff costs 81 193 60 806
3. NET FINANCE COSTSInterest paid/(received) on:Long-term loans 6 547 8 016Short-term deposits (327) (1 535)Other 2 381 458
8 601 6 939
4. SHARE OF PROFIT IN ASSOCIATE COMPANYAttributable share of after tax profit 907 1 399
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for the year ended 30 June 2003
GROUP
2003 2002R’000 R’000
5. TAXATIONSouth African normal taxationCurrent taxation 4 217 7 978
– current year 3 866 7 978– prior year underprovision 351 –
Deferred taxation 3 045 (3 283)
– current year 3 396 (3 283)– prior year overprovision (351) –
7 262 4 695
Reconciliation of taxation rate % %SA normal tax rate 30,0 30,0
Adjusted for:Exempt income (9,9) (10,5)Disallowable expenditure 2,1 1,6Amortisation of trademarks (5,6) (7,0)Included in after tax profit of associate (0,6) (1,2)
Effective taxation rate 16,0 12,9
6. EARNINGS PER SHAREEarnings per share is based on earnings of R36 910 658 (2002: R31 716 475) and a weighted average of 105 548 829 (2002: 105 548 829) ordinary shares in issue during the year.
Headline earnings per share is based on earnings of R37 653 986 (2002: R32 289 498) and a weighted average of 105 548 829 (2002: 105 548 829) ordinary shares in issue during the year. See note 13.
Reconciliation of headline earningsNet profits attributable to ordinary shareholders 36 911 31 716
Adjusted by:Impairment of property, plant and equipment – 3 772Amortisation of goodwill 1 509 1 008Profit on disposal of property, plant and equipment (1 094) (4 393)
37 326 32 103Taxation on above adjustments 328 186
Headline earnings 37 654 32 289
64
Notes to the Consolidated Annual Financial Statements continued
for the year ended 30 June 2003
GROUP
2003 2002R’000 R’000
7. PROPERTY, PLANT AND EQUIPMENTLand and buildings 22 499 22 054
at the beginning of the year 22 054 21 462additions 445 592
Landfill sites 123 367 104 453
Cost 189 630 167 285
at the beginning of the year 167 285 142 954additions 22 345 24 331
Amortisation 66 263 62 832
at the beginning of the year 62 832 52 461charged in the current year 3 431 10 371
Plant and vehicles 107 312 106 774
Cost 217 951 204 172
at the beginning of the year 204 172 170 617on acquisition of subsidiary and joint venture 383 30 075additions 24 600 68 202disposals (11 204) (64 722)
Accumulated depreciation 110 639 97 398
at the beginning of the year 97 398 112 850on acquisition of subsidiary and joint venture – 13 405charged in the current year 23 930 18 308impairment of assets – 3 772disposals (10 689) (50 937)
Furniture and equipment 10 269 8 588
Cost 23 700 18 435
at the beginning of the year 18 435 10 540on acquisition of subsidiary and joint venture – 423additions 5 276 8 709disposals (11) (1 237)
Accumulated depreciation 13 431 9 847
at the beginning of the year 9 847 7 694on acquisition of subsidiary and joint venture – 327charged in the current year 3 590 2 915disposals (6) (1 089)
Capital work in progress 1 421 961
at the beginning of the year 961 4 523capitalised during the year (961) (4 523)additions 1 421 961
264 868 242 830
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for the year ended 30 June 2003
GROUP
2003 2002R’000 R’000
7. PROPERTY, PLANT AND EQUIPMENT (continued)A register containing the information required by paragraph 22(3) of schedule 4 of the Companies Act is available for inspection at the registered office of the company.
The carrying value of plant held under hire purchase agreements at 30 June 2003 is R9,8 million (2002: R7,8 million). Assets under hire purchase agreements are pledged as security for the related hire purchase liabilities in terms of note 17. Vehicles with a carrying value of R55,1 million are pledged as security in terms of note 17.
8. INVESTMENT IN PREFERENCE SHARESInvestment in preference shares 8 428 8 428
8 428 8 428
9. INVESTMENT IN ASSOCIATEUnlisted Attributable net assets of associate at acquisition 1 290 1 290The excess of the purchase consideration over the fair value of the assets and liabilities at date of acquisition of the investment in the associate 7 710 7 710
Shares at cost 9 000 9 000Share of post acquisition reserves 3 520 2 613
– Prior years 2 613 1 214– Current year 907 1 399
Dividend received (307) –
12 213 11 613Amortisation of goodwill– amortisation to date (2 278) (1 507)
Carrying value of investment 9 935 10 106
Directors’ valuation approximates carrying value.Goodwill in associate on acquisition 7 710 7 710Accumulated amortisation at beginning of year (1 507) (736)Amortisation recognised during current year (771) (771)
Balance of goodwill in associate 5 432 6 203
Remaining life 7 years 8 years
10. GOODWILLGross amount of goodwill at the beginning of the year 2 493 2 000Accumulated amortisation at the beginning of the year (353) (116)Goodwill recognised during the year 7 457 493Amortisation recognised during the current year (738) (237)
Balance of goodwill 8 859 2 140
66
Notes to the Consolidated Annual Financial Statements continued
for the year ended 30 June 2003
GROUP
2003 2002R’000 R’000
11. INVENTORIESConsumables and spares 5 614 3 518Fuel and oil 982 956
6 596 4 474
12. ACCOUNTS RECEIVABLETrade receivables 94 477 77 783Prepayments 3 907 4 301Joint venture receivables – 6 209Other 4 234 4 187
102 618 92 480
13. ORDINARY SHARE CAPITAL AND SHARE PREMIUMAuthorised share capital
150 000 000 (2002: 150 000 000) ordinary shares of 1 cent each 1 500 1 500
Issued share capital117 276 476 ( 2002: 117 276 476) ordinary shares of 1 cent each 1 173 1 173
Held in subsidiary in terms of share buy-back (118) (118)
These shares do not carry voting rights and are not taken into account in the calculation of earnings per share 1 055 1 055
Share premium 48 652 73 009Share buy-back – (13 802)
48 652 59 207
Ordinary share capital and share premium 49 707 60 262
The unissued ordinary shares have been placed under the control of the directors. This authority expires at the next Annual General Meeting
14. DISTRIBUTABLE RESERVESRetained earnings Comprising:
Company 117 928 105 229Subsidiaries and associate (12 293) (35 383)Joint ventures 1 837 715
107 472 70 561
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for the year ended 30 June 2003
GROUP
2003 2002R’000 R’000
15. DEFERRED TAXATIONBalance at the beginning of the year 10 643 14 226
Movements during the year attributable to:On acquisition of subsidiary – (300)Charged to the income statement 3 045 (3 283)
Balance at the end of the year 13 688 10 643
Balance comprises:Capital allowances 17 918 17 234Provisions (7 119) (8 141)Prepayments 1 133 (794)Other 1 756 2 344
13 688 10 643
16. ENVIRONMENTAL REMEDIATION PROVISIONSProvisions for site rehabilitation, closure and post closure
– at the beginning of the year 79 220 66 467– charged in the current year 20 129 15 926– utilised in the current year (11 921) (3 173)
87 428 79 220
17. LONG-TERM BORROWINGSSecuredLoan agreement secured over vehicles with a book value of R55,1 million (2002: R57,9 million) bearing interest at 13,57% per annum See note 7. 44 276 50 975Hire purchase agreements secured over plant with carrying value of R9,8 million (2002: R7,8 million) at interest rates varying from 10,64% to 16% See note 7. 7 497 7 492
51 773 58 467Less: current portion included under current liabilities. See note 21. 23 148 16 229
28 625 42 238
Repayable during the years ending June 2003 – 16 2292004 23 148 17 0222005 18 128 16 854 2006 9 395 8 1212007 1 102 241
The company’s borrowings are not restricted by its articles of association.
18. DEFERRED INCOMEDeferred income represents advance payments on pre-sold airspace. This amount is recognised as income as the airspace is consumed. 4 076 4 531
19. ACCOUNTS PAYABLETrade creditors 45 980 44 932 Accruals 17 467 17 473Other 5 040 6 876
68 487 69 281
Short-term environmental
Bonus Leave pay provisions Other Total
20. SHORT-TERM PROVISIONSBalance as at 30 June 2001 4 351 2 343 6 300 4 593 17 587Utilised during the year (4 351) – (97) (343) (4 791)Provided during the year 3 986 338 – – 4 324
Balance as at 30 June 2002 3 986 2 681 6 203 4 250 17 120Utilised during the year (3 986) – (1 284) – (5 270)Provided during the year 3 000 962 – 1 638 5 600
Balance as at 30 June 2003 3 000 3 643 4 919 5 888 17 450
GROUP
2003 2002R’000 R’000
21. CURRENT PORTION OF LONG-TERM BORROWINGSLoan agreement 19 859 12 661 Hire purchase agreements 3 289 3 568
23 148 16 229
22. CONTINGENCIESSuretyship for bank overdrafts and guarantees 12 043 8 372
23. CAPITAL COMMITMENTSApprovedContracted for 19 524 24 636Not yet contracted for 135 211 76 909The capital expenditure will be financed from the Group’s existing borrowing facilities.
68
Notes to the Consolidated Annual Financial Statements continued
for the year ended 30 June 2003
GROUP
2003 2002R’000 R’000
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24. RETIREMENT BENEFIT INFORMATIONAll salaried employees under the age of 63 are contributory members of the Group’s retirement benefit fund.
Contributions are charged to income as incurred and amounted to R4 560 465 (2002: R3 465 964) for the year,which is included under staff costs in note 2.
The fund is a defined contribution fund and is registered under the Pensions Fund Act of 1956, as amended.
Waged employees have the choice of joining the Group’s retirement benefit fund or joining the TGAWU pension fund.
25. FINANCIAL INSTRUMENTSFinancial instruments recognised on the balance sheet include Investments, Accounts receivable, Cash and cashequivalents, Accounts payable and Borrowings.
All financial instruments are recognised at the time the Group becomes party to the contractual provisions of theinstruments. All financial instruments are initially measured at cost, being fair value of the consideration given.Subsequently the financial instruments are measured as follows:
InvestmentsThe company’s investment in unlisted preference shares is carried at cost.
Accounts receivablesAccounts receivable, which generally have 30 to 90 day terms, are recognised at original invoice amount less anallowance for any uncollectable amounts. An estimate for doubtful debts is made when collection of any amountoutstanding is no longer probable. Bad debts are written off when identified.
Cash and cash equivalentsCash and cash equivalents comprise cash at bank and in hand.
Accounts payableAccounts payable, which are normally settled on 30 to 90 day terms, are carried at cost which is the fair value of theconsideration to be paid in the future for goods and services received, whether or not billed to the Group.
BorrowingsBorrowings are subsequently measured at amortised cost using the effective rate method. Amortised cost is calculatedtaking into account any transaction costs, and any discount or premium on settlement.
26. RELATED PARTIESManagement fees amounting to R3 500 676 (2002: R3 442 440) have been charged to Millennium WasteManagement (Pty) Ltd.
Plant hire charges amounting to R5 241 675 (2002: R2 924 915) were charged by Conquip (Pty) Ltd to Group companies.
All transactions with related parties occurred at arm’s length and have been eliminated on consolidation.
27. COMPARATIVE FIGURESWhere necessary comparative figures have been adjusted to conform with changes in presentation in the current year.
28. SEGMENTAL REPORTINGThe directors are of the opinion that the Group operates under one business segment being waste management andone geographic segment being South Africa. Hence both primary and secondary segmental disclosure requirementsare included in the financial statements.
29. CONTINGENT LIABILITYIn terms of a tax directive received from SARS, one of the subsidiaries within the Group has claimed a deduction fortaxation purposes on the cost of certain trademarks acquired. SARS has since revoked their directive. The companyhas lodged an objection which is still under consideration with SARS. Management is confident that the objection willbe upheld and therefore no provision has been raised for the additional taxation.
for the year ended 30 June 2003
for the year ended 30 June 2003
70
Company Annual Financial Statements
INCOME STATEMENTOperating profit 1 12 699 11 192 Taxation – –
Net profit attributable to ordinary shareholders 12 699 11 192
BALANCE SHEETas at 30 June 2003
AssetsInvestments in subsidiaries and joint ventures 2 181 555 179 411
EquityCapital and reservesOrdinary share capital and share premium 3 63 627 74 182 Distributable reserves 117 928 105 229
Total equity 181 555 179 411
STATEMENT OF CHANGES IN EQUITYOrdinary share capital and share premium 3Ordinary share capital at the beginning and end of the year 1 173 1 173
Share premiumAt the beginning of the year 73 009 73 009 Cash distribution (10 555) –
At the end of the year 62 454 73 009
DISTRIBUTABLE RESERVESAt the beginning of the year 105 229 94 037 Net profit attributable to ordinary shareholders 12 699 11 192
At the end of the year 117 928 105 229
CASH FLOW STATEMENTCash retained from operating activities (10 555) 3 156
Cash generated by operations 4 – –Utilised to decrease working capital – 11 600 Distribution/dividend paid to shareholders 5 (10 555) (8 444)
Cash effects of financing activities 10 555 (3 156)
Increase/(decrease) in loans to subsidiaries 10 555 (3 156)
Movement in cash and cash equivalents – –
COMPANY
2003 2002Note R’000 R’000
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COMPANY
2003 2002Note R’000 R’000
NOTES TO THE COMPANY ANNUAL FINANCIAL STATEMENTS
1. OPERATING PROFITOperating profit is stated after:Directors’ remunerationServices as directors – non-executive 88 118 Services as executives 5 673 5 168
5 761 5 286 Paid by subsidiaries (5 761) (5 286)
– –
Revaluation of investment in subsidiary 12 699 11 192
2. INVESTMENTS IN SUBSIDIARIES AND JOINT VENTURESShares in subsidiaries – Annexure A 122 554 109 855 Loans to subsidiaries – Annexure A 59 001 69 556
181 555 179 411
3. ORDINARY SHARE CAPITAL AND SHARE PREMIUMAuthorised share capital150 000 000 (2002:150 000 000) ordinary shares of 1 cent each 1 500 1 500
Issued share capital117 276 476 (2002:117 276 476) ordinary shares of 1 cent each 1 173 1 173
Share premium 62 454 73 009
4. CASH GENERATED BY OPERATIONSOperating profit 12 699 11 192 Adjusted for non-cash flow items:Revaluation of investment in subsidiary (12 699) (11 192)
– –
5. DISTRIBUTION/DIVIDEND PAID TO SHAREHOLDERSAmount owing at beginning of year – (8 444)Cash distribution from share premium (10 555) –
(10 555) (8 444)
INTEREST OF HOLDING COMPANY
Issued % held Shares Loansshare
Nature of capital 2003 2002 2003 2002 2003 2002Name business R’000 R’000 R’000 R’000
Direct subsidiariesSignificant subsidiariesEnviroServ Investments (Pty) Ltd Investment company 190 100 100EnviroServ Site (Holfontein) (Pty) Ltd Property holding company 120 100 100 27 27 – 17 EnviroServ Waste Management (Pty) Ltd Waste management and disposal 1 100 100 100 068 87 369 68 663 79 218 EnviroDrum (Pty) Ltd Drum recycling 1 000 100 100Organic Recycling (Pty) Ltd Property holding company 10 000 100 100 385 385 77 77 Waste-tech Landfill (Pty) Ltd Property holding company 100 100 100 4 122 4 158Waste-tech (Transvaal)) (Pty) Ltd Property holding company 6 000 100 100
Insignificant subsidiaries Dormant 100 100 17 952 17 916 (9 739) (9 756)
Indirect subsidiariesVissershok Landfill (Pty) Ltd Waste disposal 100 100 100EnviroServ Coastal Property Company (Pty) Ltd Property holding company 100 100 100Rapid Services (Pty) Ltd Plant hire 125 100 100Eastern Cape Incineration Services (Pty) Ltd Waste incineration 100 100 50Indirect joint venturesAmatola Waste (Pty) Ltd Waste collection 100 50 50Millennium Waste Management (Pty) Ltd Waste management and disposal 100 47 47Separation and Recovery Systems (Pty) Ltd Waste processing 100 50 50Vissershok Waste Management (Pty) Ltd Waste disposal 2 50 50
Indirect associateChargold (Pty) Ltd Manufacturing 415 100 35 35
122 554 109 855 59 001 69 556
2003 2002R’000 R’000
Aggregate financial information relating to joint ventures:
Balance sheetProperty, plant and equipment 26 926 15 410Current assets 39 398 14 134Current liabilities 45 656 9 821
Income statementRevenue 153 372 107 283
Loss before taxation (2 269) (744)Taxation 183 170
Loss after taxation (2 452) (914)
There are no contingent liabilities as at 30 June 2003.
Aggregate financial information relating to associate:
Balance sheetProperty, plant and equipment 4 440 6 197Current assets 15 525 12 000Long-term liabilities 1 205 148Current liabilities 4 865 4 481
Income statementRevenue 41 174 31 017
Profit before taxation 3 812 5 695Taxation 1 220 1 709
Profit after taxation 2 592 3 986
There are no contingent liabilities as at 30 June 2003.
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Annexure A – Details of Subsidiary Companies, Joint Ventures and Associate
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June June June June June June June2003 2002 2001 2000 1999 1998 1997
Ratios and Statistics
for the year ended 30 June 2003
* *
STOCK EXCHANGE PERFORMANCEMarket price – high (cents) 230 175 150 125 145 630 630Market price – low (cents) 113 110 56 50 47 90 290Market price – year-end (cents) 220 130 129 64 101 115 500Market capitalisation (R million) 232,2 137,2 136,2 75,1 118,5 134,9 549,5Earnings per share (cents) 34,97 30,05 2,59 20,45 19,06 (5,09) 14,33Headline earnings per share (cents) 35,68 30,59 26,15 22,10 20,08 8,08 14,33Value of shares traded (R’000) 10 222 9 719 62 376 27 732 35 073 86 046 44 975 Number traded (000’s) 6 433 7 398 46 508 32 350 39 489 24 935 9 373 Percentage traded 6,09 7,01 44,06 27,58 33,67 31,83 8,53Market price/net asset value (percent) 148 105 153 65 119 161 618 Closing price/earnings ratio 6,17 4,65 4,93 2,9 5,03 14,23 21,58 Closing distribution/dividend yield (percent) 5,5 7,7 6,2 10,9 5,0 n/a n/a
BUSINESS PERFORMANCERevenue (R’000) 426 086 377 946 379 887 331 608 342 927 340 117 255 581 Earnings (R’000) 36 911 31 716 2 879 23 978 22 356 (5 235) 14 965 Headline earnings (R’000) 37 654 32 289 29 036 25 920 23 547 9 527 14 965 Distribution/dividends 12,0 10,0 8,0 7,0 5,0 – –Current ratio(percent) 99,04 103,8 100,7 141,4 108,6 83,6 139,8Return on shareholders’ equity (percent) 26,1 28,1 27,1 24,1 25,7 10,9 16,4Return on total assets (percent) 13,8 12,8 13,2 12,9 9,1 4,4 13,4Profit margin (percent) 12,5 11,4 10,0 10,6 9,5 5,2 10,4Debt/equity ratio (percent) 30,6 36,5 – – – 44,5 41,0Interest cover (times) 6,2 6,2 24,3 20,2 3,5 1,7 4,8Cash generated by operations (R’000) 103 362 89 858 78 521 70 433 70 228 69 831 37 143
EMPLOYEE STATISTICSNumber of employees 1 170 965 1 348 1 337 1 405 1 606 1 799Revenue per employee (R’000) 364 392 317 248 244 212 142
Definitions of how these ratios were calculated are included in the accounting policies note on page 55. * Comparative figures have been restated on a pro forma basis to include the acquisition of Waste-tech and all current accounting
policies as if they were in effect from 1 January 1997.
Category Number of % of Number % of
shareholders shareholders of shares issued shares
Nominees & banks 78 6,40 3 310 718 2,82
Individuals 1 065 87,44 35 371 798 30,16
Investment trust & Other Companies 75 6,16 78 593 960 67,02
Total 1 218 100,00 117 276 476 100,00
At the year end, the shares of the company were held by the following categories of shareholders:
No of shareholders No of shareholders
Shareholder type In SA other than in SA Total shareholders
Nominal Nominal Nominal
Number Percentage Number Percentage Number Percentage
Public 1 052 86,37 155 12,73 1 207 99,10
Directors 8 0,66 Nil Nil 8 0,66
Other (anything that
falls outside the scope
or description of those
mentioned above) 3 0,24 Nil Nil 3 0,24
Total 1 063 87,27 155 12,73 1 218 100,00
According to the records of the company, the only shareholders, other than directors, registered as holding five percent or
more of the company’s shares at 30 June 2003 are the following:
Percentage of
Number of Net shares
shares Percentage in issue
BB Investment Co. (Pty) Ltd 28 712 058 24,48 27,20
Zader Investments (Pty) Ltd 8 986 145 7,66 8,51
Old Mutual Group 18 112 692 15,44 17,16
as at 30 June 2003
Analysis of Shareholders
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Shareholders’ Diary
for the year ended 30 June 2003
Financial year-end 30 June 2003
Annual general meeting 10 October 2003
Reports
– Interim March
– Announcement of annual results August
– Annual financial statements September
Distribution of share premium in lieu of dividend
– Declared 18 August 2003
– Last day to trade ordinary shares “cum” distribution 17 October 2003
– Ordinary shares trade “ex” distribution 20 October 2003
– Record date 24 October 2003
– Payment date 27 October 2003
– Period of no dematerialisation/rematerialisation 20 to 24 October 2003, both dates inclusive
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Notice to Shareholders
NOTICE OF ANNUAL GENERAL MEETINGNotice is hereby given that the seventh Annual General Meeting of the shareholders of the company will beheld at 18 Dusseldorf Street, Apex, Benoni at 09h00 on Friday, 10 October 2003 for the following purposes:
Ordinary business
1. To receive and adopt the annual financial statements for the year ended 30 June 2003.
2. To re-elect by way of single resolution, or otherwise, the following directors who retire in terms of thecompany’s articles of association and, being eligible, offer themselves for re-election:
2.1 E Gombault
2.2 DK Gordon
2.3 B Joffe
2.4 A McLean
2.5 RP Rocher
3. To re-appoint auditors for the ensuing year.
4. To transact such other business as may be transacted at an annual general meeting.
Special business
Shareholders will be asked to consider and if deemed fit, to pass, with or without modification, the followingresolutions:
Special resolution number 1“Resolved that, the company or any of its subsidiaries be and are hereby authorised by way of a generalapproval, to acquire a further 20% of its ordinary issued share capital, in terms of section 85 (2) and 85 (3) ofthe Companies Act 61 of 1973 and in terms of the rules and requirements of the JSE Securities ExchangeSouth Africa (’’the JSE’’) being that:
• Any such acquisition of ordinary shares shall be implemented on the open market of the JSE;
• This general authority shall be valid until the company’s next Annual General Meeting, provided that itshall not extend beyond fifteen months from the date of passing of this special resolution;
• An announcement will be published as soon as the company has acquired ordinary shares constituting,on a cumulative basis, 3% of the number of ordinary shares in issue prior to the acquisition pursuant towhich the aforesaid 3% threshold is reached, containing full details of such acquisitions;
• Acquisitions of shares in aggregate in any one financial year may not exceed 20% of the company’sordinary issued share capital as at the date of passing of this special resolution.
• In determining the price at which ordinary shares issued by the company are acquired by it in terms ofthis general authority, the maximum premium at which such ordinary shares may be acquired will be10% of the weighted average of the market value at which such ordinary shares are traded on the JSE asdetermined over the five trading days immediately preceding the date of repurchase of such ordinaryshares by the company.
The reason for and effect of special resolution number 1The effect of special resolution number 1 and the reason therefor, is to grant the company a general approvalin terms of the Companies Act No 61 of 1973 (as amended) for the acquisition by the company of a further
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20% of the company’s ordinary issued share capital, which general approval shall be valid until the earlier ofsuch next Annual General Meeting of the company or its variation or revocation of such general authority byspecial resolution at any subsequent general meeting of the company; provided that the general authority shallnot extend beyond fifteen months from the date of this Annual General Meeting.
Opinion of the directorsShould the authority be granted at the company’s Annual General Meeting, it will provide the board of directorswith the flexibility to re-purchase such shares as and when the best interests of the company require it to do so.
The directors of EnviroServ Holdings Limited (“EnviroServ”) have considered the impact of the sharerepurchase and are of the opinion that:
1. The company and the Group will be able, in the ordinary course of business, to pay its debts for a periodof 12 months from the date of this notice.
2. The assets of the company and the Group are in excess of the liabilities, measured in accordance withthe accounting policies used in the audited annual financial statements for the year ended 30 June 2003.
3. The ordinary share capital and reserves of the company and the Group will be adequate for a period of 12 months from the date of this notice.
4. The working capital of the company and the Group will be adequate for a period of 12 months from thedate of this notice.
The company undertakes to advise the sponsor before entering the market to commence any share re-purchases, in order to enable the sponsor to furnish the JSE with written confirmation of the company’sworking capital.
Ordinary resolution number 1“Resolved that all of the ordinary shares in the authorised but unissued share capital of the company be andare hereby placed at the disposal and under the control of the directors, and that the directors be and arehereby authorised and empowered, subject to the provisions of the Act, and the Listings Requirements of theJSE, to allot, issue and otherwise dispose of such shares to such person/s on such terms and conditions andat such times as the directors may from time to time in their discretion deem fit.”
Ordinary resolution number 2“Resolved that, subject to the prior approval of the JSE, the directors of the company shall be entitled to payby way of a pro-rata reduction of share capital or share premium, in lieu of a dividend, an amount equal to50% (fifty percent) of the after tax profits of the company in any one financial year ending on or after 30 June 2004.”
Ordinary resolution number 3To approve a general authority for the directors to issue ordinary shares of 0,1 cent each for cash to publicshareholders as and when suitable situations arise, subject to the following conditions:
(a) that this authority shall be valid until the company’s next annual general meeting but shall in any eventnot extend beyond 15 months from the date of this annual general meeting;
(b) the shares must be issued to public shareholders and not to related parties;
(c) that a paid press announcement giving full details, including the impact on net asset value and earningsper share, will be published at the time of any issue representing, on a cumulative basis within onefinancial year, 5% or more of the number of shares of that class in issue prior to the issues;
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Notice to Shareholders continued
(d) that issues in the aggregate in any one year may not exceed 10% of the number of shares of that class ofthe company’s issued share capital;
(e) that, in determining the price at which an issue of shares will be made in terms of this authority, themaximum discount permitted will be 10% of the weighted average traded price of the shares in question,as determined over the 30 days prior to the date determined or agreed to by the directors; and
(f) the approval of 75% majority of the votes cast by the shareholders present or represented by proxy at thismeeting is required for the resolution pertaining to the waiver of pre-emptive rights to become effective.
Ordinary resolution number 4
“Resolved that any one of the directors of the company be and is hereby authorised to do all such things, signall such documents and take such further and other actions as may be necessary to implement the resolutionsset out in this notice.”
Short biographies of directors seeking re-election
Executive directors
Esmé Gombault (39)
Esmé Gombault obtained her BSc (Chemistry) in 1985. Esmé has been in the Waste Management Industrysince 1986. She started her career as a Pollution Control Officer with the Department of Environmental Affairsand Tourism. She joined the Group in 1988 and is currently responsible for the management of EnviroServowned landfill and incineration facilities nationally. Her current position is Regional General Manager: Dispose-tech.
Desmond Gordon (42)
On 7 February 2001, Des was appointed Group Chief Executive of EnviroServ Holdings Limited. Prior to this,Des served as Group Financial Director for EnviroServ Holdings Limited from April 1997 and prior to that wasGroup Financial Director of Waste-tech from September 1996. Des was previously the Group FinancialManager from January 1991 until September 1996 for a construction and construction materialsmanufacturing company listed on the Johannesburg Stock Exchange. From January 1985 until December1990 Des was employed in the auditing profession with the Johannesburg office of one of the majorinternational auditing firms.
Alexander McLean (Alistair) (54)
Alistair has served as Executive Chairman of the EnviroServ Group since February 2001 and is responsible forstrategic management and planning as well as growth and new business development. Before this, Alistair wasGroup Chief Executive, a position he served in since 1996 and has been involved in EnviroServ since 1986,when he became a major shareholder. Over the years he has steered the Group through a series ofacquisitions and mergers to produce a group of businesses with good critical mass and diversity in relatedareas of waste management.
Raymon Rocher (35)
Raymon Rocher completed his studies at University of Natal (Pmb) in 1991. After completing his articles ofclerkship with KPMG in Pietermaritzburg, he joined Group Five Limited in 1995 as Group Accountant. In 1997 he joined EnviroServ as Group Financial Manager and was appointed to the Operational Board on 8 March 2000. After spending a year in Gauteng as the Regional Financial Manager in order to becomeacquainted with the operational side of the business, Raymon was appointed to the EnviroServ HoldingsLimited board as Group Financial Director on 7 August 2001.
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Non-executive director
Brian Joffe (56)
Brian is Chairman of The Bidvest Group Limited. Bidvest is the largest service company on the JSE and one ofthe largest industrial companies by market capitalisation. It employs 67 000 people and has subsidiaries listedon the London, Australian and Luxembourg Stock Exchanges. Before Bidvest, Brian held variouschairmanships and was Chief Executive of EW Tarry plc which was listed on the London Stock Exchange inAugust 1983. Brian graduated from the University of the Witwatersrand as a Chartered Accountant (SA) in1971 and served his Articles with Levitt Kirson Gross.
Voting and proxies
Certificated shareholders
A shareholder of the company entitled to attend and vote at the general meeting of shareholders is entitled toappoint one or more proxies (who need not be a shareholder of the company) to attend, vote and speak inhis/her stead. In order to be valid, completed forms of proxy must be lodged at the transfer secretariesComputershare Ltd, Investor Services Division, 70 Marshall Street, Johannesburg 2001 (PO Box 61051,Marshalltown 2107) by no later than 09h00 on Wednesday, 8 October 2003.
On a show of hands, every shareholder of the company present in person or represented by proxy shall haveone vote only. On a poll, every shareholder of the company present in person or represented by proxy shallhave one vote for every share held in the company by such shareholder.
Dematerialised shareholders
EnviroServ Holdings Limited shareholders who have already dematerialised their EnviroServ Holdings Limitedshares through a Central Securities Depository Participant (“CSDP”) or broker and who wish to attend thegeneral meeting must instruct their CSDP or broker to issue them with the necessary authority to attend.
Should EnviroServ Holdings Limited shareholders who have already dematerialised their shares wish to vote byway of proxy, they must provide their CSDP or broker with their voting instructions in terms of the custodyagreement entered into between them and their CSDP or broker, except for shareholders who have electedown-name registration in the sub-register through a CSDP or broker, which shareholders must complete theattached form of proxy and return it in accordance with the instructions contained therein to the transfersecretaries, Computershare Ltd, Investor Services Division, 70 Marshall Street, Johannesburg 2001 (PO Box 61051, Marshalltown 2107), so as to be received by them no later than 09h00 on Wednesday, 8 October 2003, or in terms of the custody agreement entered into between the dematerialised own-nameshareholders and their CSDP.
A proxy need not be a shareholder of the company.
In respect of dematerialised shares, it is important to ensure that the person or entity (such as a nominee)whose name has been entered into the relevant sub-register maintained by a CSDP completes the form ofproxy in terms of which he/she appoints a proxy to vote at the general meeting of shareholders in accordancewith the instructions received from dematerialised beneficial holders.
By order of the board
O DeftereosCompany Secretary
18 August 2003
EnviroServ Holdings Limited
(Incorporated in the Republic of South Africa)Registration number: 1994/000280/06Share Code: ENV ISIN ZAE 0000 10989
Secretary and registered office Auditors
Orestis Deftereos (ACIS) CA(SA) Ernst & YoungC/o EnviroServ Holdings Limited Chartered Accountants (SA)18 Dusseldorf Street Ernst & Young HouseApex 52 Wanderers Office ParkBenoni 1501 Corlett Drive, Illovo 2196P O Box 2207 P O Box 2322Benoni 1500 Johannesburg 2000
Transfer secretaries Bankers
Computershare Ltd, Investor Services Division First National Bank of Southern Africa LimitedRegistration Number: 2000/006082/06 ABSA Bank Limited70 Marshall Street Standard Bank of South Africa LimitedJohannesburg 2001P O Box 61051Marshalltown 2107
Offices Tel Fax E-mail
Head Office, Benoni (011) 422-2560 (011) 845-1495 [email protected], Germiston (011) 456-5400 (011) 453-7583 [email protected], Durban (031) 902-1526 (031) 902-5778 [email protected], Cape Town (021) 951-8420 (021) 951-8440 [email protected] Estate, Port Elizabeth (041) 466-2741 (041) 466-2745 [email protected]
Website: www.enviroserv.co.za
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Administration
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Form of Proxy
EnviroServ Holdings LimitedRegistration No. 1994/000280/06Share Code: ENV ISIN:ZAE 0000 10989(“EnviroServ Holdings Limited” or “the company”)
For use by certificated and own-name dematerialised shareholders at the Annual General Meeting of shareholders to be held atthe registered office of EnviroServ Holdings Limited, 18 Dusseldorf Street, Apex, Benoni at 09h00 on Friday, 10 October 2003.
I/We
being the holder(s) of shares of EnviroServ Holdings Limited hereby appoint (see note 1)
1. or failing him*,
2. or failing him*,
3. or failing him, the chairman of the meeting, as my/our*proxy to act for me/us * at the Annual General Meeting of the company which will be held at 09h00 on Friday, 10 October 2003and at every adjournment or postponement thereof and to vote for and/or * against such resolutions and/or * abstain fromvoting in respect of the shares in the issued share capital of the company registered in my/our* name (see note 2) as follows:
NUMBER OF VOTES
In Favour of Against Abstain
ORDINARY BUSINESS1. To receive and adopt the annual financial statements for
the year ended 30 June 2003
2. To re-elect the following directors who retirein terms of the company’s articles of association:
2.1 E Gombault
2.2 DK Gordon
2.3 B Joffe
2.4 A McLean
2.5 RP Rocher
3. To re-appoint the auditors for the ensuing year
SPECIAL BUSINESS1. Special resolution number 1
2. Ordinary resolution number 1
3. Ordinary resolution number 2
4. Ordinary resolution number 3
5. Ordinary resolution number 4
and generally to act as my/our* proxy at the said general meeting. (Tick whichever is applicable. If no directions are given,the proxy holder will be entitled to vote or to abstain from voting as that proxy holder deems fit.)
Signed at: this day of 2003
Signature:
Assisted by me (where applicable)
(State capacity and full name)
Each shareholder is entitled to appoint one or more proxies (none of whom need be a shareholder/s of the company) toattend, speak and vote in place of that shareholder at the general meeting.*Delete as applicable.Please read the notes on the reverse hereof.
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Notes to Proxy
1. A shareholder may insert the name of a proxy or the names of two alternative proxies of the shareholder’s choice in
the space provided. The person whose name stands first on the form of proxy and who is present at the general
meeting will be entitled to act as proxy to the exclusion of those whose names follow.
2. A shareholder’s instructions to the proxy must be indicated by the insertion of the relevant number of votes exercisable
by the shareholder in the appropriate box provided. Failure to comply with the above will be deemed to authorise the
proxy to vote or to abstain from voting at the general meeting as he/she deems fit in respect of all the shareholder’s
votes exercisable thereat. A shareholder on the proxy is not obliged to use all the votes exercisable by the shareholder
or by the proxy, but the total of the votes cast and in respect of which abstention is recorded may not exceed the total
of the votes exercisable by the shareholder or by the proxy.
3. Forms of proxy must be lodged with or posted to the company’s transfer secretaries, Computershare Ltd, Investor
Services Division, 70 Marshall Street, Johannesburg 2001 (PO Box 61051, Marshalltown, 2107) to reach them no
later than 09h00 on Wednesday, 8 October 2003.
4. The completion and lodging of this form of proxy will not preclude the relevant shareholder from attending the general
meeting and speaking and voting in person thereat to the exclusion of any proxy appointed in terms hereof.
5. Documentary evidence establishing the authority of a person signing this form of proxy in a representative capacity or
other legal capacity must be attached to this form of proxy unless previously recorded by the transfer secretaries or
waived by the chairman of the general meeting.
6. Any alteration or correction made to this form of proxy must be initialled by the signatory/ies.
7. If any shares are jointly held, the first name appearing in the register shall, in the event of any dispute, be taken as the
shareholder.
in environmentally responsible waste management
enviroserv holdings ltd 2003annual report
leadership
in environmental ly responsible waste management
This report is printed on environmentally friendly Naturalis paper.
Glossary of terms
Airspace – The area contained within a landfill cell available for the disposal of waste.
BPEO – “Best Practicable Environmental Option.” The outcome of a systematic consultative
procedure that emphasises the protection of the environment. It establishes, for a given set
of objectives, the option that provides the most benefit or least damage to the environment
as a whole at acceptable cost.
CAIA – Chemical and Allied Industries Association.
Cell – This is the basic landfill unit within the landfill site into which waste is disposed.
Closure – The act of terminating the operation of a landfill. Closure is preceded by rehabilitation and
followed by post closure monitoring.
Domestic waste – Primarily household waste and garden refuse.
Duty of care – This requires that anyone who generates, transports, treats or disposes of waste must
ensure that there is no unauthorised transfer or escape of waste from their control, and
must retain documentation describing both the waste and any related transactions.
The person retains responsibility for the waste generated or handled.
Encapsulation – The procedure for disposing of high hazardous wastes, not suitable for direct landfilling,
by isolating the wastes in sealed, reinforced concrete cells located in a demarcated and
independently lined area of a Class H hazardous landfill site.
Hazardous waste – Waste, other than radioactive waste, which is legally defined as hazardous in the state in
which it is transported or disposed of, determined by the chemical reactivity, toxic,
explosive, corrosive or other characteristics which cause, or are likely to cause, danger to
health or the environment when improperly treated, stored, transported or disposed of.
Healthcare risk waste – Infectious waste emanating primarily from hospitals, clinics, surgeries, chemists and
sanitary services.
Industrial waste – Hazardous and non-hazardous waste in either a dry or liquid form from industrial and
commercial generators.
Landfill site – The area permitted for waste disposal on which landfill cells and other structures required
for the safe disposal of waste are constructed.
Leachate – An aqueous solution arising when water percolates through decomposing waste and as a
result of the biodegradation of the waste. It contains final and intermediate products of
decomposition, various solutes and waste residues.
Local authorities – Municipalities, district councils and government institutions.
OHSA – Occupational Health and Safety Act.
SHERQ – Safety, Health, Environment, Risk and Quality.
ISO 9001 – Specifies requirements for a quality management system where an organisation needs to
demonstrate its ability to consistently provide product that meets customer and applicable
regulatory requirements, and aims to enhance customer satisfaction through the effective
application of the system, including processes for continual improvement of the system and
the assurance of conformity to customer and applicable regulatory requirements.
ISO 14001 – Specifies requirements for an environmental management system, to enable an organisation
to formulate a policy and objectives taking into account legislative requirements and
information about significant environmental impacts.
ISO 17025 – Specifies the general requirements for the competence to carry out tests and/or calibrations,
including sampling.
Note to reader: If there are any terms used in this report with which you are unfamiliar,
you may e-mail [email protected].
enviroserv holdings ltd ann
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in environmentally responsible waste management
enviroserv holdings ltd 2003annual report
leadership
in environmental ly responsible waste management
This report is printed on environmentally friendly Naturalis paper.
Glossary of terms
Airspace – The area contained within a landfill cell available for the disposal of waste.
BPEO – “Best Practicable Environmental Option.” The outcome of a systematic consultative
procedure that emphasises the protection of the environment. It establishes, for a given set
of objectives, the option that provides the most benefit or least damage to the environment
as a whole at acceptable cost.
CAIA – Chemical and Allied Industries Association.
Cell – This is the basic landfill unit within the landfill site into which waste is disposed.
Closure – The act of terminating the operation of a landfill. Closure is preceded by rehabilitation and
followed by post closure monitoring.
Domestic waste – Primarily household waste and garden refuse.
Duty of care – This requires that anyone who generates, transports, treats or disposes of waste must
ensure that there is no unauthorised transfer or escape of waste from their control, and
must retain documentation describing both the waste and any related transactions.
The person retains responsibility for the waste generated or handled.
Encapsulation – The procedure for disposing of high hazardous wastes, not suitable for direct landfilling,
by isolating the wastes in sealed, reinforced concrete cells located in a demarcated and
independently lined area of a Class H hazardous landfill site.
Hazardous waste – Waste, other than radioactive waste, which is legally defined as hazardous in the state in
which it is transported or disposed of, determined by the chemical reactivity, toxic,
explosive, corrosive or other characteristics which cause, or are likely to cause, danger to
health or the environment when improperly treated, stored, transported or disposed of.
Healthcare risk waste – Infectious waste emanating primarily from hospitals, clinics, surgeries, chemists and
sanitary services.
Industrial waste – Hazardous and non-hazardous waste in either a dry or liquid form from industrial and
commercial generators.
Landfill site – The area permitted for waste disposal on which landfill cells and other structures required
for the safe disposal of waste are constructed.
Leachate – An aqueous solution arising when water percolates through decomposing waste and as a
result of the biodegradation of the waste. It contains final and intermediate products of
decomposition, various solutes and waste residues.
Local authorities – Municipalities, district councils and government institutions.
OHSA – Occupational Health and Safety Act.
SHERQ – Safety, Health, Environment, Risk and Quality.
ISO 9001 – Specifies requirements for a quality management system where an organisation needs to
demonstrate its ability to consistently provide product that meets customer and applicable
regulatory requirements, and aims to enhance customer satisfaction through the effective
application of the system, including processes for continual improvement of the system and
the assurance of conformity to customer and applicable regulatory requirements.
ISO 14001 – Specifies requirements for an environmental management system, to enable an organisation
to formulate a policy and objectives taking into account legislative requirements and
information about significant environmental impacts.
ISO 17025 – Specifies the general requirements for the competence to carry out tests and/or calibrations,
including sampling.
Note to reader: If there are any terms used in this report with which you are unfamiliar,
you may e-mail [email protected].
enviroserv holdings ltd ann
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