glossary ofterms - sharedata · sherq – safety, health, environment, risk and quality. ... change...

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w a s t e s o l u t i o n s f o r a s u s t a i n a b l e f u t u r e w a s t e s o l u t i o n s f o r a s u s t

s u s t a i n a b l e f u o u r e w a s t e s o l u t i o n s f o r a s u s t a i n a b l e f u t u r e w a s t e

a s t e s o l u t i o n s l o r a s u s t a i n a b l e f u t u r e w a s t e s o l u t i o n s f o r a s u s ta

u s t a i n a b l e f u t u r e w a s t e s o l u t i o n s f o r a s u s t a i n a b l e f u t u r e w a s t e

s t e s o l u t i o n s f t r a s u s t a i n a b l e f u t u r e w a s t e s o l u t i o n s f o r a s u s t a

s t a i n a b l e f u t u i e w a s t e s o l u t i o n s f o r a s u s t a i n a b l e f u t u r e w a s t e s

t e s o l u t i o n s f o o a s f o r a i n a b l e f u t u r e w a s t e s o l u t i o n s f o r a s u s t a i

t a i n a b l e f u t u r n w a s t e s o l u t i o n s f o r a s u s t a i n a b l e f u t u r e w a s t e f o

e s o l u t i o n s f o r s s u s t a i n a b l e s u s t a i n a b l e a b l e n s f o r a s u s t a i n a b le

a i n a b l e f u t u r e w a s t e s o l u t i o n s f o r a s u s t a f u t u r e t u f u t u r e w a s t e f o

A N N U A L R E P O R T 2 0 0 4

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Airspace – The area contained within a landfill cell available for the disposal of waste.

BEE – Black Economic Empowerment.

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.

OHSAS 18001 – Occupational Health and Safety Management System.

Note to reader: If there are any terms used in this report with which you are unfamiliar, you may e-mail

[email protected].

Glossary of Terms

1 Achievements

2 Financial highlights

4 EnviroServ at a glance

9 Chairman’s and CEO’s report

18 Board of directors

20 Senior management

23 Sustainability report

24 Corporate social investment

27 SHERQ review

30 Corporate governance

35 Value added statement

36 Annual financial statements

65 Company annual financial statements

69 Analysis of shareholders

70 Shareholders’ diary

71 Notice to shareholders

75 Form of proxy

76 Notes to proxy

ibc Glossary of terms

contents

EnviroServ meetsthe changingneeds of ourclients and isable to offer acomprehensiverange ofsustainableintegrated wastemanagementsolutions.

1

Achievements

> Headline earnings per share up 13% to 40,72 cents

> Cash generated by operations increases by 21% to R125,5 million

> Improved operating efficiencies led to profitmargin increasing to 12,7%

> Cross-border growth initiated through securingof two new contracts outside South Africa

> Majority of regions received ISO 14001certification

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R millions

Financial Highlights

%

change 2004 2003 2002 2001 2000 1999

Income statement

Revenue 12 475,4 426,1 377,9 379,9 331,6 342,9

Operating profit 13 58,5 51,9 42,0 37,0 35,0 32,4

Headline earnings 13 42,7 37,7 32,3 29,0 25,9 23,5

Share statistics

Earnings per share (cents) 10 38,7 35,2 30,1 2,6 20,4 19,1

Headline earnings per share (cents) 13 40,7 35,9 30,6 26,2 22,1 20,1

Distribution/dividend per share (cents) 8 13,0 12,0 10,0 8,0 7,0 5,0

Key ratios and financial data

Return on shareholders’ equity (%) (5) 24,8 26,1 28,1 27,1 24,1 25,7

Return on total assets (%) (2) 13,5 13,8 12,8 13,2 12,9 9,1

Operating margin (%) 1 12,7 12,5 11,4 10,0 10,6 9,5

Net interest-bearing debt 2 59,3 57,9 66,8 18,7 17,8 30

Debt/equity ratio (%) (14) 31,6 36,8 51,1 18,9 15,4 29,8

Interest cover (times) 13 7,0 6,2 6,2 24,3 20,2 3,5

Cash generated by operations 21 125,5 103,4 89,9 78,5 70,4 70,2

Market capitalisation 40 325,6 232,2 137,2 136,2 75,1 118,5

3

* Revenue figures have been restated in the graphs for the period 1998 – 2001 on a pro forma basisto reflect the disposal of 53% of our domestic waste operations to an empowerment joint venture,Millennium Waste Management (Pty) Limited.

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Distribution/dividends per share

Headline earnings per share

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Revenue* Cash generated byoperations

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Industrial WasteWaste-techmanages, collects,sorts and separatesrecyclables andtransports anddisposes of hazardousand non-hazardousindustrial waste.

Wade Refuseprovides domesticwaste collectionservices.(Millennium JV)

Domestic Waste

Waste-tech andLandfillManagementprovide on-sitesolutions to sort andseparate recyclablewaste for re-use orbeneficiation.

BeneficiationChargold specialisesin processes whichbeneficiate carbonwaste products.(35% Shareholding)

Hazmat offers a24-hour supportservice for emergencyclean-ups, hazardousmaterial spillagecontainment andon-site remediation.

Spill Response and Clean-ups Recycling

• CARDBOARD• CANS• GLASS• PLASTIC

EnviroServoperationsprovideenvironmentallyresponsiblewastemanagementsolutions acrossall industries.

EnviroServ at a glance

5

ProcessProcessManagementprovides on-sitesolutions to re-use,recycle and reducewaste throughinnovativetechnologies andinstallations.

Healthcare WasteSanuMed providesservices for the safecollection anddisposal ofhealthcare risk waste.(Millennium JV)

General Waste LandfillLandfillManagementmanages generalwaste disposalfacilities.(Millennium JV)

IncinerationDispose-techdisposes of healthcarerisk waste at permittedEnviroServ incinerationfacilities.

Hazardous Waste LandfillDispose-tech treatsand disposes of wasteat permitted EnviroServwaste disposalfacilities.

Plant/EquipmentConquip Hirespecialises in the hire ofcompaction and relatedequipment in the waste,construction and miningindustries.

Sediba providestotal water andsewage managementsolutions.(Millennium JV)

Water and Sewage

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Traditional waste managementoperations are evolving in linewith market trends towardsresponsible waste managementsolutions including minimisation,re-use, recycling and responsibletransport and disposal.

Strategy

Market trends are currently shaping our industry.

WASTE PREVENTION

Manufacturers are facing increased pressure from

Government regarding environmental issues

relating to waste management. The publication of

Government's “White Paper on Integrated Pollution

and Waste Management for South Africa” in March

2000 signalled a major shift in focus from

traditional disposal to control and prevention. New

legislation is currently being drafted to support this

shift and will bring further pressure on waste

generators, particularly manufacturers, as waste

effectively remains their legal responsibility through

the “cradle to grave” principle.

Our clients are shifting their mindsets to holistic

waste management and the demand for higher

level waste management solutions is increasing.

EnviroServ is particularly well positioned to take

advantage of this trend through leadership in new

high-level solutions and technologies.

7

COMPREHENSIVE RANGE OF WASTESOLUTIONS

EnviroServ’s clients are embracing the Group as a

valuable business partner as our comprehensive

service offering not only enables them to comply

with legislation on waste prevention but also

addresses the complexities of waste management.

We are involved in the entire waste hierarchy of our

clients and offer a complete waste service

including waste minimisation, waste processing,

on-site management, recycling and re-use as well

as ISO 14001 certified waste collection and

disposal at properly permitted sites.

SAFE DISPOSAL CERTIFICATION

A continuing market trend is the requirement for

“Safe Disposal Certification”. Many businesses,

particularly those exporting to foreign customers

and those with ISO 14001 environmental

management systems, cannot afford the

consequences of an incident related to perceived

irresponsible waste management practices. We

expect the demand for responsible waste

management services to increase in the future with

the implementation of the proposed national Waste

Information System. EnviroServ is proud to be the

leading brand associated with responsible waste

management in South Africa and offers a

comprehensive safe disposal certification process

and waste manifest system.

EnviroServ will continue to enhance our service

offering in line with market trends and focus on

providing comprehensive, cost-effective and

sustainable solutions to waste generators.

waste avoidance

waste minimisation

waste re-use

waste recycling

waste treatment

waste disposal

Curren

t Foc

us

Futu

re F

ocus

Changing focus in the waste market hierarchy

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Review by Chairman and CEO

EnviroServ is in a strongposition to meet the changingneeds of clients and seize theopportunities from increasingenvironmental responsibility.

9

EnviroServ’s focus on improving our service

offering to ensure that we deliver a comprehensive

range of waste management solutions, has once

again allowed us to post a strong performance for

the financial year under review. Despite the impact

of a strong Rand on some of our clients, particularly

in the manufacturing industry, we have increased

revenue levels from the previous year and improved

operating profit.

Revenue from continuing operations for the period

increased by 15% to R465,0 million and operating

profit increased by 13% to R58,5 million.

THE WASTE INDUSTRY

Regulatory Environment

The period under review has been an active time as

far as the development of environmental legislation

is concerned. Government has made substantial

progress in its environmental law reform programme

and continues to put increasing pressure on waste

generators. Significant to EnviroServ are the changes

in the administrative structures regulating waste and

the new draft regulations published in connection

with activities that require environmental impact

assessments (“EIA”).

Chairman’s Report

“The strongcommitment ofour people todeliver qualityservice and addvalue to ourclients has beenkey to ourperformance.”

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Alistair McLean

These include:

> The Environment Conservation Amendment

Act 50 of 2003 (“ECAA”), from an administrative

perspective, provides for the transfer of the

management of waste sites from the Department

of Water Affairs and Forestry to the Department

of Environmental Affairs and Tourism. The ECAA

gives additional powers to the Minister of

Environmental Affairs and Tourism to impose

compulsory deposit charging systems or

related financial measures on certain waste

products which may pose a hazard to the

environment or to human health. No regulations

have yet been promulgated under the ECAA

but EnviroServ will be monitoring future

developments in this regard.

> The National Environmental Management

Amendment Act 46 of 2003 bolsters the

enforcement of environmental legislation as

it amends the National Environmental

Management Act 107 of 1998 by, inter alia,

establishing an environmental management

inspectorate, which will enhance Government’s

ability to police environmental legislation.

Finally, there have been extensive amendments

to the National Road Traffic Regulations

promulgated under National Road Traffic Act 93 of

1996 during the period. The amendments refine

the regulatory framework regarding the transport of

dangerous goods.

Despite the increasing regulation of waste

production and management, policing of waste

generators remains a challenge. Improved

monitoring of corporate compliance with new waste

regulations will ensure that South African companies

are focused on better waste management thus

enabling EnviroServ to set up partnerships to assist

corporates in responsible waste management

practices.

Global Trends

Global business trends are moving towards

sustainable waste solutions. There is a stronger

focus on corporate governance and meeting the

requirements of “triple bottom line” reporting.

To this end, EnviroServ assists clients to better

manage environmental impacts and risks in a

responsible manner.

OUR STRATEGIC FOCUS

Government’s stance on waste management

together with global trends has increased

awareness of environmental issues across all

industries, particularly the manufacturing sector,

and elevated the demand for more comprehensive

waste management services.

In line with these developments in the waste

industry, EnviroServ continues to expand our service

offering beyond providing services that assist in the

disposal and control of waste, to providing total

waste management solutions. This shift in focus has

led to an increase in revenues from services such as

on-site waste management and recycling.

Furthermore, we are aware of the onus on

our clients to minimise waste at the source and

better their management of waste. As such we are

striving to partner with clients to provide a

comprehensive range of waste management

solutions and aim to become part of their

operational plans going forward.

THE YEAR IN REVIEW

EnviroServ’s operations have performed well this

year, underpinned by appropriate operational

structures and a strong team of quality people.

Furthermore, we have created value for the Group

by concentrating on higher margin businesses and

keeping costs in check.

Over the year, we achieved a number of

strategic aims:

> In line with the Group’s strategy to modestly grow

our business beyond South African borders

through offering the same traditional services

offered in South Africa, we have secured two

new cross-border contracts and are negotiating

a number of others. Additionally, we are striving

to broaden the spectrum of services currently

offered in South Africa.11

> We continue to target high-level waste

management businesses and to this end the

Group acquired a small composting plant in the

Western Cape for the handling of sewage

sludge. There is potential for this business to be

expanded nationally.

> The Process Management division has been

further expanded and during the year secured

a contract to construct and operate an effluent

treatment plant in Zwelitsha, East London.

EMPOWERMENT

EnviroServ is committed to the principles of Black

Economic Empowerment and continues to drive

empowerment at all levels throughout our business.

Our commitment to these principles is evidenced

by our creation of an empowerment joint venture,

Millennium Waste Management (Pty) Limited

during 2000, our substantive progress in addressing

employment equity, and our considerable

investment in training and developing our staff.

The Group has recently been awarded a rating of

BBB (“Black-influenced company”) by the

EmpowerDEX rating agency and was also ranked

21st in the Financial Mail’s EmpowerDEX ranking

of the Top 200 Black Empowered Companies.

Furthermore, the Business Women’s Association in

May 2004 rated EnviroServ in the Top 10 for

Women in Leadership. Each of these awards bears

testimony to our efforts towards empowerment.

CORPORATE SOCIAL INVESTMENT

EnviroServ has continued its support for

community-based projects in the areas in which

we operate. We have established a growing

number of partnerships with SMMEs, which have

been included in some of our longer-term

contracts. Another key community project over the

past year was EnviroServ’s sponsorship of the

WasteArt 2004 Expo, which included a number of

competitions helping to raise awareness of waste

and the environment. These activities culminated

in a waste arts and crafts exhibition and a gala12

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Chairman’s Report

event held at Nelson Mandela Square in Sandton.

Through this event, a number of artists and

community-based organisations were able to

showcase and sell their work.

HUMAN RESOURCES

We are proud of the depth and quality of our

people. Their strong commitment to deliver quality

service and add value to our clients has been key to

our performance. At EnviroServ, skills development,

training and creating opportunities for individuals to

grow in the organisation are important components

of our strategy.

The Group has an established Employment Equity

Policy, which is aligned with the requirements of

the Employment Equity Act. In terms of this policy,

EnviroServ has developed a five-year plan, with set

equity targets, which the Group is making progress

towards achieving by the end of 2005. Progress

against the plan is monitored by the board and

we are well positioned to achieve our targeted

equity percentage representation of Previously

Disadvantaged Individuals (“PDI”) at each level of

management.

DIRECTORSHIP AND CORPORATEGOVERNANCE

EnviroServ remains committed to the requirements

of King II on Corporate Governance. This commit-

ment is evidenced by the detail contained in the

Sustainability Section within this report.

Rufus Maruma resigned from the board in March

2004 after seven years of service and I would like

to thank him for his valuable contribution.

PROSPECTS

We remain cautiously optimistic on the macro

economic outlook. We expect an increasing

recovery in global demand towards more

comprehensive waste management solutions,

however, a strong Rand will continue to pose a

challenge for many of our clients, particularly those

in the export manufacturing sector. Despite these

challenges we are positive about the year ahead.

The intense operational focus and commitment

from our people places EnviroServ in a strong

position to take advantage of changing client needs

and seize the opportunities from increasing

responsibility levels. We look ahead to a year of

further sustainable growth and expansion

opportunities into neighbouring countries.

APPRECIATION

Thank you to my fellow board members for their

valued input and to the management team and

staff for your continuing ability to meet the Group’s

objectives.

Alistair McLean

Chairman

13

INTRODUCTION

During the past year, EnviroServ has been able to

deliver growth and create value for all stakeholders

in a challenging economic environment. We have

remained focused on our strategy to improve

operating efficiencies, drive down costs and forge

stronger relationships with clients by ensuring that

products and services are aligned to their needs.

Our industrial clients continue to become more

discerning in selecting waste service partners with

cost-effective and sustainable waste management

solutions. EnviroServ’s ability to meet client

requirements in this regard has placed us at the

forefront of the waste industry and has helped to

offset some of the negative effects of a moderately

growing economy. EnviroServ’s service offering

has also been enhanced through the majority of

our operations obtaining ISO 14001 certification,

as well as increased penetration into new

areas in South Africa. Additionally, EnviroServ’s

empowerment credentials place the Group in a

strong position to meet clients’ procurement

requirements as determined by their relevant

empowerment frameworks.

Significant to EnviroServ’s growth strategy are the

Strategic Growth Projects (“SGP”) and Process

Management divisions. SGP, established two years

ago, develops growth opportunities outside of

CEO’s Report

“EnviroServremainsfocused on ourstrategy toimproveoperatingefficiencies,drive downcosts and forgestrongerrelationshipswith clients.”

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Des Gordon

traditional markets and our Process Managementdivision is mandated to develop opportunitiesfocusing on waste minimisation. These divisionshave recently been consolidated under commondivisional management and have strongentrepreneurial teams with a high degree oftechnical capital. They have begun to deliver viableprojects into the Group that should start to fuelfuture growth in revenue and earnings as well asexpanding our service offering.

EnviroDrum, which specialised in responsiblecontainer management and drum reconditioning,disposed of its loss-making steel drumreconditioning division during the year underreview. The division was unable to adequatelyimprove its performance despite many initiatives inprevious years to improve efficiencies and thequality of the reconditioned steel drums.EnviroDrum will continue the profitable portion ofthe business that manages cleaning of plasticcontainers.

The growth and development of our staff remains ahigh priority within the Group and is regarded as anessential component in ensuring that we areadequately resourced to grow our business. TheGroup has embarked on a number of traininginitiatives for our employees, ranging from ABET(“Adult Basic Education Training”) through toaccredited in-house developed programmes suchas a certificate in Professional Driving and a SalesDevelopment Course.

PERFORMANCE HIGHLIGHTS

The Group has continued to produce strong resultswith shareholders’ attributable profit increasing by10% over the previous year.

Revenue from continuing operations increased by15% to R465,0 million (2003: R403,7 million). Inan increasingly price sensitive market this growthwas achieved through increased volumes andexpansion into new markets rather than priceincreases.

Our continuous drive to improve efficienciesenabled us to offset the effect of the limited priceincreases on our margins, whilst the closure of theloss-making steel drum reconditioning division inDecember 2003 helped improve the Group’soperating margin to 12,7% (2003: 12,5%).

This revenue growth at higher margins resulted in

operating profit increasing by 13% to R58,5 million

(2003: R51,9 million). Net finance costs remained

constant. The Group’s share in the after tax profits

from associates more than doubled to R2,1 million

(2003: R0,9 million). This was due to improved

results from Chargold and the acquisition of a 30%

stake in Brunig Composting (Pty) Limited, effective

1 July 2003.

Profit before tax for the year was R52,1 million.

This is an 18% increase on the previous year

(2003: R44,2 million).

Cash generated by operations grew by 21% to

R125,5 million (2003: R103,4 million). This strong

cash generation enabled debt to be contained at the

same levels as last year despite relatively high capital

expenditure in 2004. Additions and replacements to

fixed assets amounted to R84,8 million, as a result of

spending R47 million on plant and vehicles as part of

our ongoing asset renewal programme and to

resource new ventures and R19 million in

replenishing the airspace consumed from the Group’s

landfill sites due to the higher disposal activity

experienced this year compared to recent years.

The Group’s balance sheet remains strong, with

a debt/equity ratio of 32% improved from 37%

in 2003.

OPERATIONAL REVIEW

Industrial Waste Division The Industrial Waste division comprises Waste-

tech, the industrial collection business, Conquip

Hire, which hires compaction and related

equipment to the waste, mining and construction

industries and Hazmat, a 24-hour support service

for emergency clean-ups, hazardous material

spillage containment and on-site remediation.

During the year, the majority of operations across

the regions showed a solid improvement in

financial performance enabling us to start rolling

out a number of new depots in areas where we

have achieved a critical mass in clients. Our

drive for continuous improvement in our service

delivery, particularly in ensuring environmentally

responsible waste solutions, saw our KwaZulu-

Natal operation winning the award for Excellence in

15

Furthermore, our facilities in Gauteng, KwaZulu-

Natal and the Eastern Cape all received ISO 14001

certification.

Strong competition from alternative technologies

as well as from non-compliant waste operators

remains a challenge for this division. We are,

however, focused on reducing costs and aim to

become more customer-focused in providing

sustainable integrated waste solutions in line

with their requirements. The debate regarding the

use of incinerators as opposed to alternative

technologies is ongoing and we are in the process

of strategically reviewing our position and options

around sustainable destruction technologies,

having regard for community concerns, client

needs and employee health and safety.

Domestic Waste DivisionMillennium Waste Management (Pty) Limited

Joint Venture

The Millennium Waste Management division

comprises Landfill Management, which manages

disposal sites on behalf of third parties; Sediba, the

water and sewage division; Wade Refuse, the

domestic waste collection business; and SanuMed,

the healthcare risk waste management division.

EnviroServ holds a 47% stake in the Millennium

Waste Management joint venture.

This division continued to under-perform and has

not delivered the expected improvement in results.

During the year, a number of tendered contracts

in our SanuMed business had a disappointing

outcome and the remaining businesses have not

seen the expected growth in new tenders or a

positive change in attitude towards privatisation

from Local Authorities.

Looking forward, the Domestic Waste division

continues to face a number of challenges which

include competition from the Local Authorities’ in-

house waste service providers, overcapacity in the

healthcare risk waste sector, as well as gearing up

to provide alternative service models such as

community-based waste solutions and Public/

Private Partnerships. The division, however, is well

positioned to address these challenges and

increase profitable market share following the

reorganisation of management teams and sales

force structures during the year. The division will

CEO’s Report

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Construction Environmental Management at the

Hillside Expansion Project in Richards Bay. We

have also made significant progress with the

implementation of ISO 14001 and the majority of

our operations are now certified. During the year

under review a number of remedial clean-ups,

mainly in the petro-chemical industry, were

undertaken.

Looking forward, while we face the challenge of

remaining competitive against non-compliant

waste operators, we continue to seek innovative

ways of providing sustainable and integrated waste

solutions that are appropriate and add value to

our clients.

We aim to increase profitable market share through

initiatives which include increasing our national

footprint in operations such as Hazmat and

introducing new differentiated service offerings to

our clients. Operational excellence and staff

development are key to the success of this

business going forward.

Disposal DivisionThe division comprises Dispose-tech, which

operates the Group’s permitted waste treatment,

destruction and disposal facilities.

The financial performance across the majority of

regions improved materially during the year as

a result of increased revenues and continued

cost control.

The technical integrity and sustainability of our

landfill sites was enhanced through the

construction and commissioning of the Aloes

leachate treatment plant which enabled us to

effectively manage the liquid effluent generated

from the landfill site. The Holfontein leachate

treatment plant is also being commissioned to

achieve similar objectives.

also benefit from cross-selling its basket of services

and exploring consolidation opportunities in the

healthcare risk waste market.

Although this division has not achieved Group

performance criteria for a number of years, the

Group remains committed to maintaining its

presence in this sector as it forms an essential

element of balancing risk through maintaining

activities across a broad spectrum of waste

activities and driving economic benefits from

critical mass.

Strategic Growth Projects Division

The division comprises SGP which develops growth

opportunities outside of traditional markets and

Process Management, which develops growth

opportunities higher up the waste hierarchy

through focusing on waste reduction, re-use and

recycling.

During the year, the division delivered a positive

contribution to Group revenue and earnings as a

result of securing and executing a number of new

contracts:

> Process Management secured a contract to

build and operate an effluent treatment plant in

Zwelitsha, East London. Construction is

estimated for completion in March 2005 and

EnviroServ will operate and maintain the plant

under contract for a period of 10 years.

> An ownership stake was acquired in a small

composting operation in the Western Cape for

the handling of sewage sludge to be used as

compost.

> Start-up operations were established in Angola

and Mozambique and contracts were secured

for domestic collections and the management

of hazardous landfill sites in each region

respectively.

> Significant progress has been made towards

establishing a joint venture entity with a leading

player in the cement industry, to collect and

blend waste for use as alternative fuels and

resources in the cement industry.

Looking ahead, the Group is focused on growing

returns and expanding our African operations.

We are rapidly building experience in the challenges

of these new markets which include understanding

the complexities of foreign regulatory environments,

operating over vast distances and dealing with

different commercial frameworks, especially in

securing debts and cash flows. Furthermore, we

aim to grow Process Management through

introducing new technologies and services and

by acquiring businesses which offer high-level

waste solutions.

PROSPECTS

The increasing awareness of environmental issues

and responsibility amongst waste generators

should ensure continued growth in our traditional

markets. The pace of this growth will be largely

affected by the performance of the economy and

prevailing economic factors. Additionally, some of

the current initiatives to exploit growth opportunities

for the Group are gaining momentum and will

enhance the Group’s overall performance in

the future.

Going forward, we look to improve revenues and

margins through expansion of our current service

offering beyond South African borders and

enhancement of our current portfolio of high-level

waste operations. Furthermore, we believe the

Group is well positioned to seize opportunities

arising from changing market trends including a

shift in focus from traditional disposal to waste

control and prevention.

Des Gordon

Chief Executive Officer

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Board of Directors

Alistair McLean (55)

Executive Chairman

Alistair has served as ExecutiveChairman of the EnviroServ Groupsince February 2001 and isresponsible for strategic managementand new business development. Hepreviously held the position of GroupChief Executive from January 1997 toJanuary 2001. Alistair has beenactively involved in EnviroServ since1986 when he became a majorshareholder.

Des Gordon (43)

Chief Executive OfficerBCom; CA(SA)

Des was appointed Chief Executive inFebruary 2001. He joined the Group in1997 and served as Financial Directorfor four years. Prior to this, Des spentfive years with Group Five Limited asthe Group Financial Manager after fiveyears in the auditing profession withErnst & Young.

Raymon Rocher (36)

Financial DirectorBCom; CA(SA)

Raymon joined EnviroServ as GroupFinancial Manager in 1997 and wasappointed Group Financial Director in2001. Raymon spent three years withKPMG where he completed his articlesbefore gaining two years’ experience asGroup Accountant at Group FiveLimited.

Pierre Fourie (42)

Divisional Director Industrial WasteBEng; MBL

Pierre joined EnviroServ in 2000 andwas appointed Director in 2002. Priorto joining EnviroServ, Pierre spentseven years as Production andOperations Manager with LytteltonEngineering Works. He was alsoGeneral Manager and ManagingDirector for I&J and Pat Cornickrespectively.

Delia Lavarinhas (31)

Property DirectorHigher Diploma in Design; ProjectManagement; Management AdvancementProgramme

Delia joined EnviroServ in 2000 asProperty Director and also serves asBrand Manager of Wade Refuse.Previously, Delia worked for a largeconstruction company and didfreelance consulting for approximatelythree years.

Edwin Motebang (58)

Human Resources and IndustrialRelations DirectorDiploma in Labour Law, Advanced LabourRelations Skills Development; BML (UFS)

Edwin joined EnviroServ in1992 asSales Director. After the merger withWaste-tech in 1997 he became theIndustrial Relations Manager. Edwinbecame Human Resources andIndustrial Relations Director in 2000.

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Esmé Gombault (40)

Divisional Director DisposalBSc Chemistry

Esmé joined EnviroServ as a WasteConsultant in 1988 following threeyears as a Pollution Control Officer withDEAT. Esmé became General Managerof the Dispose-tech division in 2002.Esmé was appointed to the EnviroServboard in 2003.

Brian Joffe (57)

Non-executiveCA(SA)

Brian spent three years with LevittKirson Gross prior to holding aposition as Chief Executive of EW Tarry plc. Brian held variouschairmanships from 1983 until 1988when he became Executive Chairmanof Bid Corporation Limited prior to itslisting on the JSE as the BidvestGroup Limited. Brian was recentlyawarded the South African Chapter ofthe Ernst & Young World EntrepreneurAward 2003. Brian was appointed tothe EnviroServ board in 2000.

Joe Pamensky (74)

Non-executiveCA(SA); OMSG

Joe has over forty years’ experience inthe financial, insurance and bankingindustries and is the recipient ofnumerous business awards. He servesas Non-executive Director of theBidvest Group as well as numerousother public and private companiesand was appointed to the EnviroServboard in 2001.

Lindsay Ralphs (48)

Non-executiveBCom; BAcc; CA(SA)

Lindsay gained accounting experienceat Price Waterhouse before leaving in1981 to join EW Tarry plc where hewas appointed Joint ManagingDirector. He joined the Bidvest Groupin 1992 as Operations Director and iscurrently Chairman of the Bidservdivision. Lindsay also serves asDirector of the Bidvest Group Limited.He was appointed to the EnviroServboard in 2001.

Muriel Dube (31)

Non-executiveB.Hons. Social Sciences; ExecutiveCertificate Leadership and Development(Harvard)

Muriel Dube has senior operations andmanagement experience in the publicand private sector and is one of SouthAfrica’s leading environmentalists. Murielwas recently appointed by Governmentin the role of Chief Climate Negotiator.Muriel also serves as an expert on theUnited Nations Technology TransferGroup. Muriel is Group CommercialDirector at Bidvest and serves asExecutive Director. Muriel was appointedto the EnviroServ board in 2001.

Senior Management

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Dawie Krugel (42)

Regional General Manager –Waste-tech Division, GautengBSc

Joined EnviroServ in 2003

Rhyno Gouws (41)

Regional General Manager –Millennium, GautengBAgric Admin; Road Transport Diploma


Ronald Duigan (42)

General Manager – Process Management DivisionBSc Eng (Chem); MBA


Craig Hurle-Hill (45)

General Manager – Conquip Hire DivisionNTC5 Heavy Current

Joined Conquip in 1986

Avril Kidd (36)

Regional General Manager – Waste-tech Division, KwaZulu-NatalBSc


* Director of EnviroServ Waste Management (Pty) Ltd** Director of Millennium Waste Management (Pty) Ltd

Kieron Geoghegan (49)*

Divisional Director - StrategicGrowth ProjectsBA

Joined Conquip in 1985

Clive Kidd (40)

Regional General Manager –Millenium, KwaZulu–NatalNHD (Civ Eng); MBP


Rustim Keraan (33)

Regional General Manager –Millenium, Western CapeBSc Eng (Civil); MBA


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Thabiso Taaka (31)

National Sales Manager – Millennium MAP


Alan Oosthuizen (40)

Regional General Manager –Waste-tech Division, Western CapeDip Civil Engineering


Barry Miles (47)

Business Development Manager –Strategic Growth ProjectsCivil Engineering Technologist; MBA


Jeff le Roux (46)

Group Marketing Manager

MSc; HDE; CPMM; CM(SA)


Benoît Le Roy (43)

General Manager – Millennium, Sediba DivisionDip Chem Eng; Dip Bus Management

Joined Millennium in 2002

Stuart McMullan (42)

Regional General Manager – Waste-tech Division, Eastern CapeDip Cost Accounting


Cosmas Mzulwini (42)**

Managing Director – MillenniumDiploma in Road Transport; Advanced

Business Programme


Jabu Ngwenya (51)**

Executive Director – Millennium


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Sustainability Report

EnviroServ’s sustainability is built on close involvement withlocal communities, thedevelopment of its people andcareful attention to responsibleenvironmental practices.

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EnviroServ, as a South African company, is

committed to assisting our country towards a

sustainable future. We believe in taking responsibility

for our environment and in empowering both our

people and the communities in which we operate.

Aligning to our best practice approach, we

continually aim to improve all systems and

processes used in day-to-day tasks in all aspects of

waste management. In addition, we focus on

innovative ways to educate the public on waste

management and continue to assist with various

community projects uplifting the quality of life

for many communities. Developing our own people

is key and we continue to drive development

and training.

CORPORATE SOCIAL INVESTMENT

Community Involvement With Our Facilities

All of EnviroServ’s hazardous waste landfill and

healthcare risk waste treatment facilities have

established active, long-standing Monitoring

Committees with the aim of monitoring the Group’s

compliance with the permits issued by the

Department of Water Affairs and Forestry. These

committees consist of members of local

communities and various interest groups as well

as representatives from National, Provincial and

Local Authorities.

The committees facilitate communication between

EnviroServ, neighbouring communities, authorities

and other stakeholders in transparent and open

public forums. Attendance at regular meetings over

the past year has been good and allowed for swift

resolution of important environmental issues.

The continued strong relationships established

through EnviroServ’s Monitoring Committees are

vital to ensure the sustainability of our operations

going forward.


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Intuthuku Sewing Club Project

EnviroServ continues to support a number of

projects to assist and uplift the communities in

which we operate. An example is the Intuthuku

(“to move forward”) Sewing Club, a Holfontein

community project that has experienced significant

success since EnviroServ approached the Etwatwa

community in 2002 and initiated its formation.

Some of the key achievements of this team of

entrepreneurial artists include:

> Participation in a world environmental initiative

and exhibition in Naxos, Greece through the

creation of an embroidered Waste Pyramid;

> The Waste Pyramid was displayed at the

EnviroServ WasteArt 2004 Expo in Johannesburg

in June 2004. The Pyramid has also been

entered for the FNB Crafts Now Awards 2004;

> The export of handcrafted bags to countries

including Japan, Germany, the USA, the UK

and Australia;

> Participation in the “Journey to Freedom”

multimedia show in Pretoria. This involved the

preparation of two large embroidered quilts

with images based on the struggle against

apartheid and the following 10 years of

freedom. The quilts have been entered for the

FNB Crafts Now Awards 2004 and will be

exhibited in the Weavings of War International

Exhibition taking place in seven major cities in

the USA later in the year; and

> More than 40 embroideries have been framed

in glass and given to clients as corporate gifts

or sold as artworks and over 200 handcrafted

bags have been embroidered for conferences

nationwide.

The success of the Intuthuku Sewing Club has

enabled it to become almost self-sustaining and

develop a platform for future growth. EnviroServ is

proud to be associated with this project and to have

assisted in its development.

WasteArt – A New Sustainability Initiative

WasteArt is a nationwide initiative that supports

and promotes the development of sustainable

business enterprises through the creative use of

waste. The key objectives are aligned to those of

the World Summit on Sustainable Development,

2002. These include:

> Creating awareness of responsible waste

management, particularly amongst the youth;

> Promoting the principles of sustainability

through the practice of recycling;

> Providing an opportunity for entrepreneurship

and the development of small sustainable

businesses based on the creative use of waste

material; and

> Promoting emerging artists, particularly

individuals from previously disadvantaged

communities, who work with waste and

recycled materials.

The culmination of these objectives was the

EnviroServ WasteArt 2004 Expo, held at the Nelson

Mandela Square and the Sandton Civic Gallery in

June 2004. This year’s inaugural event was a great

success with significant interest from the public

and the media.

The expo incorporated a number of exciting

presentations and events that included a display

area where artists’ and crafters’ works were

showcased, a gallery which hosted an exhibition of

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the works of 13 of South Africa’s top artists and

daily craft-making demonstrations with waste

materials. The public were also able to participate

through a school’s competition of arts and crafts

made from waste. The expo culminated in a gala

dinner and fashion show presenting wearable

works of art/fashion made from waste materials.

Our commitment towards sustainability involves

making this expo an annual event and developing

further programmes around the WasteArt initiative

not only to educate the public on waste

management but also to assist emerging artists

and crafters in South Africa.

DEVELOPING OUR PEOPLE

Skills training and development continues to be a

high priority for EnviroServ. We believe that training

and development of all employees is a business

imperative for sustained success in service delivery

markets. The Group has established a number of

specific programmes to develop potential and latent

talent and skills at all levels in the organisation.

Learnership Programmes

In 2003 we initiated our Driver Learnership

Programme to ensure that our fleet would be

operated by the best qualified drivers. Not only has

the programme boosted the confidence of our

drivers but it has also resulted in a significant

improvement in vehicle efficiencies.

The Learnership Programmes have been significantly

expanded during the year to include a total of six

Learnerships with 103 Learners. These included:

> 27 Professional Driver Learnerships;> 39 Generic Management Learnerships;> 19 Secretarial and Administration Learnerships;> 6 Marketing and Sales Learnerships;> 6 Accounting Clerk Learnerships; and> 6 Registered Bookkeeper Learnerships.

Twenty-seven percent of the Learnerships have

been offered to previously unemployed individuals.

Benefits from the Learnerships are many in that

they provide the Group with an additional means

towards a structured approach to training, staff

development, succession planning and recruitment

as the Group grows.

Skills Development: Adult Basic Education Training

The Adult Basic Education Training (“ABET”)

programme seeks to empower workers and

address the past inequalities in education amongst

our employees. The programme has received a

good response from employees with consistent

increases in the number of participants.

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Skills Development: Sales Team Programme

During the year, EnviroServ piloted a training and

development initiative within the sales team.

A thorough review involving a skills audit was

undertaken to ensure that the programme would

be effectively aligned to the national skills

development initiatives, whilst at the same time

catering for the necessary skills required by the

sales force within the EnviroServ context.

Delegates of the programme attend modules each

month and undertake assignments based on the

related national unit standard of competence.

EnviroServ has ensured that all such assignments

are relevant and relate directly to the workplace

requirements of the delegates to ensure effective

skills transfer and practical applications within

the sales function. Those that have attended

the programme and completed the required

assessments will receive credits towards a

qualification and will be registered on the National

Learner Record Database.

Internships

Three internships have been initiated at the Head

Office – one in the Human Resources Department

and two in the Marketing Department. The Internship

Project involves the contractual engagement of

young students who have just graduated or are about

to graduate. The students will continue with post-

diploma or post-graduate studies while receiving

mentorship from experienced staff and gaining valid

work experience.

SAFETY, HEALTH, ENVIRONMENTAL,RISK AND QUALITY MANAGEMENT

EnviroServ has invested in, and is committed to

adopting and implementing internationally

accepted best practices that match the needs of

our business and the client base that we serve.

We are in the process of rolling out environmental,

safety and quality management systems that in

their finality will form an integrated SHERQ

management system to effectively minimise or

eliminate the risks associated with operating in the

waste management industry. The international

practices currently being adopted are:

> ISO 14001 – Environmental Management

System;

> OHSAS 18001 – Occupational Health and Safety

Management System; and

> ISO 9001 – Quality Management System.

The management structure relating to SHERQ

activities has been expanded to provide for a

National SHERQ Manager reporting directly into the

Directorate to ensure that common integrated

systems are developed nationally. Once the

implementation of these management systems is

complete, they will be fully integrated into our IT

system and will ensure compliance with local

requirements and legislation.

Environmental Management

Over the previous 18 months, EnviroServ has

worked hard to achieve ISO 14001 certification for

its Waste-tech and Dispose-tech operations.

We are proud to report that this goal has been

achieved, with the Dispose-tech and Waste-tech

facilities and operations incorporated into a national

multi-site certification. This has demonstrated our

commitment towards being both operationally

competent and providing peace of mind to

our clients, based on the assurance that operations

are being managed in an environmentally

responsible manner.

As leaders in the provision of a broad range

of waste management solutions, we remain

HIV/Aids Awareness

An extensive HIV Programme has been

implemented, building on our previous awareness

and education effort. A Steering Committee chaired

by the HR Director has been set up to provide

focus and guidance to the Group. The purpose of

the programme will be to:

> Limit the incidence of new infections;

> Ensure fair and non-discriminatory practices in

the workplace; and

> Limit the negative impact of HIV/Aids on

productivity and employee benefits.

Education on HIV/Aids has also been expanded to

include a system of Voluntary Counselling and

Testing for HIV. The aim is to encourage employees

to know their HIV status and thereby understand

the importance of their role in limiting the spread of

the epidemic as well as reduce fear and promote

appropriate attitudes in the workplace. Employees

with HIV will be assisted by the medical team

together with the Human Resources Officer in the

initiation of treatment and will be given guidance

and continuous follow-up in the workplace.

Performance capacity will be monitored and

managed in consultation with employees in

order to minimise the impact on both employees

and the Group.

Occupational Hygiene Monitoring

During the year, Occupational Hygiene Monitoring

was standardised at all the waste disposal facilities

throughout the country. This system consists of the

Air Pathway Analysis System and the Occupational

Hygiene Programme which was developed to

ensure that health hazards associated with the

Group’s operations do not pose an unnecessary

risk to employees or to members of the public.

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committed to the application of innovative solutions

that are in alignment with legislative requirements

and the National Waste Management Strategy.

Stakeholder Involvement

EnviroServ has regular waste disposal site tours

and audits that allow stakeholders to gain an

understanding of our practices and procedures.

The feedback obtained from these tours provides

meaningful input towards the improvement of our

environmental system.

Risk Management

Five high-level SHERQ risks have been identified

with respect to EnviroServ’s operations. Each risk

has an associated management plan and set of

operational controls to ensure that they are

effectively monitored, managed and controlled.

The following high-level risks have been identified:

> Accidents and spillages associated with the

transportation and disposal of hazardous and

non-hazardous waste;

> Activities that result in or may result in

pollutants being released into the environment;

> Damage to environment or infrastructure through

improper control of over-loading vehicles;

> Risk to persons, property and environment

associated with persons conducting dangerous

tasks; and

> Illegal diversion or pilfering of waste product

whilst under EnviroServ’s control.

The Air Pathway Analysis System for Waste Disposal

Sites in South Africa is a system for monitoring air

quality. It was developed on EnviroServ sites

nationwide and is an example of EnviroServ’s

leadership role in the waste industry. This system is

now implemented on 11 other waste disposal sites

in the country showing great benefit to the operators

of the sites, the employees and the communities

who live in the vicinity. The DWAF Minimum

Requirements for Waste Disposal Sites are being

reviewed and a new section on Air Quality on Waste

Disposal Sites is to be incorporated into this

document in 2004.

Further occupational hygiene initiatives forming

part of our Occupational Hygiene Programme

during the year included:

> The sampling of employee exposure

conducted in both the summer and winter

months, within a comprehensive site-specific

Occupational Hygiene Programme. The

programme evaluates and controls health

hazards associated with the operations at the

specific waste disposal site, including noise

exposure, visual stress, thermal stress,

chemical stress and ergonomic stress. The

controls, which include ventilation systems

and personal protective equipment used on

the sites are adequate for the mitigation of any

health hazards associated with the workplace;

> An off-site source emissions inventory is being

compiled for each site to establish sources of

emissions. The boundary or fence line air

samplings on the sites indicate that there are

off-site sources of emissions to air that were

contributing to on-site data;

> The standardisation of the Dispose-tech

incinerator facilities throughout the country.

Worker exposure to chemical and physical

stressors was considered as well as the

adequacy of mitigation measures in place; and

> The monitoring of SanuMed trucks for

biological contamination as part of the

SanuMed Hazardous Biological Agent

Programme.

29

GENERAL PRINCIPLES

The board of directors takes cognisance of the

duties and responsibilities imposed on it by the

Companies Act, 1973 as well as the Memorandum

and Articles of Association of the company.

Furthermore, the directors of EnviroServ Holdings

Limited and its subsidiaries confirm their commitment

to the principles of discipline, accountability,

responsibility and integrity as advocated in the

King II Report on Corporate Governance for South

Africa 2002 (“the King Code”).

Stakeholders have the assurance that the company

and the Group are being ethically managed in

compliance with generally accepted corporate

practices, because the directors of EnviroServ

Holdings Limited regard Corporate Governance as

vitally important to the success of the Group and are

unreservedly committed to applying the principles

necessary to ensure that good governance is

practiced in all of its business dealings.

The board believes that the Group has been in

compliance with the King Code of corporate

practice throughout the past financial year, to the

extent considered practical.

ETHICS

In pursuance of the highest ethical standards of

behaviour from its employees, the Group’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 as a set of

integrated policies and management codes and

incorporate the ethical standards required of

employees in their interaction with one another and

with all stakeholders.

Corporate Governance

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A formal policy, implemented by the Company

Secretary, has been adopted prohibiting dealing

in securities by directors and other employees

during “closed periods” or any period considered

sensitive.

The Group operates a 24-hour 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. All potential fraudulent activities

are formally investigated.

BOARD CHARTER

A board Charter setting out the specific responsibilities

to be discharged by the board has been adopted

during the year. The purpose of the board Charter

is to regulate how business is to be conducted by

the board in accordance with the principles of good

Corporate Governance.

PURPOSE AND ROLE OF THE BOARD

The board will retain full and effective control over

the company and monitor management in carrying

out board plans and strategies. The board gives

strategic direction to the company, appoints the

chief executive officer and ensures that succession

is planned. It is ultimately responsible for ensuring

that the Group remains a going concern.

RESPONSIBILITIES AND DUTIES OFTHE BOARD

> The board will ensure that the Group complies

with all relevant legislation, regulations and

codes of best business practice.

> The board will regularly review processes and

procedures to ensure the effectiveness of

internal systems of control so that the accuracy

of its reporting is maintained at a high level at

all times.

> The board has established and administers a

system of Corporate Governance and these

principles are constantly being re-evaluated

and improved.

> The performance of the board and individual

directors and executive management are

constantly being evaluated.

> The board ensures that an adequate budgeting

and planning process exists and that

performance is measured against these

budgets and plans.

> There is independent annual appraisal of the

executive chairman.

> The board has ensured the adoption of an

effective affirmative action plan.

COMPOSITION OF THE BOARD

The board has been constituted as required in

terms of the Companies Act, 1973 and comprises

a balance of executive and non-executive directors

to ensure shareowner interests, including minority

interests, will be protected. The seven executive

and four non-executive directors currently

comprising the board meet quarterly, retain full and

effective control over the activities of the Group and

monitor executive management in implementing

board plans and strategies.

The company’s board is currently chaired by an

executive chairman and the function of this office

is separate from that of the chief executive officer

who has overall responsibility for the performance

and management of the Group. Non-executive

directors have access to management and may

meet separately with management without the

attendance of executive directors. Directors are

kept appropriately informed of key developments

affecting the Group between board meetings.

All directors are entitled to seek independent

professional advice about the affairs of the Group

at the Group‘s expense.

BOARD APPOINTMENTS

There is no formally constituted nomination

committee for the election of directors. The board

considers that such a committee is not required. It

is policy for details of any proposed candidate to be

distributed to directors for formal consideration.

BOARD MEETINGS

Board members participate fully in board

discussions and bring the benefit of their

combined skills and knowledge to the board

table. The Chairman may at his discretion call

extraordinary board meetings to address any

urgent matters arising. The board may invite any

relevant person to attend board meetings.

Details of attendance by directors at board

meetings during 2004 are set out below:

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Directors’ Attendance At Board Meetings – 2003/2004

Name 18 Aug ’03 3 Nov ’03 17 Feb ’04 19 May ’04 16 Aug ‘04

MDN Dube P P P P P

P Fourie P P P P P

E Gombault P P P P P

DK Gordon P P P P P

B Joffe P A P A A

D Lavarinhas A P P P P

MR Maruma P P P NAD NAD

A McLean P A P P P

EK Motebang P P P P P

JL Pamensky P A P P P

LP Ralphs A P P A P

RP Rocher P P P P P

A = absent P = present NAD = Not a Director at that time.

BOARD COMMITTEES

To enable the board to properly discharge its

responsibilities and duties, certain responsibilities

of the board have been delegated to board

committees. The creation of committees does not

reduce the director’s overall responsibility.

Each board committee operates within its

prescribed terms of reference. The board ensures

that each committee has access to professional

advice at the cost of the company if so required.

There is full disclosure from the board committees

to the board.

AUDIT COMMITTEE

Members

Messrs JL Pamensky (Chairman), MBN Dube,

LP Ralphs and P Fourie.

Secretary

O Deftereos

The Audit Committee’s terms of reference deal

adequately with its membership, authority and

duties. The board of directors 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, two non-

executive directors and an executive director. 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, as

well as environmental, health and safety issues.

The board has determined that the Audit

Committee has satisfied its responsibilities for the

year under review in compliance with its terms of

reference.

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.

REMUNERATION COMMITTEE

Members

Messrs MR Maruma (Chairman) (resigned

31 March 2004), LP Ralphs and A McLean.

The Remuneration Committee meets at least

annually and is responsible for ensuring that

directors are fairly rewarded for their contributions

to the Group’s overall performance.

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.32

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RISK MANAGEMENT AND INTERNALCONTROL

The board recognises that it has overall

responsibility for risk management and is satisfied

that there is an adequate ongoing risk

management process in place, which identifies,

evaluates and manages the significant risks faced

by the Group. To this end, management is tasked

with identifying key risk areas and developing

strategies to address these risks. This process

includes a continuity plan in the event of a disaster

such as a computer system failure. The Executive

Committee regularly reviews the progress made

against these strategies by management.

To meet its responsibility with respect to reliable

financial information, the Group maintains financial

and operational systems of internal control. The

directors are responsible for these systems which

are designed to provide reasonable but not absolute

assurance against material misstatement and loss.

All systems of internal control no matter how well

designed, have inherent limitations with the

possibility for the circumvention or overriding

of controls. Further, because of changes in

conditions, the effectiveness of a system of internal

control may vary over time.

The directors have reviewed the Group’s systems of

internal control for the year under review and are of

the opinion that the these systems have been

effective during this period.

COMPANY SECRETARY

The Company Secretary plays a key role in

ensuring that board procedures are both followed

and reviewed regularly and is responsible for

ensuring that the applicable rules and regulations

for the conduct of the affairs of the board are

complied with and that all matters associated with

its efficient operation are maintained.

In addition to statutory duties, the Company

Secretary provides the directors with guidance as

to how their responsibilities should be properly

discharged in the best interests of the Group. All

directors have access to the advice and services of

the Company Secretary.

The Company Secretary has compiled a schedule

of legislation with which the Group must comply.

This schedule has been distributed on the

Group’s intranet for 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.

EMPLOYMENT EQUITY

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 an Employment Equity Forum continually

monitors, implements and manages the progress to

ensure that the legislative provisions are upheld.

INVESTOR AND STAKEHOLDERRELATIONS

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.33

HIV/AIDS

The Group ensures that the rights of employees

affected by HIV/Aids 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

Environmental Management Policies.

HEALTH AND SAFETY

The Group strives to conform to environmental,

health and safety laws in its operations and seeks

to add value to the quality of life of its employees

through health and safety programmes.

Management continues to focus on compliance

with key features of existing environmental, health

and safety legislation and international standards.

GOING CONCERN

The directors have reviewed the Group’s

budget and cash flow forecast for the year to

30 June 2005. 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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35

Value added is a measure of the wealth the Group has been able to create in its operations by adding value to the

cost of consumables, products and services purchased. The statement summarises the total wealth created and

shows how it was shared by employees and other parties who contributed to the Group’s operations. The calculation

takes into account the amounts retained and re-invested in the Group for the replacement of assets and development

of operations.

2004 2003

% R’000 R’000 %

Revenue 475 403 426 086

Paid to suppliers for consumables and services balancing (243 222) (234 331)

Total wealth created 100 232 181 191 755 100

Distributed as follows:

Employees – salaries, wages and other employment costs 38 88 275 71 432 37

Providers of capital 4 8 574 8 601 5

– finance cost of borrowings 8 574 8 601

Government 13 29 979 23 731 12

– SA normal and deferred taxation 11 592 7 262

– PAYE and SITE 17 468 15 414

– RSC levies 919 1 055

Re-invested in the Group to maintain and develop

current and future operations 45 105 353 87 991 46

– retained earnings 40 545 36 911

– depreciation and environmental remediation provisions 64 808 51 080

Total wealth distributed 100 232 181 191 755 100

for the year ended 30 June 2004

Value Added Statement

Employees (38%)

Re-invested in the Group (45%)

Government (13%)

Providers of capital (4%)

2004

Employees (37%)

Re-invested in the Group (46%)

Government (12%)

Providers of capital (5%)

2003

38 Approval of annual financial statements

38 Statement by company secretary

39 Report of the independent auditors

40 Directors’ report

43 Accounting policies

48 Consolidated income statement

49 Consolidated balance sheet

50 Consolidated statement of changes in equity

51 Consolidated cash flow statement

52 Notes to the consolidated cash flow statement

54 Notes to the consolidated annual financial statements

65 Company annual financial statements

66 Notes to the company annual financial statements

67 Annexure A – details of subsidiary

companies, joint ventures and associates

68 Ratios and statistics

contents

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Annual Financial Statements

“EnviroServ anticipates thechanging needs of our clientsand is able to offer solutions at all levels of the wastehierarchy.”

37

The Group’s annual financial statements and those of the company which appear on pages 40 to 67 were

approved by the board on 16 August 2004 and are signed on its behalf by:

DK Gordon A McLean

Chief Executive Officer Chairman

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Approval of Annual Financial Statements

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 Deftereos

Company Secretary

16 August 2004

Statement by Company Secretary

39

To The Members of EnviroServ Holdings Limited

We have audited the Group annual financial

statements set out on pages 40 to 64 and the

company annual financial statements set out on

pages 65 to 67 for the year ended 30 June 2004.

These financial statements are the responsibility of

the company’s directors. Our responsibility is to

express an opinion on these financial statements

based on our audit.

Scope

We conducted our audit in accordance with

statements of South African Auditing Standards.

These standards require that we plan and perform

the audit to obtain reasonable assurance that the

financial statements are free 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

Report of the Independent Auditors

> 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 Group financial position at 30 June 2004 and

the results of their operations and cash flows for

the year then ended in accordance with

South African Statements of Generally Accepted

Accounting Practice, and in the manner required

by the Companies Act in South Africa.

Ernst & Young

Registered accountants and auditors

Chartered Accountants (SA)

Johannesburg

16 August 2004

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Directors’ Report

The directors have pleasure in submitting the

annual financial statements of the company

together with the consolidated annual financial

statements of the Group for the year ended

30 June 2004.

PRINCIPAL ACTIVITIES OF THE GROUP

EnviroServ Holdings Limited is an investment

holding company whose subsidiaries are engaged

in waste management in Southern Africa. The

business of the Group is divided into domestic,

industrial, medical, landfill and process

management divisions and includes all aspects of

the transportation, disposal and management of

waste streams to the highest standards.

RESULTS OF OPERATIONS

The results of operations and financial position of

the company and the Group as at 30 June 2004

are set out in the accompanying financial

statements on pages 40 to 67.

SHARE CAPITAL

Authorised: 150 000 000 ordinary shares of 1 cent

each being R1 500 000 (2003: R1 500 000).

Issued: 118 139 702 ordinary shares of 1 cent

each of which 11 727 647 ordinary shares of

1 cent each are held by a wholly owned subsidiary

company in terms of a share buy-back. Shares

held by the subsidiary do not vote and are not

taken into account in the calculation of earnings

per share.

Net issued share capital: 106 412 055

(2003: 105 548 829).

Further details of the authorised and issued share

capital are given in note 15 to the financial

statements.

DIRECTORATE

Details and changes in the board of directors are

listed hereunder:

EXECUTIVE DIRECTORS

Messrs A McLean, P Fourie, DK Gordon,

D Lavarinhas, EK Motebang and RP Rocher were

directors throughout the year. Ms E Gombault was

appointed director on 18 August 2003.

NON-EXECUTIVE DIRECTORS

Messrs B Joffe, LP Ralphs and Ms MBN Dube

were non-executive directors throughout the year.

INDEPENDENT NON-EXECUTIVEDIRECTORS

Mr JL Pamensky was an independent non-

executive director throughout the year.

Mr MR Maruma resigned on 31 March 2004.

DIRECTORS’ INTEREST IN SHARES

The shareholdings of the individual directors are

as follows:

Beneficial Non-beneficial

Indirect 2004 2003 2004 2003

MBN Dube – – – –P Fourie 413 000 263 000 – –E Gombault 449 500 358 000 – –B Joffe – – – –DK Gordon 683 500 873 800 264 800 –D Lavarinhas 366 000 270 000 – –A McLean 974 700 724 700 24 526 987 26 438 549MR Maruma 1 081 952 1 081 952 – –EK Motebang 483 500 448 000 – –JL Pamensky – – – –LP Ralphs – – – -RP Rocher 634 000 439 000 – –

5 086 152 4 458 452 24 791 787 26 438 549

41

The company has not been informed of any material changes in these figures since 30 June 2004 to the date

of this report.

DIRECTORS’ EMOLUMENTS FOR THE YEAR ENDED 30 JUNE 2004

Directors Fees Salary Motor Bonus Pension Other Total 2003& travel contribution

R’000 R’000 R’000 R’000 R’000 R’000 R’000 R’000

Executive

P Fourie 529 112 316 60 52 1 069 899

E Gombault 417 116 214 54 59 860 –

DK Gordon 726 165 388 85 78 1 442 1 257

D Lavarinhas 265 83 78 27 25 478 451

A McLean 821 193 404 95 78 1 591 1 431

EK Motebang 381 122 143 46 67 759 742

RP Rocher 529 110 316 61 62 1 078 893

Non-executive

MBN Dube 60 – – – – – 60 20

B Joffe – – – – – – – –

MR Maruma 26 – – – – – 26 37

JL Pamensky 90 – – – – – 90 30

LP Ralphs – – – – – – – –

SERVICE CONTRACTS

No service contract exists between the company

and any of its directors having notice periods

exceeding one month 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 and equipment during the year

ended 30 June 2004.

SECRETARY

The office of secretary was held by Mr O Deftereos

during the period covered by this report. The

secretary’s business and postal address are

as follows:

Business Address Postal Address16 Ernst Oppenheimer Avenue PO Box 1547Bruma Bedfordview2026 2008

SUBSIDIARY COMPANIES

A list of subsidiary, joint venture and associatecompanies appears on page 67 of this report.

The interests of the company in the aggregateamounts earned by subsidiary companies, jointventures and associate companies after tax were:

30 June 30 June 2004 2003R’000 R’000

Income 36 114 33 856Losses 10 004 9 644

No special resolutions, the nature of which mightbe of significance to members in their appreciationof the state of affairs of the Group, were passed byany of the company’s subsidiaries during the yearcovered by this report.

Feb2004 2003

Number of shares available for allocation at beginning of financial period 1 025 924 130 086

Number of shares acquired net of sales 1 826 676 1 039 438

Number of shares taken up by employees during the year (4 444 500) (1 275 000)

Number of shares re-acquired from employees 1 597 625 1 131 400

Number of shares available for allocation at end of financial period 5 725 1 025 924

Number of scheme shares held by employees at end of financial period 11 633 275 9 754 000

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Directors’ Report

SHARE INCENTIVE SCHEME

The directors have established the EnviroServ

Holdings Limited Share Incentive Trust under the

provisions of Section 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 a multiple of 100 not exceeding

17 720 955, 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

not exceed 1 181 397 shares, being approximately 1%

of the issued share capital of the company.

DISTRIBUTION OF SHARE PREMIUMIN LIEU OF A DIVIDEND

The directors have resolved to pay a cash

distribution of 13 cents (2003: 12 cents) per

ordinary share payable out of share premium, in

lieu of a final dividend (“the distribution”), for the

year ended 30 June 2004. The last day to trade

“CUM” the distribution in order to participate in the

distribution will be Friday, 8 October 2004. The

shares of the company will commence trading

“EX” the distribution from the commencement of

business from Monday, 11 October 2004 and

the record date will be Friday, 15 October 2004.

Share certificates may not be dematerialised or

rematerialised from Monday, 11 October 2004 to

Friday, 15 October 2004, both days inclusive.

Payment will be made to shareholders on Monday,

18 October 2004.

DIRECTORS’ RESPONSIBILITIES INRELATION TO FINANCIAL STATEMENTS

The annual financial statements referred to in this

report have been prepared by management in

accordance with South African Statements of

Generally Accepted Accounting Practice and in

compliance with the Companies Act, No 61 of

1973 (as amended) in South Africa. They are

based on appropriate accounting policies which

have been consistently applied (except where

disclosed) and which are supported by reasonable

and prudent judgements and estimates. The

annual financial statements have been prepared

on a going concern basis and the directors have

every reason to believe that the Group will be able

to continue its operation for the foreseeable future.

The directors are of the opinion that the internal

financial controls are adequate for preparing

the financial statements 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 of these controls, procedures and

systems has occurred during the year under review.

EVENTS SUBSEQUENT TO THE YEAR-END

No events have occurred from 30 June 2004 to the

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 2004.

43

The financial statements are prepared on the

historical cost basis except for the measurement at

fair value of financial instruments and incorporate

the following principal accounting policies which

are in accordance with Statements of South African

Generally Accepted Accounting Practice and are

consistent with those applied in the previous year

except in regard to the adoption of the JSE

Securities Exchange requirements to consolidate

the Group’s share incentive trust. The comparative

years’ figures have been restated accordingly.

CONSOLIDATION

Subsidiaries

The consolidated financial statements include

those of the company and its subsidiaries. The

results of any subsidiaries acquired or disposed of

during the year are included from the effective

dates of acquisition and up 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

individual identifiable assets and liabilities of the

subsidiary on the basis of fair value at the date of

acquisition. Unrealised income arising from

transactions within the Group and inter-company

balances have been eliminated.

Associates

An associate company is one over which the

company has the ability to exercise significant

influence, but not control, and which it intends to

hold as a long-term investment. The Group’s share

of post-acquisition results of 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 in associate is carried in the

balance sheet at cost plus post-acquisition

changes in the Group’s share of net assets of the

associate, less any impairment in value. The

Group’s investment in associate includes goodwill

(net of accumulated amortisation) on acquisition.

Goodwill arising on the acquisition of associates is

accounted for in accordance with the accounting

policy for goodwill stated below.

Joint ventures

Joint 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 been incorporated in the consolidated

financial statements. The results of joint ventures

are included from the effective dates of acquisition

and up to the effective dates of disposal.

Goodwill

Any remaining difference between the purchase

price of shares in subsidiaries, joint ventures or

associates and the net asset value is dealt with

as follows:

> The excess of the net asset value of the

identifiable net assets over the purchase

consideration is either recognised in income on

a systematic basis over the useful life of the

identifiable net non-monetary assets, or as

future anticipated expenses are incurred, or it

is recognised in income immediately when it

exceeds 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 a straight-line basis over its

useful life.

Goodwill is stated at cost less accumulated

amortisation and any impairment in value of the

identifiable net assets.

Deferred taxation

Deferred taxation is provided using a balance

sheet liability method on all temporary differences

Accounting Policies

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Accounting Policies

between carrying amounts for financial reporting

purposes and the amounts used for taxation

purposes, except differences relating to goodwill

not deductible for taxation purposes and the initial

recognition of assets or liabilities which affect

neither accounting nor taxable profit or loss, and

in respect of taxable temporary differences

associated with investments in subsidiaries,

associates and interests in joint ventures, except

where the timing of the reversal of the temporary

difference can be controlled and it is probable that

the temporary difference will not reverse in the

foreseeable future.

A deferred tax asset is recognised to the extent that

it is probable that future taxable profits will

be available against which the associated unused

tax losses and deductible temporary differences

can be utilised. Deferred taxation is calculated

using taxation rates that have been enacted at

balance sheet date. The effect on deferred taxation

of any changes in taxation rates is charged to

the income statement, except to the extent that it

relates to items previously charged or credited

directly to equity.

Property, plant and equipment

Property, plant and equipment is 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 for freehold landfill sites, which are amortised

on the basis of airspace consumed. Land is not

depreciated. The carrying amounts are reviewed

at each balance sheet date to assess whether

they are recorded in excess of their recoverable

amounts, and where the carrying amount exceeds

this estimated recoverable amount, assets are written

down to their recoverable amount. Impairment

losses are recognised in the income statement.

The recoverable amount of property, plant and

equipment is the greater of net selling price and

value in use.

Rates of depreciation/amortisation

Landfill sites – airspace consumed

Vehicles – 5 years

Light delivery vehicles – 4 years

Plant – 5 years

Computers – 3 years

Office equipment – 5 years

Bins – 1 to 5 years

Buildings – 10 to 30 years

Investments

Investments are carried at cost less any

impairment in value.

Leased assets

Plant and equipment held under finance leases are

capitalised, where substantially all the risks and

rewards associated with ownership of an asset are

transferred from the lessor to the Group as lessee,

at the inception of the lease at the fair value of the

leased property or, if lower, at the present value of

the minimum lease payments. Such assets are

depreciated over the shorter of the estimated

useful life of the asset or the lease term.

Lease finance charges, which are recognised in the

income statement, are allocated to accounting

periods over the duration of the leases using the

effective interest rate method, which reflects the

extent and cost of lease finance utilised in each

accounting period.

All other leases are treated as operating leases and

the relevant rentals are recognised as an expense

in the income statement on a straight-line basis

over the lease term.

Deferred income

Deferred income is recognised as airspace is

consumed.

Borrowing costs

Borrowing costs incurred in respect of assets

which take a substantial period of time to prepare

for their intended use are capitalised during the

45

period of construction. All other borrowing costs

are recognised in the income statement in the

period when incurred.

Inventories

Inventories 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

costs to completion and the estimated costs

necessary to make the sale.

Redundant and slow-moving inventories are

identified and written down to net realisable value.

Write-downs to net realisable value and inventory

losses are expensed in the period in which the

write-downs or losses occur.

Government grants

Government grants are recognised at their fair value

where there is reasonable assurance that the grant

will be received and all attaching conditions will be

complied with. When the grant relates to an expense

item, it is recognised as income over the periods

necessary to match the grant on a systematic basis

to the costs that it is intended to compensate.

Revenue recognition

Revenue is recognised to the extent that it is

probable that the economic benefits will flow to

the Group and the revenue can be reliably

measured. The following specific recognition

criterias are adopted:

> Revenue from waste collection, disposal

services, plant hire, container management

and administration fees are recognised when

the service which gives rise to the revenue

takes place.

> Dividends are recognised when the shareholders’

right to receive the payment is established.

Foreign exchange transactions

Foreign exchange transactions are translated at

the spot rate ruling at the date of the transaction.

At balance sheet date monetary items are

translated at rates then ruling. Exchange differences

occurring on the settlement of monetary items or on

the reporting of outstanding monetary items, are

taken to the income statement.

The assets and liabilities of overseas subsidiaries

are translated at the rate of exchange, ruling at the

balance sheet date. The income statements of

overseas subsidiaries are translated at weighted

average exchange rates for the year. The exchange

differences arising on the retranslation are taken

directly to equity. On disposal of a foreign entity,

accumulated exchange differences are recognised

in the income statement as a component of the

gain or loss on disposal.

Provisions

A provision is recognised when there is a legal or

constructive obligation as a result of a past event

for which it is probable that a transfer of economic

benefits will be required to settle the obligation and

a reliable estimate can be made of the amount of

the obligation. If the effect of the time value of

money is material, provisions are determined by

discounting the future cash flows at a pre-tax rate

that reflects current market assessment of the time

value of money.

Environmental remediation provisions

Full provision has been made for the net

present value (“NPV”) of the Group’s minimum

unavoidable costs, in respect of closure liabilities at

the Group’s landfill sites. The Group continues to

provide for all post-closure costs over the life of its

landfill sites, based on the airspace consumed in

the period, since liabilities in relation to these costs

increase as waste is deposited.

Estimates are reviewed annually and any

differences arising are brought into account in the

income for the period.

Research and development expenditure

This expenditure is charged against operating profit

when incurred.

Retirement benefits

All current contributions to retirement funds are

charged against income as incurred. The fund is a

defined contribution fund.

Financial instruments

Financial instruments recognised in the balance

sheet include investments, accounts receivable,

cash and cash equivalents, accounts payable and

borrowings.

All financial instruments are recognised at the

time the Group becomes party to the contractual

provisions of the instruments. All financial

instruments are initially measured at cost, being

fair value of the consideration given. Subsequently,

the financial instruments are measured as follows:

Investments

The company’s investment in unlisted preference

shares is carried at cost less a provision for

impairment.

Accounts receivable

Accounts receivable, which generally have 30 to 90

day terms, are recognised at original invoice amount

less an allowance for any uncollectable amounts. An

estimate for doubtful debts is made when collection

of any amount outstanding is no longer probable.

Bad debts are written off when identified.

Cash and cash equivalents

Cash and cash equivalents comprise cash at bank

and on hand.

Accounts payable

Accounts payable, which are normally settled on

30 to 90 day terms, are carried at cost which is the

fair value of the consideration to be paid in the

future for goods and services received, whether or

not billed to the Group.

Borrowings

Borrowings are subsequently measured at

amortised cost using the effective rate method.

Amortised cost is calculated taking into account

any transaction costs, and any discount or

premium on settlement.

Employee share incentive plan and employee

share trust

The Group has an employee share incentive plan

and employee share trust. Shares held by the

employee share trust are treated as treasury

shares, recorded at cost and presented in the

balance sheet as a deduction from equity.

Definitions

Earnings 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 share at the end of the year.

Headline earnings – as calculated in note 7.

Current ratio – current assets divided by current

liabilities. (A broad indicator of the Group’s short-

term liquidity.)

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Accounting Policies

Return on shareholders’ equity – headline earnings

as a percentage of average shareholders’ equity.

(An objective 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.

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Revenue 1 475 403 426 086

Continuing operations 464 952 403 677

Discontinued operation 10 451 22 409

Cost of operations (278 345) (250 868)

Continuing operations (266 425) (228 266)

Discontinued operation (11 920) (22 602)

Gross profit 197 058 175 218

Depreciation, overheads and other expenses/income (138 571) (123 351)

Operating profit 2 58 487 51 867

Net profit on discontinuance of operation 3 117 –

Net finance costs 4 (8 574) (8 601)

Share of profit in associate companies 5 2 107 907

Profit before taxation 52 137 44 173

Taxation 6 (11 592) (7 262)

Net profit attributable to shareholders 40 545 36 911

Earnings per share (cents) 7 38,69 35,20

Headline earnings per share (cents) 7 40,72 35,90

Group

2004 2003Note R’000 R’000

Consolidated Income Statement


Group

2004 2003Note R’000 R’000

49

Consolidated Balance Sheet

ASSETS

Non-current assets 318 376 292 090

Property, plant and equipment 8 291 821 264 868

Investment in preference shares 9 8 428 8 428

Investment in associates 10 11 323 9 935

Goodwill 11 6 804 8 859

Current assets 155 452 122 878

Inventories 12 4 006 6 596

Accounts receivable 13 130 591 102 618

Employee benefits 14 16 608 9 970

Cash and cash equivalents 4 247 3 694

Total assets 473 828 414 968

EQUITY AND LIABILITIES

Capital and reserves 187 463 157 312

Ordinary share capital and share premium 15 41 333 49 840

Foreign currency translation reserve (1 887) –

Distributable reserves 16 148 017 107 472

Non-current liabilities 146 740 133 817

Deferred taxation 17 13 219 13 688

Environmental remediation provisions 18 102 317 87 428

Interest-bearing borrowings 19 27 532 28 625

Deferred income 20 3 672 4 076

Current liabilities 139 625 123 839

Accounts payable 21 80 141 68 487

Short-term provisions 22 21 942 17 450

Current portion of interest-bearing borrowings 23 36 036 32 985

Taxation 1 506 4 917

Total equity and liabilities 473 828 414 968

as at 30 June 2004

Ordinary share capital and share premium

Share capital 15

At beginning of year 1 055 1 055

Issued during the year 8 –

At end of year 1 063 1 055

Share premium –


Issued during the year 2 158 –

Treasury shares 1 993 133

Prior year 133 1 728

Current year 1 860 (1 595)

Cash distribution (12 666) (10 555)

At end of year 40 270 48 785

Foreign currency translation reserve

At beginning of year – –

Currency translation differences during the year (1 887) –

At end of year (1 887) –

Distributable reserves 16


Net profit attributable to ordinary shareholders 40 545 36 911

At end of year 148 017 107 472

Group

2004 2003Note R’000 R’000

Consolidated Statement of Changes in Equity

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Group

2004 2003Note R’000 R’000

51

Consolidated Cash Flow Statement

CASH RETAINED FROM OPERATING ACTIVITIES 65 764 61 170

Cash generated by operations A 125 456 103 362

Utilised to increase working capital B (22 980) (22 653)

Cash generated by operating activities 102 476 80 709

Net finance costs (8 574) (8 601)

Taxation paid C (15 472) (383)

Cash available from operating activities 78 430 71 725

Distribution paid to shareholders D (12 666) (10 555)

CASH UTILISED IN INVESTING ACTIVITIES (69 441) (61 585)

Acquisitions of subsidiaries and associates E (967) (10 380)

Additions to property, plant and equipment (19 154) (18 099)

Replacement of property, plant and equipment (65 632) (35 027)

Proceeds on disposal of property, plant and equipment 13 219 1 614

Dividend received from associate 744 307

Disposal of operations F 2 349 –

CASH EFFECTS OF FINANCING ACTIVITIES 6 117 (6 601)

Proceeds from issue of share capital 2 166 –

Net financing effects of employee share incentive trust 1 993 (1 505)

Decrease in interest-bearing borrowings (1 093) (13 613)

Increase in current portion of interest-bearing borrowings 3 051 8 517

Net increase/(decrease) in cash and cash equivalents 2 440 (7 016)

Net foreign exchange difference (1 887) –

Balance at the beginning of year G 3 694 10 710

Balance at the end of year G 4 247 3 694


A. CASH GENERATED BY OPERATIONS

Operating profit 58 487 51 867

Adjusted for non-cash flow items:

Depreciation/amortisation 42 842 30 951

Provision for environmental remediation 21 966 20 129

Profit on disposal of property, plant and equipment (1 541) (1 094)

Impairment of property, plant and equipment 2 005 –

Amortisation of goodwill 1 697 1 509

125 456 103 362

B. UTILISED TO INCREASE WORKING CAPITAL

Movement in inventories 1 666 (1 870)

Movement in accounts receivable (27 973) (7 546)

Movement in accounts payable 12 954 (1 098)

Movement in short-term provisions 4 492 330

Movement in deferred income (404) (455)

Movement in employee benefits (6 638) (93)

Spent from environmental remediation provisions (7 077) (11 921)

(22 980) (22 653)

C. TAXATION PAID

Amount owing at beginning of year (4 917) (1 083)

Current taxation charged per note 6 (12 061) (4 217)

Amount owing at end of year 1 506 4 917

(15 472) (383)

D. DISTRIBUTION PAID TO SHAREHOLDERS

Amount owing at beginning of year – –

Cash distribution from share premium (12 666) (10 555)

Amount owing at end of year – –

(12 666) (10 555)

E. ACQUISITIONS OF SUBSIDIARIES AND ASSOCIATES

The fair value of assets acquired and liabilities assumed were as follows:

Subsidiaries

Property, plant and equipment – 383

Accounts receivable – 2 592

Inventories – 252

Overdraft – (9)

Accounts payable – (3 271)

– (53)

Group

2004 2003Note R’000 R’000

Notes to the Consolidated Cash Flow Statement

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2004 2003R’000 R’000

53

Notes to the Consolidated Cash Flow Statement

E. ACQUISITIONS OF SUBSIDIARIES AND ASSOCIATES (continued)

Intangibles acquired on acquisition 171 7 457

Net asset value acquired 171 7 404

Overdraft acquired – 9

Purchase consideration payable 171 7 413

Amount outstanding previous year – paid – 2 967

Purchase consideration paid 171 10 380

Associate

Purchase consideration paid 796 –

Acquisition of subsidiaries and associates 967 10 380

F. DISPOSAL OF OPERATIONS

EnviroDrum, which specialised in responsible container management and drum

reconditioning, disposed of its loss-making steel drum reconditioning division in

December 2003.

Property, plant and equipment 1 308 –

Inventories 924 –

Profit on disposal of plant and equipment 2 268 –

Proceeds from disposal 4 500 –

Cash incurred on discontinuance (2 151) –

Cash flow on disposal 2 349 –

G. CASH AND CASH EQUIVALENTS

Cash and cash equivalents included in the cash flow statement comprise

the following balance sheet amounts:

Bank balances and cash 4 247 3 694


1. REVENUE

Revenue represents net invoiced sales to customers for services

exclusive of value added tax.

Waste services 421 703 368 496

Container management 10 451 22 409

Plant hire 43 249 35 181

475 403 426 086

2. OPERATING PROFIT

Cost of operations includes the following:

Amortisation of landfill sites 10 697 3 431

Staff costs 63 739 59 597

Operating leases – plant and equipment 9 865 7 692

Depreciation, overheads and other expenses/(income) include the following:


Auditors’ remuneration 1 783 1 390

Audit fee 1 776 1 336

Other services 7 54

Government grants released (650) –

Various government grants have been received in respect of

training expenses incurred.


Continuing operations (1 466) (1 094)

Discontinued operation (75) –

Impairment of furniture and equipment* 2 005 –

Depreciation

Plant and vehicles 26 744 23 930

Furniture and equipment 5 401 3 590

Directors’ remuneration 7 453 5 761

Services as directors – non-executive 176 88

Services as executives 7 277 5 673

Foreign exchange losses 293 63

Operating leases

Properties 976 1 367

Fees for professional services 8 749 4 556

Staff costs 34 725 21 596

* Included in furniture and equipment is computer software, which was impaired during the year due to the fact

that the carrying amount was higher than the recoverable amount of the asset over its useful life.

Group

2004 2003R’000 R’000

Notes to the Consolidated Annual Financial Statements

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55


3. DISCONTINUED OPERATION

EnviroDrum, which specialised in responsible container management and drum reconditioning, disposed of its

loss-making steel drum reconditioning division in December 2003.

EnviroDrum entered into a binding sale agreement for substantially all of the assets attributable to the

discontinuing operation on 29 October 2003.

The results of the division for the period until disposal, have been included as discontinued operations in the

consolidated income statement.

The cash flows incurred by the division for the period to the date of disposal and for the year to 30 June 2003 are

as follows:

30 Dec 30 June2003 2003

Cash flow from operations (4 570) (8 573)

Finance cost (422) (898)

Net cash outflow (4 992) (9 471)

Assets disposed of 2 232 –

Consideration received

Cash 4 500 –

Profit on disposal 2 268 –

Costs of discontinuance 2 151 –

Net profit on discontinuance of operation 117 –

4. NET FINANCE COSTS

Interest paid/(received) on:

Long-term loans 6 206 6 547

Short-term deposits – (327)

Other 2 368 2 381

8 574 8 601

5. SHARE OF PROFIT IN ASSOCIATE COMPANIES

Attributable share of after tax profit. (See note 10) 2 107 907


6. TAXATION

South African normal taxation

Current taxation 5 154 4 217

– current year 5 154 3 866

– prior year underprovision – 351

Deferred taxation (469) 3 045

– current year (469) 3 396

– prior year overprovision – (351)

Foreign tax 6 907 –

11 592 7 262

Reconciliation of taxation rate % %

SA normal tax rate 30,0 30,0

Adjusted for:

Exempt income (3,6) (9,9)

Disallowable expenditure 2,4 2,1

Amortisation of trademarks (4,9) (5,6)

Included in after tax profit of associate (1,7) (0,6)

Effective taxation rate 22,2 16,0

7. EARNINGS PER SHARE

Earnings per share is based on earnings of R40 544 725 (2003: R36 910 658)

and a weighted average of 104 790 594 (2003: 104 872 033) ordinary shares

in issue during the year.

Headline earnings per share is based on earnings of R42 668 856

(2003: R37 653 986) and a weighted average of 104 790 594

(2003: 104 872 033) ordinary shares in issue during the year. (See note 15)

Reconciliation of headline earnings:


Adjusted by:

Impairment of property, plant and equipment 2 005 –

Net profit on discontinuance of operation (117) –



42 589 37 326

Taxation on above adjustments 80 328

Headline earnings 42 669 37 654

Group

2004 2003R’000 R’000


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2004 2003R’000 R’000

57


8. PROPERTY, PLANT AND EQUIPMENT

Land and buildings 24 814 22 499

at the beginning of the year 22 499 22 054

additions 5 525 445

disposals (3 210) –

Landfill sites 131 534 123 367

Cost 208 494 189 630


additions 18 864 22 345

Amortisation 76 960 66 263


charged in the current year 10 697 3 431

Plant and vehicles 118 160 107 312

Cost 237 558 217 951


on acquisition of subsidiary and joint venture – 383

additions 47 223 24 600

disposals (27 616) (11 204)

Accumulated depreciation 119 398 110 639



disposals (17 985) (10 689)

Furniture and equipment 8 129 10 269

Cost 28 904 23 700


additions 5 411 5 276

disposals (207) (11)

Accumulated depreciation 20 775 13 431



impairment 2 005 –

disposals (62) (6)

Capital work in progress 9 184 1 421

at the beginning of the year 1 421 961

capitalised during the year (1 421) (961)

additions 9 184 1 421

Net carrying amount 291 821 264 868

Made up of:

– Total cost 508 954 455 201

– Total accumulated depreciation/amortisation 217 133 190 333


8. 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.

Plant and vehicles with a carrying value of R39,2 million (2003: R55,1 million) are pledged as security for a loan in

terms of note 19. The carrying value of plant and vehicles held under hire purchase agreements at 30 June 2004

is R23,7 million (2003: R9,8 million). Assets under hire purchase agreements are pledged as security for the related

hire purchase liabilities in terms of note 19.

Group

2004 2003

R’000 R’000

9. INVESTMENT IN PREFERENCE SHARES

Unlisted

Investment in preference shares of joint venture 8 428 8 428

8 428 8 428

15 900 000 cumulative redeemable variable rate preference shares of 1 cent each. The period for redemption of

the preference shares may be extended by the Millennium Waste Management (Pty) Ltd for such further period as

it deems necessary, by mutual agreement with the holder of such preference shares. The cumulative preferential

dividend is calculated at a rate of 70% of the ruling prime rate, based on the par value of the shares plus the

premium paid thereon.

10. INVESTMENT IN ASSOCIATES

Unlisted

Attributable net assets of associates at acquisition 2 086 1 290

– Opening balance 1 290 1 290

– Acquisitions 796 –

Goodwill at acquisition date 7 710 7 710

Shares at cost 9 796 9 000

Share of post-acquisition reserves 5 320 3 520

– Prior years 3 213 2 613

– Current year 2 107 907

Dividend received (744) (307)

14 372 12 213

Amortisation of goodwill:

– amortisation to date (3 049) (2 278)

Carrying value of investment 11 323 9 935

Directors’ valuation approximates carrying value for both the current and prior years.

Goodwill in associates on acquisition 7 710 7 710

Accumulated amortisation at beginning of year (2 278) (1 507)

Amortisation recognised during current year (771) (771)

Balance of goodwill in associates 4 661 5 432


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Group

2004 2003R’000 R’000

59


11. GOODWILL

Gross amount of goodwill at the beginning of the year 9 950 2 493

Accumulated amortisation at the beginning of the year (1 091) (353)

Goodwill recognised during the year 171 7 457

Goodwill reversed during the year* (1 300) –

Amortisation recognised during the current year (926) (738)

Balance of goodwill 6 804 8 859

Made up of:

Gross amount of goodwill 8 821 9 950

Accumulated amortisation (2 017) (1 091)

* A contingency payment of R1,3 million in the prior year was dependant on an

acquisition meeting profit targets for the year ended 30 June 2004. The targets

were not met and accordingly, the contingency payment did not become payable.

As a result goodwill of R1,3 million previously recognised, was reversed during

the current year.

12. INVENTORIES

Consumables and spares 3 305 5 614

Fuel and oil 701 982

4 006 6 596

13. ACCOUNTS RECEIVABLE

Trade receivables 104 439 94 477

Prepayments 5 421 3 907

Other 20 731 4 234

130 591 102 618

14. EMPLOYEE BENEFITS

Employee share incentive loans 16 608 9 970

The Group has an employee share incentive scheme which provides loans to

directors and executive management through the share incentive trust in order

to purchase shares in the company. Shares are pledged as security by employees

until their loans are fully repaid.


15. ORDINARY SHARE CAPITAL AND SHARE PREMIUM

Authorised share capital

150 000 000 (2003: 150 000 000) ordinary shares of 1 cent each 1 500 1 500

Issued share capital


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.

1 063 1 055

Share premium 40 270 48 785

Ordinary share capital and share premium 41 333 49 840

The unissued ordinary shares have been placed under the control of the directors.

This authority expires at the next Annual General Meeting.

16. DISTRIBUTABLE RESERVES

Retained earnings

Comprising:

Company 132 363 117 928

Subsidiaries and associate 9 344 (12 293)

Joint ventures 6 310 1 837

148 017 107 472

17. DEFERRED TAXATION

Balance at the beginning of the year 13 688 10 643

Movements during the year attributable to:

(Credited)/charged to the income statement due to temporary differences (469) 3 045

Balance at the end of the year 13 219 13 688

Balance comprises:

Capital allowances 20 608 17 918

Provisions (4 628) (7 119)

Prepayments 839 1 133

Other (3 600) 1 756

13 219 13 688

Group

2004 2003R’000 R’000


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Group

2004 2003R’000 R’000

61


18. ENVIRONMENTAL REMEDIATION PROVISIONS

Provisions for site rehabilitation, closure and post-closure

– at the beginning of the year 87 428 79 220

– charged in the current year 21 966 20 129

– utilised in the current year (7 077) (11 921)

102 317 87 428

19. INTEREST-BEARING BORROWINGS

Secured

Loan agreement secured over vehicles with a book value of R39,2 million

(2003: R55,1 million) bearing interest at 13,57% per annum. (See note 8) 29 841 44 276

Hire purchase agreements secured over plant and vehicles with carrying value of

R23,7 million (2003: R9,8 million) at varying interest rates from prime less 1,55%

to prime less 2% (2003: 10,64% to 16%). (See note 8) 17 561 7 497

47 402 51 773

Less: Current portion included under current liabilities 19 870 23 148

27 532 28 625

Minimum payment on hire purchase agreements

– Within one year 5 211 4 321

– Two to five years 16 594 5 212

21 805 9 533

Less: Finance charges (4 244) (2 036)

Present value of minimum payments 17 561 7 497

The company’s borrowings are not restricted by its Articles of Association.

20. DEFERRED INCOME

Deferred income represents advance payments on pre-sold airspace. This amount

is recognised as income as the airspace is consumed 3 672 4 076

21. ACCOUNTS PAYABLE

Trade creditors 61 708 45 980

Accruals 14 667 17 467

Other 3 766 5 040

80 141 68 487


22. SHORT-TERM PROVISIONS

Balance as at 30 June 2002 3 986 2 681 6 203 4 250 17 120

Utilised 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

Utilised during the year (3 000) – (4 919) – (7 919)

Provided during the year 4 734 879 – 6 798 12 411

Balance as at 30 June 2004 4 734 4 522 – 12 686 21 942

Group

2004 2003R’000 R’000

23. CURRENT PORTION OF INTEREST-BEARING BORROWINGS

Loan agreement 16 264 19 859

Hire purchase agreements 3 605 3 289

Current portion of secured interest-bearing borrowings 19 870 23 148

Bank overdraft 16 167 9 837

36 036 32 985

24. CAPITAL COMMITMENTS

Approved

Contracted for 26 982 20 603

Not yet contracted for 88 698 114 300

The capital expenditure will be financed from of the Group’s existing

borrowing facilities.

25. RETIREMENT BENEFIT INFORMATION

All 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 R7 927 060 (2003: R4 560 465) for the year,

which are 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.

Short-termenvironmental

Bonus Leave pay provisions Other Total


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26. FINANCIAL INSTRUMENTS

Exposure to currency, interest rate and credit risk arises in the normal course of the Group’s business.

Fair values

The fair values of all recognised financial instruments are not materially different from the carrying amounts reflected

in the balance sheet. Financial instruments include loans, bank balances and cash, accounts receivable, accounts

payable and short-term and long-term borrowings.

Credit risk management

The Group has a credit risk policy in place and the exposure to credit risk is monitored on an ongoing basis. Credit

evaluations are performed on all customers requiring credit over a certain amount.

Liquidity management

The cash flows from debtors and creditors are reasonably well matched in that payments were made to creditors

on the same terms and conditions given to customers. It is anticipated that the year-end position will be settled

within a 30 to 90 day time frame.

27. RELATED PARTIES

Management fees amounting to R4 037 904 (2003: R3 500 676) have been charged to Millennium Waste

Management (Pty) Limited and R2 041 947 to other Group companies. Plant hire charges amounting to R4 789 448

(2003: R5 241 675) were charged by Conquip (Pty) Limited to Group companies. All transactions with related parties

occurred at arm’s length and have been eliminated on consolidation.

28. COMPARATIVE FIGURES

Where necessary comparative figures have been adjusted to conform with changes in presentation in the current year.

2003 Previously

Restated stated

R’000 R’000

Balance sheet

Employee benefits 9 970 –

Ordinary share capital and share premium 49 840 49 707

Current portion of interest-bearing borrowings 32 985 23 148

Statement of changes in equity


Cash flow statement

Movement in employee benefits (93) –

Increase in current portion of interest-bearing borrowings 8 517 6 919


29. SEGMENTAL REPORTING

The directors are of the opinion that the Group does not operate in more than one material business or geographical

segment other than waste management in Southern Africa. Hence, both primary and secondary segmental

disclosure requirements are included in the financial statements.

30. CONTINGENT LIABILITY

In terms of a tax directive received from SARS, one of the subsidiaries within the Group has claimed a deduction

for taxation purposes on the cost of certain trademarks acquired. SARS has since revoked their directive. The

company has lodged an objection. Management is confident that the objection will be upheld and therefore no

provision has been raised for the additional taxation.

2004R’000

Operating leases

Future minimum rentals payable under non-cancellable operating leases:

– Within one year 2 769

– After one year but not more than five years 11 075

– More than five years 20 091

33 935

31. CHANGE IN ACCOUNTING POLICY

In terms of the JSE Securities Exchange requirement to incorporate share trusts into the Group consolidated

accounts, the EnviroServ Holdings Limited Share Incentive Trust has been included in the balance sheet. In prior

years, the Trust was not consolidated and the comparative figures have been adjusted to reflect the change in

accounting policy. (See note 28)


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Company

2004 2003Note R’000 R’000

65

Company Annual Financial Statements

Income statement

Operating profit 1 14 435 12 699

Taxation – –


Balance sheet

Assets

Investments in subsidiaries and joint ventures 2 185 491 181 555

Equity

Capital and reserves

Ordinary share capital and share premium 3 53 128 63 627

Distributable reserves 132 363 117 928

Total equity 185 491 181 555

Statement of changes in equity

Ordinary share capital and share premium

Ordinary share capital at the beginning and end of the year 3 1 182 1 173

Share premium

At the beginning of the year 62 454 73 009

Cash distribution (12 666) (10 555)

Issued during the year 2 158 –

At the end of the year 51 946 62 454

Distributable reserves

At the beginning of the year 117 928 105 229


At the end of the year 132 363 117 928

Cash flow statement

Cash retained from operating activities (12 666) (10 555)

Cash generated by operations 4 – –

Cash distribution 5 (12 666) (10 555)

Cash effects of financing activities 12 666 10 555

Proceeds from issue of share capital 2 167 –

Decrease in loans to subsidiaries 10 499 10 555

Movement in cash and cash equivalents – –


NOTES TO THE ANNUAL FINANCIAL STATEMENTS

1. Operating profit

Operating profit is stated after:

Directors’ remuneration

Services as directors – non-executive 176 88

Services as executives 7 277 5 673

7 453 5 761

Paid by subsidiaries (7 453) (5 761)

– –

Revaluation of investment in subsidiary 14 435 12 699

2. Investments in subsidiaries and joint ventures

Shares in subsidiaries – Annexure A 136 989 122 554

Loans to subsidiaries – Annexure A 48 502 59 001

185 491 181 555

3. Ordinary share capital and share premium

Authorised share capital


Issued share capital



53 128 63 627

4. Cash generated by operations

Operating profit 14 435 12 699

Adjusted for non-cash flow items:

Revaluation of investment in subsidiary (14 435) (12 699)

– –

5. Cash distribution

Amount owing at beginning of year – –

Cash distribution out of share premium (12 666) (10 555)

Amount owing at end of year – –

(12 666) (10 555)

Company

2004 2003Note R’000 R’000

Company Annual Financial Statements

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67

Direct subsidiariesSignificant subsidiariesEnviroServ Investments (Pty) Ltd Investment company 190 100 100EnviroServ Site (Holfontein) (Pty) Ltd Property holding company 120 100 100 27 27 EnviroServ Site (Shongweni) (Pty) Ltd Property holding company 1 000 100 100EnviroServ Waste Management (Pty) Ltd Waste management and disposal 1 100 100 114 503 100 068 58 164 68 663EnviroDrum (Pty) Ltd Container management 1 000 100 100Murray Transport Services (Pty) Ltd Property holding company 20 000 100 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 4 122 Waste-tech (Transvaal)) (Pty) Ltd Property holding company 6 000 100 100EnviroServ Process Management (Pty) Ltd Dormant 120 100 50Insignificant subsidiaries Dormant 100 100 17 952 17 952 (9 739) (9 739)

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 100 100 100

Indirect joint venturesAmatola Waste (Pty) Ltd Waste collection 100 50 50Millennium Waste Management (Pty) Ltd Waste management and disposal 1 000 47 47Separation and Recovery Systems (Pty) Ltd Waste processing 100 0 50Vissershok Waste Management (Pty) Ltd Waste disposal 2 50 50

Indirect associatesChargold (Pty) Ltd Manufacturing 415 100 35 35Brunig Compost Processors (Pty) Ltd Waste processing 30 30

136 989 122 554 48 502 59 001

2004 2003R’000 R’000

Aggregate financial information relating to joint ventures:

Balance sheetProperty, plant and equipment 38 170 26 926 Current assets 36 365 39 398 Current liabilities 39 373 45 656 Income statementRevenue 213 894 153 372

Profit before taxation 29 704 (2 269)Taxation (15 489) 183

Profit after taxation 14 215 (2 452)

There are no contingent liabilities as at 30 June 2004.

Aggregate financial information relating to associates:

Balance sheetProperty, plant and equipment 7 932 4 440 Current assets 15 950 15 525Long-term liabilities 4 031 1 205 Current liabilities 6 522 4 865

Income statementRevenue 68 098 41 174

Profit before taxation 9 259 3 812Taxation 2 778 1 220

Profit after taxation 6 481 2 592

There are no contingent liabilities as at 30 June 2004.

Interest of holding company

Issued% held Shares Loans

share 2004 2003 2004 2003 2004 2003Nature of business capital R’000 R’000 R’000 R’000

Annexure A – Details of Subsidiary Companies, Joint Ventures and Associates

STOCK EXCHANGE PERFORMANCEMarket price – high (cents) 395 230 175 150 125 145 630 630Market price – low (cents) 210 113 110 56 50 47 90 290Market price – year-end (cents) 306 220 130 129 64 101 115 500Market capitalisation (R million) 325,6 232,2 137,2 136,2 75,1 118,5 134,9 549,5Earnings per share (cents) 38,69 35,20 30,05 2,59 20,45 19,06 (5,09) 14,33Headline earnings per share (cents) 40,72 35,90 30,59 26,15 22,10 20,08 8,08 14,33Value of shares traded (R’000) 41 128 10 222 9 719 62 376 27 732 35 073 86 046 44 975 Number traded (000’s) 13 320 6 433 7 398 46 508 32 350 39 489 24 935 9 373 Percentage traded 11,27 6,09 7,01 44,06 27,58 33,67 31,83 8,53Market price/net asset value (percentage) 174 148 105 153 65 119 161 618 Closing price/earnings ratio 7,52 6,17 4,65 4,93 2,9 5,03 14,23 21,58 Closing distribution/dividend yield (percentage) 4,2 5,5 7,7 6,2 10,9 5,0 n/a n/a

BUSINESS PERFORMANCERevenue (R’000) 475 403 426 086 377 946 379 887 331 608 342 927 340 117 255 581 Earnings (R’000) 40 545 36 911 31 716 2 879 23 978 22 356 (5 235) 14 965 Headline earnings (R’000) 42 669 37 654 32 289 29 036 25 920 23 547 9 527 14 965 Distribution/dividends 13,0 12,0 10,0 8,0 7,0 5,0 – –Current ratio (percent) 111,3 99,2 103,8 100,7 141,4 108,6 83,6 139,8Return on shareholders’ equity (percentage) 24,8 26,1 28,1 27,1 24,1 25,7 10,9 16,4Return on total assets (percentage) 13,5 13,8 12,8 13,2 12,9 9,1 4,4 13,4Operating margin (percentage) 12,7 12,5 11,4 10,0 10,6 9,5 5,2 10,4Net interest-bearing debt 59,3 57,9 66,8 18,7 17,8 29,7 37,1 37,4Debt/equity ratio (percentage) 31,6 36,8 51,1 18,9 15,4 29,8 44,5 41,0Interest cover (times) 7,0 6,2 6,2 24,3 20,2 3,5 1,7 4,8Cash generated by operating activities (R’000) 125 456 103 362 89 858 78 521 70 433 70 228 69 831 37 143

EMPLOYEE STATISTICSNumber of employees** 1 152 1 170 965 1 348 1 337 1 405 1 606 1 799Revenue per employee (R’000)** 413 364 392 317 248 244 212 142

Definitions of how these ratios were calculated are included in the accounting policies note on page 46.

* 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 werein effect from 1 January 1997.

** For this calculation employees of joint venture companies have been accounted for on a proportionate basis to our share of investment.

June June June June June June June* June*2004 2003 2002 2001 2000 1999 1998 1997

Ratios and Statistics

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Number of % of Number of % ofCategory shareholders shareholders of shares issued shares

69

Analysis of Shareholders

Nominees and banks 174 12,95 30 981 095 26,22

Individuals 1 079 80,28 5 412 478 4,58

Investment Trust and other Companies 91 6,77 81 746 129 69,20

Total 1 344 100,00 118 139 702 100,00

At the year end, the shares of the company were held by the following categories of shareholders:

Shareholder type Number of shareholders Number of shareholders Total shareholdersin SA other than in SA

Nominal Percentage Nominal Percentage Nominal Percentagenumber number number

Public 1 186 88,24 148 11,01 1 334 99,26

Directors 7 0,52 Nil Nil 7 0,52

Other (anything that

falls outside the scope

or description of those

mentioned above) 3 0,22 Nil Nil 3 0,22

Total 1 196 88,99 148 11,01 1 344 100,00

According to the records of the company, the only shareholders, other than directors, registered as holding three

percent or more of the company’s shares at 30 June 2004 are the following:

Number Percentage Percentage ofof shares net shares in

issue

BB Investment Co (Pty) Ltd 29 712 058 25,15 27,92

Zader Investments (Pty) Ltd 8 986 145 7,61 8,44

Old Mutual Group 15 768 461 13,35 14,82

as at 30 June 2004

Financial year-end 30 June 2004Annual general meeting 8 October 2004

REPORTS

– Interim March– Announcement of annual results August– Annual financial statements September

DISTRIBUTION OF SHARE PREMIUM IN LIEU OF DIVIDEND

– Declared 16 August 2004– Last day to trade ordinary shares “cum” distribution 8 October 2004– Ordinary shares trade “ex” distribution 11 October 2004– Record date 15 October 2004– Payment date 18 October 2004– Period of no dematerialisation/rematerialisation 11 – 15 October 2004

(both dates inclusive)

Shareholders’ Diary

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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

Orestis Deftereos (ACIS) CA(SA)C/o EnviroServ Holdings Limited18 Dusseldorf StreetApexBenoni 1501PO Box 2207Benoni 1500

TRANSFER SECRETARIES

Computershare Investor Services 2004 (Pty) LimitedRegistration number: 2004/003647/0770 Marshall StreetJohannesburg 2001PO Box 61051Marshalltown 2107

AUDITORS

Ernst & YoungChartered Accountants (SA)Ernst & Young HouseWanderers Office Park52 Corlett DriveIllovo 2196PO Box 2322Johannesburg 2000

BANKERS

First National Bank of Southern Africa LimitedABSA Bank LimitedStandard Bank of South Africa Limited

OFFICES

Head Office – Benoni

Tel (011) 422 2560Fax (011) 845 1495Email [email protected]

Rietfontein – Germiston


Prospecton – Durban


Bellville – Cape Town

Tel (021) 951 8420Fax (021) 951 8440Email [email protected] Estate – Port Elizabeth


Website www.enviroserv.co.za

Administration

71

NOTICE OF ANNUAL GENERALMEETING

Notice is hereby given that the eighth Annual

General Meeting of the shareholders of the

company will be held at 18 Dusseldorf Street,

Apex, Benoni at 09:00 on Friday, 8 October 2004

for the following purposes:

ORDINARY BUSINESS

1. To receive and adopt the annual financial

statements for the year ended 30 June 2004.

2. To re-elect by way of single resolution, the

following directors who retire in terms of the

company’s Articles of Association and, being

eligible, offer themselves for re-election:

2.1 MBN Dube

2.2 EK Motebang

2.3 JL Pamensky

2.4 LP Ralphs

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 following resolutions:

Special resolution number 1“That the company or any of its subsidiaries be

and are hereby authorised, by way of a general

approval, to acquire ordinary shares issued by the

company, in terms of Sections 85 (2) and 85 (3) of

the Companies Act No 61 of 1973, as amended,

and in terms of the rules and requirements of the

JSE Securities Exchange South Africa (“the JSE”),

being that:

> Any such acquisition of ordinary shares shall

be effected through the order book operated by

the JSE trading system and done without any

prior understanding or arrangement;

> This general authority shall be valid until the

company’s next Annual General Meeting,

provided that it shall not extend beyond 15

(fifteen) months from the date of passing of this

special resolution number 1;

> An announcement will be published as soon as

the company or any of its subsidiaries has

acquired ordinary shares constituting, on a

cumulative basis, 3% of the number of ordinary

shares in issue prior to the acquisition pursuant

to which the aforesaid 3% threshold is

reached, and for each 3% in aggregate

acquired thereafter, containing full details of

such acquisitions;

> Acquisitions of shares in aggregate in any one

financial year may not exceed 20% of the

company’s ordinary issued share capital as at

the date of passing of this special resolution

number 1;

> In determining the price at which ordinary

shares issued by the company are acquired by

it or any of its subsidiaries in terms of this

general authority, the maximum premium at

which such ordinary shares may be acquired

will be 10% of the weighted average of the

market value at which such ordinary shares are

traded on the JSE as determined over the five

business days immediately preceding the date

of repurchase of such ordinary shares by the

company or any of its subsidiaries;

> The company has been given authority by its

Articles of Association;

> At any point in time, the company may only

appoint one agent to effect any repurchase on

the company’s behalf;

> The Company’s sponsor must confirm the

adequacy of the company’s working capital for

purposes of undertaking the repurchase of

shares in writing to the JSE before entering the

market to proceed with the repurchase;

> The company remaining in compliance with

the minimum shareholder spread requirements

of the JSE Listings Requirements; and

Notice to Shareholders

> The company and/or its subsidiaries not

repurchasing any shares during a prohibited

period as defined by the JSE Listings

Requirements.”

The reason for and effect of special resolutionnumber 1The effect of special resolution number 1 and the

reason therefore, is to grant the company a general

approval in terms of the Companies Act No 61 of

1973 (as amended) for the acquisition by the

company of a further 20% of the company’s

ordinary issued share capital, which general

approval shall be valid until the earlier of such next

Annual General Meeting of the company or its

variation or revocation of such general authority by

special resolution at any subsequent general

meeting of the company; provided that the general

authority shall not extend beyond fifteen months

from the date of this Annual General Meeting.

Special resolution number 2“Resolved that the authorised ordinary share

capital of the company be increased from

R1 500 000 divided into 150 000 000 ordinary

shares of 1 cent each to R2 000 000 divided into

200 000 000 ordinary shares of 1 cent each by the

creation of 50 000 000 new ordinary shares of

1 cent each ranking pari passu in all respects with

the existing ordinary shares in the issued ordinary

share capital of the company.”

The reason for and effect of special resolutionnumber 2The reason for and effect of special resolution

number 2 is to create 50 000 000 new ordinary

shares of 1 cent each thereby increasing the

authorised ordinary share capital of the company

from R1 500 000 to R2 000 000 so as to ensure

that the company has sufficient unissued shares

available to issue in the future.

Ordinary resolution number 1“Resolved that all of the ordinary shares in the

authorised but unissued share capital of the

company be and are hereby placed at the disposal

and under the control of the directors, and that the

directors be and are hereby authorised and

empowered, subject to the provisions of the Act,

and the Listings Requirements of the JSE, to allot,

issue and otherwise dispose of such shares to such

person/s on such terms and conditions and at such

times as the directors may from time to time in their

discretion deem fit.”

Ordinary resolution number 2“Resolved that the directors of the company shall

be entitled to pay by way of a pro rata reduction of

share capital or share premium, in lieu of a

dividend, an amount of up to 50% (fifty percent) of

the after tax profits of the company in any one

financial year ending on or after 30 June 2005.”

It is the intention of the directors to pay by way of a

pro rata reduction of share capital or share

premium, in lieu of a dividend, an amount of up to

50% (fifty percent) of the after tax profits of the

company, which the directors of the company would

have declared and paid out of profits in respect of

the company’s interim and final dividends for the

financial year ending 30 June 2005.

In terms of paragraph 5.86 of the JSE Listings

Requirements, any general payment will not exceed

20% of the company’s issued share capital. This

general authority shall be valid until the company’s

next Annual General Meeting, provided that it shall

not extend beyond 15 months from the date of

passing of this ordinary resolution number 2.

At the time an announcement will be made, in

terms of the JSE Listings Requirements, detailing

the salient features of the reduction and the

company’s sponsor shall, prior to the

implementation of the reduction, provide the JSE

with the written working capital statement required

in terms of the JSE Listings Requirements.

Before entering the market to effect the general

repurchase and also the general payment, the

directors, having considered the effects of the

repurchase of the maximum number of ordinary

shares in terms of the aforegoing general authority,

will ensure that for a period of 12 (twelve) months

after the date of the notice of Annual General

Meeting:

> the company and the Group will be able, in the

ordinary course of business, to pay its debts;

> the assets of the company and the Group, fairly

valued in accordance with Generally Accepted

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73

Accounting Practice, will exceed the liabilities

of the company and the Group;

> the company and the Group’s ordinary share

capital, reserves and working capital will be

adequate for ordinary business purposes.

The following additional information, some of which

may appear elsewhere in the annual report of

which this notice forms part, is provided in terms of

the JSE Listings Requirements for purposes of the

general authority:

> Directors and management – pages 40 and 41;

> Major beneficial shareholders – page 69;

> Directors’ interests in ordinary shares – page

40; and

> Share capital of the company – page 40.

Litigation statement

In terms of Section 11.26 of the JSE Listings

Requirements, the directors, whose names appear

on pages 40 and 41 of the annual report of which

this notice forms part, are not aware of any legal or

arbitration proceedings that are pending or

threatened, that may have or have had in the

recent past, being at least the previous 12 (twelve)

months, a material effect on the Group’s financial

position.

Directors’ responsibility statement

The directors, whose names appear on pages 40

and 41 of the annual report, collectively and

individually accept responsibility for the accuracy

of the information pertaining to these resolutions

and certify that, to the best of their knowledge and

belief, there are no facts that have been omitted

which would make any statement false or

misleading, and that all reasonable enquiries to

ascertain such facts have been made and that the

resolutions contain all information.

Material changes

Other than the facts and developments reported on

in the annual report, there have been no material

changes in the affairs or financial position of the

company and its subsidiaries since the date of

signature of the audit report and up to the date of

this notice.

The directors have no specific intention, at present,

for the company to repurchase any of its shares but

consider that such a general authority should be

put in place should an opportunity present itself to

do so during the year which is in the best interests

of the company and its shareholders.

Ordinary resolution number 3

“Resolved that any two of the directors of the

company be and are hereby authorised to do all

such things, sign all such documents and take

such further and other actions as may be

necessary to implement the resolutions set out in

this notice.”

SHORT BIOGRAPHIES OF DIRECTORSSEEKING RE-ELECTION

Executive Director

EDWIN KOPIE MOTEBANG (58)

HR and IR Director

Higher Diploma in Labour Law, Bachelor of

Management Leadership (UFS).

Edwin joined EnviroServ in 1992 as Sales Director.

Following the merger with Waste-tech in 1997, he

became the Industrial Relations (“IR”) Manager.

In 2000, he became HR and IR Director.

Non-executive Directors

MURIEL BETTY NICOLLE DUBE (31)

As one of South Africa’s leading environmentalists,

Muriel has published several articles on

sustainable development and has recently been

appointed by Government to act as South African

ambassador for environmental issues in the role of

Chief Climate Negotiator. Muriel also serves as an

expert on the United Nations Technology Transfer

Group, which is looking at global strategies in terms

of the Kyoto Protocol.

Muriel is a Post-graduate (BA Honours) in the

Social Sciences field. She also holds an Executive

Certificate from Harvard University, USA in the area

of Leadership and Development.

Muriel Dube is the Group Commercial Director at

Bidvest and serves as an Executive Director on its

Board of Directors. She was appointed to the

EnviroServ board in 2001.

JOSEPH LEON PAMENSKY (74)

Joe is a director, inter alia, of The Bidvest Group

Limited, South African Eagle Insurance Company

Limited, Stonehage Financial Services Holdings

(Jersey) Limited, Worldwide African Investment

Holdings (Pty) Limited and Chairman of Rennies

Bank Limited and Schindler Lifts (SA) (Pty)

Limited. He has over forty years’ experience in the

financial, insurance and banking industries and is

the recipient of a number of public awards. His

non-executive directorships, both locally and

internationally, are invariably supplemented by his

membership of the respective audit and/or

remuneration committees. He was appointed to the

EnviroServ board in 2001.

LINDSAY PETER RALPHS (48)

BCom; 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 an

Executive Director of The Bidvest Group Limited.

He was appointed to the EnviroServ board in 2001.

VOTING AND PROXIES

Certificated shareholders and dematerialisedshareholders with “own name” registrationA shareholder of the company entitled to attend

and vote at the general meeting of shareholders is

entitled to appoint one or more proxies (who need

not be a shareholder of the company) to attend,

vote and speak in his/her stead. In order to be

valid, completed forms of proxy must be lodged at

the transfer secretaries, Computershare Investor

Services 2004 (Pty) Limited, PO Box 61051,

Marshalltown, 2107 by 09:00 on Wednesday,

6 October 2004.

On a show of hands, every shareholder of the

company present in person or represented by

proxy shall have one vote only. On a poll, every

shareholder of the company present in person or

represented by proxy shall have one vote for every

share held in the company by such shareholder.

Dematerialised shareholders (other than those with

“own name” registration)

EnviroServ Holdings Limited shareholders who

have already dematerialised their EnviroServ

Holdings Limited shares through a Central

Securities Depository Participant (“CSDP”) or

broker other than with “own name” registration,

and who wish to attend the general 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 by way of proxy, they must provide their CSDP

or broker with their voting instructions in terms of the

custody agreement entered into between them and

their CSDP or broker, except for shareholders who

have elected “own name” registration in the sub-

register through a CSDP or broker.

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 of proxy in terms of which

he/she appoints a proxy to vote at the general

meeting of shareholders in accordance with the

instructions received from dematerialised

beneficial holders.

By order of the board

O Deftereos

Company Secretary

16 August 2004

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75

Form of Proxy

EnviroServ Holdings LimitedRegistration number 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 at the registered office of EnviroServ Holdings Limited, 18 Dusseldorf Street, Apex, Benoni at 09:00 on Friday, 8 October 2004.

I/We of (address)

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 09:00 on Friday, 8 October 2004and at every adjournment or postponement thereof and to vote for and/or* against such resolutions and/or* abstain from votingin 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 2004

2. To re-elect the following directors who retirein terms of the company’s Articles of Association:

2.1 MBN Dube

2.2 EK Motebang

2.3 JL Pamensky

2.4 LP Ralphs

3. To re-appoint the auditors for the ensuing year

SPECIAL BUSINESS1. Special resolution number 1: General approval for share buy-back

2. Special resolution number 2: Increase in authorised share capital

3. Ordinary resolution number 1: Unissued shares placed under directors’ control

4. Ordinary resolution number 2: Repayment of share premium

5. Ordinary resolution number 3: Authorising implementation of above resolutions

and generally to act as my/our* proxy at the said Annual General Meeting. (Tick whichever is applicable. If no directionsare 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 2004

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 Annual General Meeting.*Delete as applicable.Please read the notes on the reverse hereof.

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 Annual 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 Annual 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 Investor Services

2004 (Pty) Limited, 70 Marshall Street, Johannesburg. 2001 (PO Box 61051 Marshalltown 2107) to reach them by no

later than 09:00 Wednesday, 6 October 2004.

4. The completion and lodging of this form of proxy will not preclude the relevant shareholder from attending the Annual

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 Annual 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.

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Notes to Proxy

www.enviroserv.co.za

This report is printed on environmentally friendly Naturalis paper.

w a s t e s o l u t i o n s f o r a s u s t a i n a b l e f u t u r e w a s t e s o l u t i o n s f o r a s u s t

s u s t a i n a b l e f u o u r e w a s t e s o l u t i o n s f o r a s u s t a i n a b l e f u t u r e w a s t e

a s t e s o l u t i o n s l o r a s u s t a i n a b l e f u t u r e w a s t e s o l u t i o n s f o r a s u s ta

u s t a i n a b l e f u t u r e w a s t e s o l u t i o n s f o r a s u s t a i n a b l e f u t u r e w a s t e

s t e s o l u t i o n s f t r a s u s t a i n a b l e f u t u r e w a s t e s o l u t i o n s f o r a s u s t a

s t a i n a b l e f u t u i e w a s t e s o l u t i o n s f o r a s u s t a i n a b l e f u t u r e w a s t e s

t e s o l u t i o n s f o o a s f o r a i n a b l e f u t u r e w a s t e s o l u t i o n s f o r a s u s t a i

t a i n a b l e f u t u r n w a s t e s o l u t i o n s f o r a s u s t a i n a b l e f u t u r e w a s t e f o

e s o l u t i o n s f o r s s u s t a i n a b l e s u s t a i n a b l e a b l e n s f o r a s u s t a i n a b le

a i n a b l e f u t u r e w a s t e s o l u t i o n s f o r a s u s t a f u t u r e t u f u t u r e w a s t e f o

A N N U A L R E P O R T 2 0 0 4

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Airspace – The area contained within a landfill cell available for the disposal of waste.

BEE – Black Economic Empowerment.

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.

OHSAS 18001 – Occupational Health and Safety Management System.

Note to reader: If there are any terms used in this report with which you are unfamiliar, you may e-mail

[email protected].

Glossary of Terms

glossary ofterms - sharedata · sherq – safety, health, environment, risk and quality. ... change...

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