Enviroserv collects 147% leap in profit

Time of article published Aug 17, 1999

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Johannesburg - Focus on cost containment and productivity helped EnviroServ

Holdings, the country`s only listed waste management company, to defy tough

trading conditions and increase headline earnings by 147 percent to 20,1c a

share, the company said yesterday.

Alistair McLean, EnviroServ`s chief executive, said the benefits of the

company`s merger with Waste-Tech in 1997 provided the group with critical

mass and a national presence that was starting to take effect.

The company said it had returned to levels of profitability last reported in

the year to December 31 1996. Operating profit shot up 82 percent to R32,4

million and margins increased from 5,2 percent to 9,5 percent for the year

to June 30.

Turnover grew only 0,8 percent to R342 million. The company said it would

focus on increasing revenue and tweaking operating margins to the 10 to 12

percent band.

Profit before taxation improved from a loss of R1,6 million to a profit of

R24 million.

The only loss was incurred through the domestic collection business. The

group did not want to dispose of the unit, in expectation of work from

privatisation of state utilities.

Attributable earnings benefited from the reduction in rate of tax. Lowering

of interest-bearing debt ensured finance costs were contained to R7,5

million in spite of high interest rates.

Ken Bromfield, the group`s business development director, said short-term

growth would be organic over the medium to long term through acquisitions.

He said the group`s strong cash-generating position would enable it to

contain debt.

The company declared dividend 5c from zero the previous year. Enviroserv

closed up 1c at R1 on the JSE yesterday.

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