in environmentally responsible waste management

enviroserv holdings ltd 2003annual report

leadership

in environmental ly responsible waste management

This report is printed on environmentally friendly Naturalis paper.

Glossary of terms

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

BPEO – “Best Practicable Environmental Option.” The outcome of a systematic consultative

procedure that emphasises the protection of the environment. It establishes, for a given set

of objectives, the option that provides the most benefit or least damage to the environment

as a whole at acceptable cost.

CAIA – Chemical and Allied Industries Association.

Cell – This is the basic landfill unit within the landfill site into which waste is disposed.

Closure – The act of terminating the operation of a landfill. Closure is preceded by rehabilitation and

followed by post closure monitoring.

Domestic waste – Primarily household waste and garden refuse.

Duty of care – This requires that anyone who generates, transports, treats or disposes of waste must

ensure that there is no unauthorised transfer or escape of waste from their control, and

must retain documentation describing both the waste and any related transactions.

The person retains responsibility for the waste generated or handled.

Encapsulation – The procedure for disposing of high hazardous wastes, not suitable for direct landfilling,

by isolating the wastes in sealed, reinforced concrete cells located in a demarcated and

independently lined area of a Class H hazardous landfill site.

Hazardous waste – Waste, other than radioactive waste, which is legally defined as hazardous in the state in

which it is transported or disposed of, determined by the chemical reactivity, toxic,

explosive, corrosive or other characteristics which cause, or are likely to cause, danger to

health or the environment when improperly treated, stored, transported or disposed of.

Healthcare risk waste – Infectious waste emanating primarily from hospitals, clinics, surgeries, chemists and

sanitary services.

Industrial waste – Hazardous and non-hazardous waste in either a dry or liquid form from industrial and

commercial generators.

Landfill site – The area permitted for waste disposal on which landfill cells and other structures required

for the safe disposal of waste are constructed.

Leachate – An aqueous solution arising when water percolates through decomposing waste and as a

result of the biodegradation of the waste. It contains final and intermediate products of

decomposition, various solutes and waste residues.

Local authorities – Municipalities, district councils and government institutions.

OHSA – Occupational Health and Safety Act.

SHERQ – Safety, Health, Environment, Risk and Quality.

ISO 9001 – Specifies requirements for a quality management system where an organisation needs to

demonstrate its ability to consistently provide product that meets customer and applicable

regulatory requirements, and aims to enhance customer satisfaction through the effective

application of the system, including processes for continual improvement of the system and

the assurance of conformity to customer and applicable regulatory requirements.

ISO 14001 – Specifies requirements for an environmental management system, to enable an organisation

to formulate a policy and objectives taking into account legislative requirements and

information about significant environmental impacts.

ISO 17025 – Specifies the general requirements for the competence to carry out tests and/or calibrations,

including sampling.

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

you may e-mail annemaried@enviroserv.co.za.

enviroserv holdings ltd ann

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EnviroServ’s vision of leadership inenvironmentally responsible waste management is not just a statement for effect. It is the code we live by.

Since inception, our focus on driving positive change has been unwavering. There have been many instances of whereEnviroServ has not only met legislative requirements, butexceeded them.

This year’s Annual Report demonstrates how leadership forms a core part of the way we do business.

Section 1: Highlights the different aspects of leadershipacross the Group by presenting examples of thoseaccomplishments we are particularly proud of.

Section 2: Reports back to all our stakeholders on the year under review, providing a frank appraisal of oursuccesses, our failings and our growth path into the future.

Section 3: This section on sustainable development illustrateshow our practices are based on listening and responding to our wide base of stakeholders. Evidences EnviroServ’scommitment to caring and doing things right.

Section 4: Accounts for our financial delivery demonstratingour track record of growth through our income statement andcash flows and the fundamental strength of our balance sheet.

Letter to stakeholders

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Cash generated by operations(R millions)

110

100

90

80

70

60

50

40

30

20

10

0

99 00

01

02

98

03

Revenue*

(R millions)

450

400

350

300

250

200

150

100

50

0

9900

01

02

98

03

14

12

10

8

6

4

2

0

Distribution/dividends per share(cents)

40

35

30

25

20

15

10

5

0

Headline earnings per share(cents)

98

9900

01

02

03

99

00

01

02

03

98

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

2

% change 2003 2002 2001 2000 1999 1998

Income statement

Revenue 13 426,1 377,9 379,9 331,6 342,9 340,1

Operating profit 24 51,9 42,0 37,0 35,0 32,4 17,8

Headline earnings 17 37,7 32,3 29,0 25,9 23,5 9,5

Share statistics

Earnings per share (cents) 16 35,0 30,1 2,6 20,4 19,1 (5,1)

Headline earnings per share (cents) 17 35,7 30,6 26,2 22,1 20,1 8,1

Distribution/Dividend per share (cents) 20 12,0 10,0 8,0 7,0 5,0 –

Key ratios and financial data

Return on shareholders’ equity (%) 26,1 28,1 27,1 24,1 25,7 10,9

Return on total assets (%) 13,8 12,8 13,2 12,9 9,1 4,4

Operating margin (%) 12,5 11,4 10,0 10,6 9,5 5,2

Net interest bearing debt 1 48,1 47,8 – – – 37,1

Debt/equity ratio (%) 30,6 36,5 – – – 44,5

Interest cover (times) 6,2 6,2 24,3 20,2 3,5 1,7

Cash generated by operations 15 103,4 89,9 78,5 70,4 70,2 69,8

Market capitalisation 69 232,2 137,2 136,2 75,1 118,5 134,9

R millions

Financial highlights

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EnviroServ Waste Management (Pty) Ltd, our operating subsidiary focused primarily on the industrial waste market.Waste-tech manages, collects, sorts and separates recyclables and transports and disposes of hazardous andnon-hazardous industrial waste. Hazmat offers a 24-hour support service for emergency clean-ups, hazardousmaterial spillage containment and on-site remediation. Dispose-tech treats and disposes of waste at permittedEnviroServ waste disposal sites and incineration facilities. Conquip is a major player in the hire of compactionequipment in the waste, construction and mining industries. EnviroDrum provides environmentally acceptabledrum reconditioning. Process Management provides on-site solutions to re-use, recycle and reduce wastethrough innovative technologies and installations. Chargold specialises in processes which beneficiate carbonwaste products.

Millennium Waste Management (Pty) Ltd is a company in which EnviroServ owns 47%, our empowermentpartner Lungisa owns 47% and the remainder is owned by the Millennium Employee Share Trust. Sediba provides a total water and sewage management solution. Wade Refuse provides a domestic wastecollection service. SanuMed provides services for the safe collection and disposal of healthcare risk waste.Landfill Management manages general waste disposal facilities.

47%

Division Division Division Division

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Division Division 100% 100% Division

100%

Division 35%

Group structure

4

Revolutionary landfill equipment

Landfill operations consist of a number of majorprocesses, including dumping, spreading,shredding, compacting and covering waste. Theseoperations are typically carried out by threeseparate, expensive machines: a trash compactor, afront-end loader and an articulated dump truck.

EnviroServ’s Conquip Hire division has created theRef-u-Mech System which is the first of its kind andhas several unique design features. This uniquesystem consists of a package of three tools that areeasily fitted and interchangeable onto one machinewhich can perform all the major landfill operations.

A major reduction in the plant capital outlay forsmaller sites is achieved without compromising onoperating standards.

This product has given Conquip Hire andMillennium Waste Management’s LandfillManagement division a competitive edge in themarket of small to medium landfill sites.

Leachate treatment

Our hazardous landfill sites are designed andconstructed to prevent contamination. As waste on

landfill sites biodegrades, leachate is generated andstored in dams. Long-term storage of leachateincreases some of the inherent operating risks such as the potential contamination of soil andgroundwater. This, together with the cost ofconstructing lined dams occupying valuable spacewithin areas permitted for landfill operationscontinues to be a real challenge for our business.

Intensive research over a five-year period hasresulted in a cost-effective and sustainable solutionfor both the stockpile of leachate and the leachatecurrently generated. Leachate will be treated inthree separate treatment steps – a chemical step, a mechanical step, and a biological step. The combination of these three steps results in an inert effluent.

Construction on a large-scale plant is planned tocommence in September 2003, with commissioningscheduled for early 2005. The new plant will resultin increased efficiencies and avoid significant future costs.

Vehicle performance tracking, overloadprotection and bin trackingEnviroServ’s Waste-tech division runs a fleet ofvehicles to collect and transport non-hazardous and

leadership in cutting-edge waste management technology

Since inception, EnviroServ has implemented leading-edge technology in its operations to ensure it meets and mostly exceeds the requirements of waste legislation.

Pressure continues to mount on companies to ensure they handle their waste in aresponsible manner. EnviroServ’s ongoing investment in sustainable technologies forwaste treatment and disposal has positioned it well to continue providing a superiorwaste management service. Recent developments have further increased efficienciesand improved delivery to clients.

Over the next few pages we outline some of the latest technological advancesimplemented in our business:

Leading technology

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Ref-u-Mech System with the Ref-u-Pac roller attached.

hazardous waste material. A new vehicleperformance tracking system has beenimplemented to reduce long-term vehicle costs andimprove logistical management. The system enablesthe Group to manage driver behaviour and monitorvehicle routes in real-time, optimising service costsand improving service delivery. Additional benefitswill be derived when integration with our new ITsystems is complete.

A real-time vehicle overload protection warning hasbeen added to the performance tracking system.This will assist both EnviroServ and clients tocomply with the National Road Transport Act, and toreduce the long-term effect of overloading on wearand tear of vehicles and the National road network.

New bin tracking technology is also beingintroduced to improve the control, utilisation andmaintenance of containers. The system will beintegrated with EnviroServ’s IT systems to ensureefficient bin stock control and collections.

Asbestos stripping

Asbestos stripping has become an issue of greatconcern to government, labour and industry.

EnviroServ’s hazardous materials handling unit,Hazmat Support Services, is accredited andregistered with the Department of Labour as a legalasbestos handler and is the first unit in Africa to betrained and accredited in technologies for theEuropean Union DTA qualification (“ExpertSupervisor for Asbestos Removal”). Hazmat SupportServices now has the competitive advantage ofbeing the only unit in South Africa equipped to stripasbestos for marine salvage companies and many ofthe multi-national companies operating in Africa.

Re-useable healthcare risk waste containers

SanuMed has offered commercial healthcare riskwaste (HCRW) treatment services for 15 years.

A new vehicleperformance trackingsystem has beenimplemented to reducelong-term vehicle costsand improve logisticalmanagement.

leadership in cutting-edge waste management technology continued

Side loader.

8

Pending legislation has prompted certaingovernment and private healthcare clients to askfor reusable healthcare risk waste containers, andin response SanuMed will soon start a pilotoperation in Gauteng. The new container systemis environmentally friendly, more robust,significantly reduces the risk of needle-stickinjuries and spills and will reduce the totalvolume incinerated as containers are notdestroyed. Our service will be further enhancedthrough the introduction of Waste trackingtechnology with the new system as each newcontainer will be fitted with a bin tracking device.

The system is expected to add significant benefitsto our clients, while improving the cost-effectiveness of SanuMed’s operations.

Incineration of healthcare risk wasteAn independent study commissioned by theGroup in 2002 by a leading expert in healthcarerisk waste treatment technologies recommendedthat the most appropriate solution for thetreatment of healthcare risk waste in South Africawas destruction in a high-temperature two-stageincinerator fitted with environmental gas cleaningsystems (EGCS). The benefits of incineration overalternative “non-burn” technologies are:

• safety: not dependent on waste segregationor shredding at source, or at any stage ofthe treatment;

• completeness: deals with a wider spectrumof waste including anatomical and limitedchemical and pharmaceutical wastesincluding Creutz Jacobs syndrome (Madcow disease);

• waste reduction: ability to reduce wastevolumes by up to 85%;

• internationally proven technology: use ofhigh-temperature incinerators fitted with

EGCS endorsed by the EU and USEnvironmental Protection Agency;

• Compliance: complies with local andinternational regulatory requirements.

In line with this recommendation, Dispose-tech will be investing approximately R20 million inupgrading the company’s high temperatureincinerators to comply with the strictest national and international standards.

“Side loader” refuse collection system

Wade Refuse launched a side loader refusecollection system, the first of its kind to be fullyimplemented in South Africa. This system allowswaste to be loaded from both sides of a vehicle,significantly increasing productivity and cost-effectiveness. The containers are demountable andact as storage containers that can be efficiently bulktransported to the landfill site, even after hourswhen collection may not be possible.

Asset management

Historically, many municipalities do not haveadequate asset registers and maintenance orreplacement programmes for their water andsewage plants. Sediba has developed a proprietaryproduct that is able to assess, register, develop andimplement a detailed asset managementprogramme for water and sewage works. Thistechnology will allow Sediba to penetrate themunicipal market where partnerships with privatesector companies have not been fully embraced.

Wade Refuse launched arevolutionary new refusecollection system, the first of its kind to be fullyimplemented in South Africa.

Side loader.

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1945 The first private waste company to be

registered in South Africa is part of the EnviroServ

Group. Crystal Properties (Pty) Ltd was incorporated

on 6 December 1945. The name was later changed

to Purle Industrial Waste Properties (Pty) Ltd and

grew to become Waste-tech, which became part of

EnviroServ in 1997.

1971 EnviroServ became the first company to

operate a commercial hazardous waste landfill site

in South Africa.

1984 Wade Refuse was the first private company

to offer door-to-door domestic waste collection

contracts in townships such as Kwathema, Tsakane

and Soweto in Gauteng.

1989 Waste-tech launched the first commercial

healthcare risk waste management service in South

Africa, then known as the Medical Waste division.

Leading the way

1990 Holfontein H:H landfill became the first

engineered high hazardous commercial waste

disposal site designed and licenced according to

the Department of Water Affairs’ Minimum

Requirements.

1992 Chemi-Waste Service was the first collection

and disposal service for small volumes of hazardous

waste, such as laboratory and pharmacy waste.

1996 EnviroServ becomes the first, and remains

the only, waste management company to be listed

on the JSE Securities exchange.

2001 EnviroServ pioneered a new hazardous

waste solution that involved using custom-designed

silos in encapsulating drums.

The Shongweni Landfill Facility became the first

landfill site to achieve the NOSA 5 star occupational

health and safety grading.

Leading applicationsleadership in innovation

EnviroServ does not only invest in relevant technology. It invests significant time andexpertise in making sure that the way it applies its technology and assets drives growththrough unique offerings to clients and that it always adheres to the strictest environmentalstandards and legislation.

Many of our applications are offered to the market long before legislation requires it,making EnviroServ a leader in the waste management field.

We outline some of our achievements:

10

2003 EnviroServ became the first waste management group to close and rehabilitate a hazardous waste

landfill site that met all the new Minimum Requirements for Waste Disposal by Landfill, published by the

Department of Water Affairs and Forestry in 1998.

Hazmat Support Services became the first in Africa to achieve EU accreditation as expert supervisors for

asbestos removal.

EnviroServ became the first waste company to introduce electronic tracking on its large inventory of containers,

such as skips and bins, which will significantly improve control and allow the group to achieve better utilisation

of its bins and improve its service to clients.

Waste-tech truck with encapsulation silos in background.

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Edwin MotebangHuman Resources and Industrial Relations Director

Edwin joined Wade Refuse in 1992 as sales director.After EnviroServ’s merger with Waste-tech in 1997,he became the Industrial Relations Manager. In2000, he became HR and IR Director.

“One should never stop learning and developing.EnviroServ has always given me sufficient time tostudy and learn more. Development is vital tocontinually improve one’s performance. Thisorganisation empowers its people to become the nextleaders, resulting in a low turnover of staff.”

Esmé GombaultGeneral Manager – Dispose-tech

Esmé joined as a Waste Consultant in 1988 andmoved into the technical department within a year.What was only a small technical department thenhas evolved into the high-tech waste treatment anddisposal division that now operates as Dispose-tech,with an annual turnover in excess of R150 million.Esmé was recently appointed as the Group’sTechnical Director.

EnviroServ is a service business. Although our technology and assets are crucial for optimal client service, it is our people who allow us to deliver cost-effectively,successfully and on time.

Our corporate value of teamwork indicates the importance we place on workingtogether to achieve our goal of quality service delivery and adding value to our clients.We have a particularly strong focus on skills development and training, allowingpeople to grow in the organisation.

The fact that 88% of our top management worked their way up through theorganisation bears testimony to our culture of development and the Group’s ability toretain a base of relevant skills.

We outline a few examples:

“EnviroServ has a strong culture of freedom toprogress. Our Chairman said to me a number of yearsago that gender should not be an issue. If you believeyou have what it takes and you are prepared to put inthe work and do what is required, the job’s yours.”

Thabiso Taaka

General Manager – Millennium Sales and Marketing

Thabiso joined Waste-tech in 1995 as a wasteconsultant in the Gauteng Sales Team. During 2001,Thabiso completed the Management AdvancementProgramme at Wits Business School and wasappointed to the Operational Board. In the same year,EnviroServ developed its joint venture partnership withLungisa Enviro Consultants to form Millennium WasteManagement and Thabiso was appointed to hiscurrent position.

“A growing and developing organisation should beleading its people along a growth path, which is verymuch the case at EnviroServ. It allows people todevelop, resulting in a team of dedicated andcommitted employees. EnviroServ gives the besttraining and experience to its staff.”

leadership in development

Leading people

12

Avril Kidd

Regional General Manager – KwaZulu-Natal

Avril joined EnviroServ in 1989 as a Waste

Consultant, immediately after graduating from

university. Avril was General Manager of Waste-Tron

when it was acquired by EnviroServ in 1996. She

became Regional General Manager KwaZulu-Natal

in 1999 and was appointed the Group’s Waste-tech

brand manager soon thereafter.

“The opportunities at EnviroServ are there for

anyone, without prejudice. If you have the passion

for the business and the courage and willingness to

get your hands dirty, you will be trusted with

responsibility. And there is plenty of support.”

Skills development and training

EnviroServ believes that training and development of

all its employees is a business imperative for

sustained success in service delivery markets. To

this end, EnviroServ has embarked on a major drive

to develop skills at all levels.

From top, left to right:

Esmé Gombault, Thabiso Taaka, Avril Kidd, Edwin Motebang.

The implementation of the Group’s Skills

Development Plan in 2000 is producing good

results. In the past year, 803 employees

(approximately 67% of employees) underwent

training and attained various courses in

competencies such as sales, marketing,

management and practical operations.

Two learnership programmes, Adult Basic

Education and Training, and the Professional

Driver Programme, have received a very good

response from our employees and are being

expanded. Seven learnerships will be offered

during the new year, involving 202 employees

and 28 unemployed learners.

Whenever possible, we promote staff from within

the Group in line with our Employment Equity

Policy. Succession planning for middle and

senior management is an area receiving close

attention to provide the necessary resources for

future growth.

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EnviroServ anticipates the changing needsof our clients and is able to offer solutionsat all levels of the waste hierarchy.

Review by Chairman and CEO

manner. To ensure continued future growth,

EnviroServ has developed several high-tech

solutions for dealing with waste in a globally

accepted way.

Technology & Application: EnviroServ believes in

investing smartly in new technology. Research and

development is undertaken throughout our business

divisions to create cost and operational efficiencies

for our customers and improve on their methods of

waste management. Significant time and expertise is

also invested in the application of new technology to

ensure the Group meets customer and legal

requirements.

People: EnviroServ recognises that its people are its

most important asset. The Group has developed a

passionate culture with a strong emphasis on

freedom of expression and opportunities for

development within the organisation. We focus on

education and training and encourage employees at

all levels to further develop skills and enhance their

knowledge. This culture of a steadfast focus on

EnviroServ successfully delivered a strong

performance for the year despite challenging market

conditions, once again proving our leading position

in the waste management industry and our

relentless focus on continuously improving the way

we do business.

Revenue for the period increased by 13% to

R426,1 million, operating profit before amortisation

of goodwill increased by 24% to R53,4 million and

operating margin improved from 11,4% to 12,5%.

Strategic Focus

Throughout this Annual Report, we indicate how

EnviroServ makes its vision of leadership in

environmentally responsible waste management an

integral part of our lives.

I outline a few of the key points below.

Sustainability: Sustainable growth is key to the waste

management industry. With the advent of the triple

bottom line, our customers are increasingly under

pressure to account for waste in a sustainable

Chairman’s review

Alistair McLean

16

delivery has again allowed the group to deliver good

results in a tough year.

Legislation

Changing legislation is a core part of waste

management as the Government continues with

efforts to protect and sustain the environment.

September 2002 saw Johannesburg playing host to

the World Summit on Sustainable Development,

which culminated in the adoption of the Political

Declaration and Implementation Plan. The latter

focused on several key areas such as water and

sanitation and energy and health, which could be

potentially beneficial to EnviroServ’s service offering.

Several new laws promulgated during the period

under review are of relevance to EnviroServ’s

operations such as the amendment of the

definition of “waste”, in terms of the Environment

Conservation Act 73 of 1989 which will now include

building rubble as waste. However, we believe some

of the most significant developments with respect to

environmental issues have been the draft legislation

laws tabled this year. The most significant of these

draft laws from EnviroServ’s perspective are:

• The National Environmental Management:

Air Quality Bill, which proposes significantly

amending the current air quality regulatory

framework. This Bill will have a significant

impact for the Group’s healthcare risk waste

incinerator commissions, requiring substantial

investment in Environmental Gas Cleaning

Systems; and

• The proposed National Environmental

Management Act Second Amendment Bill,

(“NEMA Second Amendment Bill”), which will

review the requirements for undertaking

environmental impact assessments.

There are also draft amendments proposed for the

Transportation of Dangerous Goods chapter in the

National Road Traffic Act 93 of 1996. These are

set to enhance the existing regulatory framework

with respect to how hazardous or dangerous goods

are loaded, transported and off-loaded on or

from vehicles.

Despite the continual introduction of new legislation

around waste management and the ongoing efforts

of government to improve in this area, the policing

of legislation continues to be a problem. However,

there were some positive developments in the

period under review amongst our client-base in

terms of self-legislation and the monitoring of

methodologies applied to the management of waste.

Stakeholders of EnviroServ’s blue-chip client base

demand appropriate waste management,

increasingly placing the Group in a unique position

to service these clients.

Empowerment

We are continually looking at improving our

empowerment credentials. Some of EnviroServ’s

initiatives in this regard include:

• Zader Investments (Pty) Ltd, a Black

Empowerment company holding 8,5% of the

Group’s shares; and

Sustainable growth is key to the waste managementindustry. With the advent of the triple bottom line, our customers are increasingly under pressure to account for waste in a sustainable manner.

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Chairman’s review continued

• the creation of Millennium Waste Management

(Pty) Ltd, a joint venture company owned 47%

by the Group, 47% by Lungisa Enviro

Consultants (a Black Empowerment company),

and 6% by Millennium’s staff, the majority of

whom are Historically Disadvantaged

Individuals. EnviroServ in 2001 disposed of

four of its divisions, primarily involved in the

domestic waste market and healthcare risk

waste market.

Human Resources

Training and development continues to be a major

area of focus at EnviroServ. Our Skills Development

Plan initiated in 2000 has ensured that

approximately 67% of our staff have received

training and attained various qualifications.

New leadership programmes are being introduced

next year, while existing programmes will

be expanded.

We continue to promote staff from within the Group

in line with our Employment Equity Policy, which is

aligned with the requirements of the Employment

Equity Act.

The Group developed a five year equity plan which

has set equity targets which the Group intends to

achieve by the end of 2005.

Progress against this plan is monitored by the

board, and we are pleased to report that we are well

positioned to achieve our targeted equity

percentages of a minimum of 50% representation of

Previously Disadvantaged Individuals (PDI) at each

level of management. Our progress to date is

outlined below:

• Top management – 36% PDI representation.

This comprises all directors within the Group

and general managers.

• Senior management – 41% PDI

representation. This category includes the

regional management teams who, together

with the regional managers are responsible for

the success of the region under their control.

• Middle management – 48% PDI

representation. Included at this level are depot

managers and area managers who are not

neccesarily involved with strategic issues but

are in charge of the day to day operations

within their control.

• Junior management – 85% PDI

representation. This is the entry level for

managerial functions. This is a fertile ground

for development to higher managerial positions

in the Group.

Directorship and Corporate Governance

EnviroServ continues to endorse the requirements of

King II on Corporate Governance. The Board

currently comprises five non-executive directors and

seven executive directors, including Esmé Gombault

who was appointed director of EnviroServ on

18 August 2003. Esmé has played a significant role

in the development of Dispose-tech and EnviroServ

over the 15 years she has been with the Group and

I welcome her to the board.

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Prospects

Our macro economic outlook remains cautiously

optimistic. Recovery in global demand, reduction of

local interest rates and the emergence of the local

manufacturing sector from a recessionary period

will increase business activity. A rising demand for

more advanced waste disposal methodologies is

also likely to continue opening up further

opportunities for the Group within South Africa

and in neighbouring countries.

EnviroServ is well positioned through our

technological capabilities, passionate people and

operational focus to service the growing demand for

expertise in the waste management industry. This is

likely to drive sustainable growth for the Group into

the future.

Government proposals for a balanced scorecard

approach to evaluating empowerment companies

should prove beneficial to the Group as this

approach will take into account empowerment on a

wider basis, looking at factors beyond only

shareholding, such as the Group’s focus on its

people and communities.

Appreciation

Thank you to my fellow board members for their

valued input and well done to the management

team and staff for an outstanding result. Your

unwavering passion to this business continues to

fill me with pride.

Introduction

The traditional waste management industry in South Africa, which consisted of a collection anddisposal service, has evolved over recent years toprovide workable, cost-effective and sustainablesolutions to waste producers within South Africa and the African continent.

In October 2001, the Department of EnvironmentalAffairs and Tourism stated in the PolokwaneDeclaration, which was established during theNational Waste Summit, that it intends to reducewaste generation by 50% and waste disposal by25% before 2012. It also intends to develop a zero waste plan by 2022.

The markets we serve are conscious of these goalsand our clients look for a service provider that isable to lead the way to sustainable and responsiblewaste solutions and practices. Waste managementrequires new and innovative solutions that add valueto our environment and our clients.

EnviroServ has anticipated the changing needs ofour clients and is able to offer solutions across thewaste cycle. Although we are still dedicated tolandfill through two of our divisions, Dispose-techand Waste-tech, we are also able to offer solutionshigher up the waste hierarchy, further improving ourrevenue-generating ability. (see graphic opposite)

Higher up the waste hierarchy, initiatives such asrecycling allow for the reduction of landfill wastewithout reducing Group revenue as clients areprepared to pay a premium for sustainablesolutions. Lower down, international experienceindicates that landfill will remain a necessary part of waste disposal for many years to come. Throughongoing improvements and innovations, the Groupcontinues to improve landfill operations, allowing it to deal with waste in a globally acceptablemanner. These improvements have uniquelypositioned EnviroServ in the South African market as a provider of high-level solutions to a broadspectrum of clients.

Our vision of “Leadership in environmentallyresponsible waste management” is clearly illustratedthroughout this report. We report on key initiatives ineach of our divisions, which demonstrate ourleadership in technology, operations, development of our people and social responsibility.

Performance highlights

Our established position in the South African waste market has enabled the Group to deliver astrong result for the year ended 30 June 2003.Headline earnings per share increased by 17% to35,7 cents per share (2002: 30,6 cents per share).Revenue increased by 13% to R426,1 million (2002: R377,9 million), and an improved margin

Chief executive’s review

Des Gordon

20

resulted in a 24% increase in operating profit beforeamortisation of goodwill to R53,4 million (2002: R43,0 million). A combination of improvedcost control and a shift away from high-volume,low-margin work resulted in the operating marginincreasing to 12,5% for the year (2002: 11,4%).

Continuing strong operating cash flows have

resulted in net interest bearing debt being

maintained at R48,1 million (2002: R47,8 million),

after investing R63 million in new businesses and

expanding our asset base. Our debt/equity ratio has

fallen to 31%, and is well within the levels

management believes appropriate for the Group.

Acquisitions

Millennium Waste Management (Pty) Ltd acquired

the Water Operations division of Bateman Project

Holdings Limited with effect from 1 July 2002.

Bateman Water Operations is a leader in the water

and sewage industry in South Africa and was

incorporated into the Sediba division. Sediba now

has the appropriate critical mass, operational

expertise and empowerment credentials to grow

effectively in the South African market.

With effect from 1 January 2003 the Group acquired

the Spills Response division of Abzorbit CC. Abzorbit

is the leading spills response business in KwaZulu-

Natal, where EnviroServ previously had a limited

presence in this kind of business.

Both of these acquisitions are performing in line

with expectations.

Operational review

EnviroServ Waste Management

Waste-tech

The industrial collection business had a year of

moderate growth as the performance of the

manufacturing industry worsened in the second

half of the financial year. Mining clients also saw

conditions deteriorate as highly volatile exchange

rate fluctuations negatively impacted their

operations. In spite of these negative market forces,

this division has been able to record growth in

earnings through various operational initiatives.

Improved utilisation and cost efficiency were

achieved with our new fleet through the

implementation of several new technologies.

Our established position in the South African waste market hasenabled the Group to deliver a strong result for the year ended30 June 2003.

Waste disposal

Waste treatment

Waste recycling

Waste re-use

Wasteminimisation

Waste avoidance

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Chief executive’s review continued

Our KwaZulu-Natal region successfully achieved ISO 14001 accreditation, as we began our plannedrollout of this programme throughout the company.

The effective way in which Waste-tech has adoptedthe onerous new National Road Transport Act hasprovided a competitive advantage in our offering toclients. The requisite operational agreements placestringent requirements on waste generators tocontrol the transportation of their waste.

Waste-tech’s hazardous materials responsebusiness, Hazmat Support Services, hasstrengthened its position as the leader in its fieldwith the purchase of Abzorbit, which increased theskills base as well as the geographical coverage ofHazmat. During the year, Hazmat was involved in anumber of successful high profile projects, includingthe clean-up of the stricken cargo vessel JollyRubino which ran aground off the coast of KwaZulu-Natal.

Dispose-tech

The Dispose-tech division, which operates theGroup’s permitted waste treatment, destruction anddisposal facilities, has been centralised through anational management structure. This has enabledgreater focus on the highly specialised technicalaspects inherent in this business. Dispose-techexperienced a modest increase in revenue, but astrong improvement in margins as some high-volume, low-margin waste streams were replacedwith more profitable volumes. Our hazardous wastelandfill site at Shongweni in KwaZulu-Natal achievedISO 14001 accreditation in July. This programme isbeing rolled out to all sites nationally.

The Group’s incineration facilities remain strategic tothe disposal of healthcare risk waste in South Africaand are systematically being upgraded asEnviroServ strives to attain international standards

The Dispose-tech divisionhas been centralisedthrough a nationalmanagement structurewhich has enabled greaterfocus on the highlyspecialised technicalaspects inherent in this business.

22

Some of the new Waste-tech fleet.

and practices. All of these facilities are about to be

fitted with environmental gas cleaning systems to

ensure new legislative requirements are met.

Process Management

This division focuses on waste reduction, re-use and

recovery. During the year, the team has been further

strengthened through the appointment of people

with experience in chemical process engineering and

project management. Process Management projects

are long-term due to the need for in-depth

evaluation, followed by an infrastructural roll-out

programme to ensure the appropriate beneficiation

of the waste stream. The Process Management

division currently has a number of projects in

different stages of progress and is therefore expected

to contribute significantly towards the Group’s

growth in the medium term.

EnviroDrum

This division, specialising in responsible

container management through drum

reconditioning, has reported very poor results

for the year and has negatively impacted

EnviroServ’s Group result. During the year, the

operation re-engineered many of its systems

and processes to improve effectiveness. In

particular, systems were changed to improve

levels of quality, production throughput and a

higher level of used drum procurement. The

short-term impact of these improvements was,

however, impacted by a high level of

Landfill will remain a necessary part of waste disposal formany years to come. Through ongoing improvements andinnovations, the Group continues to improve landfilloperations, allowing it to deal with waste in a globallyacceptable manner.

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Articulated dump truck being loaded by a front end loader at the Holfontein Hazardous Landfill site.

Chief executive’s review continued

management changes. Various alternativesregarding the future of this business are currentlyunder investigation.

Conquip Hire

Conquip, which hires compaction equipment to the

waste, mining and construction industries, reported

strong results for the period as the synergistic

benefits resulting from incorporation into the Group

were realised. Additionally, the benefits of having

Conquip’s skills and resources within the Group have

improved the efficiencies of other divisions that have

outsourced their plant requirements to Conquip.

Millennium Waste Management Joint Venture

Sediba

The Group’s water and sewage division has made

significant progress with its growth strategy through

the purchase of Bateman Water Operations. This

acquisition has added a highly experienced and

competent team to Sediba’s existing operations.

Revenue and profits have increased substantially as

the critical mass and national footprint required to

make Sediba an important player in this industry

was achieved. Significant progress has been made

towards accrediting its laboratory with ISO 17025,which is expected early in the next financial year.

Sediba is now considered to be one of the top threeprivate operators in this sector in South Africa,providing services to more than two million SouthAfricans and managing more than two million litresof water and waste-water per day.

Landfill Management

Landfill Management, which manages disposal sites

on behalf of third parties, performed well in 2003.

Increased efficiencies and growth in revenue have

improved profitability. Access to newly developed

technology through the Group’s plant hire company,

Conquip, and cross-selling opportunities from the

entire Millennium Group’s services should lead to

continued growth in the forthcoming year.

Wade Refuse

The domestic collection business has not performedwell during the year under review. A number ofsubstantial contracts with local councils have notbeen renewed as councils continue to in-sourcewaste collection services. Our domestic wasteoperations continue to suffer from the slow pace of

24

Holfontein Hazardous Landfill site.

Our operations are currentlyundergoing intense changeto move from a traditionalproduct focus to becomingmore customer-centric.

privatisation of these services. However, a newsense of urgency with regard to service deliverydoes appear to be manifesting within various localauthorities. Problems created through a lack ofcritical skills and resources, together with an everaging and deteriorating asset base, will encouragelocal authorities to consider sustainable servicedelivery from private companies. Although it is verydifficult to operate efficiently in this environment, theGroup is consistently improving its service offeringthrough the use of new technology and sustainablebusiness practices. The Group believes that thisinvestment will enable Wade Refuse to showimprovements in the future. We are confident thatgreat opportunities for the Millennium business willarise in the medium term.

SanuMed

The healthcare risk waste collection division,SanuMed, delivered good growth in revenue thisyear. However, it did not achieve satisfactory returnslargely due to a lack of critical mass in some of theregions in which it operates. To profitably grow thisdivision going forward, SanuMed is investing in newequipment, such as re-usable plastic containers, andnew technology, such as automated bin tracking.

Prospects

We expect South Africa’s manufacturing sector to

emerge from its recessionary period, which could

result in a strong rebound on the back of lower

interest rates and a recovery in global demand.

If these markets improve, the increased waste

generation will positively impact on the Group’s

results going forward. EnviroServ’s ongoing

technological improvements and refinements to its

knowledge-based offer will ensure it continues to

buffer tough markets.

Our operations are currently undergoing intense

change to move from a traditional product focus to

becoming more customer-centric. We will achieve

this through focusing on tailor-made solutions and

by using our recently implemented IT systems to

improve customer delivery. The combination of

expected market growth and ever increasing service

delivery levels should result in good growth for our

industrial waste related operations.

Going forward, we expect a growing demand for

expertise in the waste industry as legislation

becomes increasingly stricter and more prescriptive.

This will increase the barriers to entry and

drive waste generators to outsource their waste

programmes. The Group’s track record shows that

it is well positioned to deliver services to the

evolving waste market.

Appreciation

My sincere appreciation to the Executive Team for

their hard work and to the Chairman and non-

executive directors for their guidance and counsel.

To our loyal and dedicated staff, my sincere thanks

for your incredible energy, effort and above all –

passion – for what we do. I look forward to another

exciting year as we grow our business together.

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Top: SanuMed employee loading healthcare risk waste.

Left: Wade Refuse rear end loader in action.

1. Alistair McLean (54)Executive Chairman

Alistair has served as Executive Chairman of the EnviroServ Groupsince February 2001 and is responsible for strategic managementand new business development. Before this, he was Chief Executivefor four years. He has been involved in EnviroServ since 1986, whenhe became a major shareholder.

2. Des Gordon (42) Chief Executive BComm; CA(SA)

Des was appointed Chief Executive in February 2001. Prior to this, heserved as Financial Director for four years. Des spent five years as theGroup Financial Manager for Group Five Limited after five years’experience in the auditing profession with Ernst & Young.

3. Raymon Rocher (35)Financial DirectorBComm; CA(SA)

Raymon spent three years with KPMG and then gained two years’experience as Group Accountant at Group Five Limited. He joinedEnviroServ as Group Financial Manager in 1997, and was appointedas Financial Director in 2001.

4. Pierre Fourie (41)Operations DirectorBEng; MBL

Pierre spent seven years as Production and Operations Manager withLyttelton Engineering Works. He was also General Manager andManaging Director for I&J and Pat Cornick respectively. He joinedEnviroServ in 2000 and was appointed a director in 2002.

5. Delia Lavarinhas (30)Property DirectorHigher Diploma in Design, Project Management; MAP

Delia worked for a large construction company and did freelanceconsulting for approximately three years. She joined EnviroServ in2000 as Property Director and also serves as Brand Manager forWade Refuse.

6. Edwin Motebang (57)HR and IR DirectorDiploma in Labour Law: Advanced Labour Relations SkillsDevelopment

Edwin joined EnviroServ in 1992 as Sales Director. Following themerger with Waste-tech in 1997, he became the Industrial Relations(IR) Manager. In 2000, he became HR and IR Director.

7. Esmé Gombault (39) Technical DirectorBSc Chemistry

Esmé joined EnviroServ as a Waste Consultant in 1988 following twoyears as a Pollution Control Officer with DEAT. Esmé later becameGeneral Manager of the Dispose-tech division. She was appointed adirector in 2003.

8. Muriel Dube (29)Non-executiveBHons Social Sciences

Muriel has been with Billiton Coal since 2000 where she serves

as Environmental Strategy Advisor. She gained experience in the

field of environmental management during four years with the

Department of Environmental Affairs and Tourism as a Director, has

co-chaired the National Committee on Climate Change and served

on the Board of Directors of the National Nuclear Regulator. She

was appointed to the EnviroServ board in 2001.

9. Brian Joffe (56)Non-executiveCA(SA)

Brian spent three years with Levitt Kirson Gross prior to holding a

position as Chief Executive of EW Tarry plc, which was listed on the

London Stock Exchange in August 1983. Over the following five

years Brian held various chairmanships until 1988 when he became

executive chairman of Bid Corporation Limited prior to its listing on

the JSE as The Bidvest Group Limited. Brian was one of the Sunday

Times top five business men in 1992 and a past recipient

of the Jewish Business Achiever of the Year Award. Brian was

appointed in 2000.

10. Joe Pamensky (73)Non-executiveCA(SA); OMSG

Joe has over forty years’ experience in the financial, insurance and

banking industries and is the recipient of numerous business

awards. He serves as a non-executive director of The Bidvest Group

Limited, as well as numerous other public and private companies,

and was appointed as a non-executive in 2001.

11. Lindsay Ralphs (47)Non-executiveBComm; BAcc; CA(SA)

Lindsay gained accounting experience at Price Waterhouse before

leaving in 1981 to join EW Tarry plc where he moved on to become

Joint Managing Director. He joined The Bidvest Group in 1992 as

Operations Director and is currently Chairman of The Bidserv

division. Lindsay also serves as a director of The Bidvest Group

Limited. He was appointed to the board in 2001.

12. Rufus Maruma (44)Non-executiveSTD (Dip); BSc Ped; BA (Hons); MSc; MAP

Rufus has 20 years experience in the environmental services and

waste management industries including a period as Chairman of the

EnviroServ Group. He was involved with the United Nations Council

for Sustainable Development and is a representative of the World

Council for Sustainable Development. Rufus is also a director of

Group Five Limited, Stewart Scott International and is Chairman of

the Phalaborwa Mining Company.

Board of directors

From top, left to right:

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1. Thabiso Taaka (30)*General Manager – Millennium Sales and MarketingMAPJoined EnviroServ in 1996

2. Dawie Krugel (41)Regional General Manager – GautengBScJoined EnviroServ in 2003

3. Alan Oosthuizen (39)*Regional General Manager – Western CapeDip Civil EngineeringJoined EnviroServ in 1995

4. Rhyno Gouws (40)(*alternate)Operations Manager – Western CapeBAgric Admin; Road Transport DiplomaJoined EnviroServ in 1991

5. Craig Hurle-Hill (44)General Manager – Conquip HireNTC5 Heavy CurrentJoined Conquip in 1986

6. Avril Kidd (35)*Regional General Manager – KwaZulu-Natal BScJoined EnviroServ in 1989

From top, left to right:

7. Kieron Geoghegan (48)*General Manager – Strategic Growth ProjectsBA; LLB; BCommJoined Conquip in 1985

8. Benoît Le Roy (42)General Manager – SedibaDip Chem Eng; Dip Bus ManagementJoined EnviroServ in 2002

9. Barry Miles (46)*General Manager – Strategic Growth ProjectsCivil Engineering Technologist; MBA Joined EnviroServ in 1999

10. Stuart McMullan (41)*Regional General Manager – Eastern CapeDip Cost AccountingJoined EnviroServ in 1985

11. Jeff le Roux (45)Group Marketing ManagerMSc; HDE; CPMM; CM(SA)Joined EnviroServ in 2002

12. Ronald Duigan (41)General Manager – Process Management BSc Eng (Chem); MBAJoined EnviroServ in 2002

Senior management

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* Director of EnviroServ Waste Management (Pty) Ltd

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EnviroServ’s sustainability in a fast-changing market islargely due to an ability to anticipate change and adaptquickly to the evolving needs of our clients. We arepositioned in a unique environment where third and firstworld collide, challenging the Group to be both innovativeand forward thinking in response to environmental needs.

One of the crucial challenges to a waste management group operating in Africa is finding ways to work togetherwith neighbouring communities, often living close to wastesites. Waste management tends to evoke strong emotionsand we have worked hard at finding ways of interactingeffectively, ensuring that sustainable change is achievedwherever EnviroServ operates.

Sustainability report

32

Social responsibility

Monitoring committees

All EnviroServ’s hazardous waste landfill facilities

and healthcare risk waste treatment facilities have

established monitoring committees to monitor and

ensure compliance with the facility permit issued by

the Department of Water Affairs and Forestry and

Department of Environment and Tourism.

These committees consist of representatives from

National, Provincial and Local Authorities, members

of Local Committees and interest groups. Various

government representatives visit our facilities on a

regular basis to ensure that requirements are met

and that we comply with legislation.

Furthermore, EnviroServ has been a member of the

Responsible Care Initiative since 1997, and

renewed its commitment again this year.

Responsible Care is an international forum

dedicated to fostering a culture and ethic of

sustainable development and cleaner technologies.

Community projects

A few of our community projects are

described below:

Umlazi landfill facility closure and football field

The Umlazi landfill site, situated in Durban,

KwaZulu-Natal, is the first hazardous waste landfill

site in South Africa to be closed and rehabilitated in

accordance with the Minimum Requirements

(DWAF, 1998). It is also the first hazardous waste

landfill to be rehabilitated with the active

involvement of a community based environmental

monitoring committee. The success of the Umlazi

project is the result of a combined effort by

EnviroServ, the authorities and the local community

to reconcile conflicting expectations and demands.

One of the key requirements of the closure design

was that the neighbouring community be involved in

all aspects of the closure and rehabilitation.

The community was kept involved by organising

regular environmental monitoring committee

meetings, guided by independent facilitator Pravin

Singh. Community feedback resulted in the

consultants adjusting certain aspects of the closure

design to suit labour intensive construction methods,

as opposed to traditional plant construction.

Capping was also required to prevent soil erosion.

The low permeability soil required for the capping

layers was sourced at a nearby borrow area. The

use of the borrow area had to be negotiated with the

community, which included the design and

construction of a football field on hand-over. The

football field, including subsoil drainage system and

grassing, was handed over to the community in

March 2003.

Facilitator Pravin Singh said:

“The Umlazi landfill site is a true success story.

It provides a graphic example of how commitment to

negotiation and fostering a good relationship with all

role players, and in particular surrounding

communities, can help achieve success for all.”

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“It is not just about sewing twopieces of material together, it isabout people realising that theyhave an opinion, that they arecreative and tapping into thatcreative nature.”Celia de Villiers, Arts in Action project co-ordinator.

Top: Angie Mamaru.Above: Intuthuku Sewing Club member working her art.

Intuthuku Sewing Club

As many of the Dispose-tech workers come from the

nearby Etwatwa township near Benoni, EnviroServ

decided to approach the community to identify a

skills development project that would become a

sustainable and empowered business. This led to

the start of the Intuthuku Sewing Club in 2002.

Arts in Action, a group of artists specialising in

collaborative interactive public arts, participatory

community projects and developmental

programmes concerned with social transformation

and change, was selected to assist.

The women work from home, allowing them thetime and flexibility to look after the needs of theirfamilies. A percentage of the revenue generatedfrom the sale of each handbag is banked by theclub to cover running costs, a percentage is putaside for future growth and the sewers earn apercentage from each bag they sell.

Themes explored in the panels includeenvironmental issues, the impact of HIV/AIDS andviolence against women and children in society. “I have realised that I am strong and that it isimportant for us to face our problems,” says projectmember Baby Mathobela. “That is why the messageon my first bag was ‘Hard times never kill’ ”.

34

EnviroServ’s initial financial investment of R100 000

was used to purchase materials, three sewing

machines and to employ teachers and assistants.

The bags are selling successfully, and it is hoped

that the project will become self-sustaining in the

near future.

Empowerment partnerships

Chloorkop landfill facility recycling project

EnviroServ awarded a five-year tender to Mama She

Waste Recyclers to manage a recycling operation on

its Chloorkop landfill site in Thembisa. Chloorkop

receives waste from the surrounding areas of

Thembisa, Kempton Park, Edenvale and Midrand,

and it was believed that the introduction of a

recycling project at this site would not only serve to

extend the life of the landfill, it would also offer an

opportunity for employment to the local community.

The introduction of a recycling scheme of this

magnitude is a first in South Africa. The Department

of Water Affairs and Forestry (DWAF) strictly

prohibits recycling on landfill sites to safeguard

against injury from possible mismanaged waste. For

this reason, EnviroServ erected a seperate structure

and fenced off a designated area for the recyclers to

work within. The area is now managed by Mama

She to meet both DWAF and Occupational Health

and Safety Act standards.

Since its inception just two years ago, Mama She’s

buy-back centre in Elandsfontein has grown from

one warehouse to three, it permanently employs

250 people and manages a successful hawker

trade. Additional contracts include the removal of

waste for several office and retail complexes,

including the Eastgate Shopping Mall. The company

has a strong relationship with Mondi Paper, Consol

Glass and Collect-a-Can for the resale of its

recovered material.

“We firmly believe to be truly successful, one must

give back,” say Darren and Mariane Pillai, owners

of Mama She.

Malibongwe

Millennium Waste Management (Millennium)

pursues empowerment of community-based

organisations. To achieve this, Millennium entered

Social responsibility continued

“Very often we find that notmuch is required to make asignificant difference insomebody’s life. For instanceMonica, a community memberthat approached us with theidea to set up a buy-backoperation in her yard, wasprovided with a cash advanceand a collection agreementfrom her home. She is nowrunning a very successfulsmall business.”Darren and Marianne Pillai, Owners of Mama She.

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into a partnership with Malibongwe, a Section 21

company that deals with development projects for

women in urban and rural areas. Domestic

collection contracts are labour intensive and

Millennium saw collaboration with Malibongwe as a

means to create broad-based employment within

local communities through access to the

organisation’s 300 000 strong membership base.

The two entities are currently working together on

the Old Mutual Cape Town service contract, which

runs for three years. Any new tenders will be

submitted to councils as a partnership.

Rietfontein landfill facility

Millennium won a tender for the management of theRietfontein disposal site on behalf of the Ekurhulenicity council. The tender submission included astrong empowerment strategy for community-basedSMME’s, centred around the training and eventualoutsourcing of four key components to local serviceproviders. Millennium worked closely with thecouncil to identify local companies that would beeligible to render the service required.

Key criteria for assessment of local companiesincluded whether applicants were currentlyunemployed as Millennium was looking to createemployment in order to have maximum impact. Six service providers were chosen, with twocompanies created to provide labour, a dustsuppression service, a composting operation andcleaning services on site and security services. It is expected that these companies will work withMillennium on other contracts in the future.

“It is important to start small, to first build capacityand gain trust on both sides,” says Millennium’sThabiso Taaka.

A black entrepreneur manages the recycling

operation on site, selling to companies that purchase

recyclable materials.

Potchefstroom landfill facility

A similar initiative has been implemented at the

Potchefstroom landfill site where Millennium is

working with another Section 21 company to render

a five-year management contract on the site.

Tirisano is a region-wide, community-based

organisation with members in Potchefstroom,

Klerksdorp and Bothasville. Through its membership

base, Tirisano is able to provide a basket of services

that account for 40% of the full project value. Once

a good working relationship has been established,

Millennium hopes to incorporate Tirisano in other

projects in the region. Local community members

operate a simple waste sorting operation, with

recyclable paper and cardboard purchased by

recycling contractors. Some 60 – 70 tons of paper

waste is recovered every month.

Rural community skills development andempowerment

The Department of Water Affairs and Forestry was

mandated with providing water and sanitation to

South Africa’s underprivileged rural communities. In

1997, DWAF issued a tender for a build, operate,

train and transfer (BOTT) project in four provinces,

namely Limpopo, Mpumalanga, Eastern Cape and

KwaZulu-Natal. The Sediba Division is part of the

AquAmanzi consortium that was successful in

securing the KwaZulu-Natal portion of this project.

To date, the project has provided clean water to

approximately 850 000 people in areas from

Richards Bay through Zululand to the Drakensberg.

180 previously unemployed members of the Thembisacommunity have now found permanent employment as pickers atChloorkop. Last year Mama She paid out R1,3 million to thepickers at Chloorkop.

36

Sediba was tasked with the operation, maintenance

and mentorship (OMM) component of the

programme.

The first phase of the project involved discussions

with the community to fully inform them of the

details of the project and to gain their support.

Community members were employed for the

construction phase of the project, which lasted

several months in most cases.

Once construction was complete, Sediba

commissioned the water treatment facilities and

undertook to train and empower local people to take

over the operation and maintenance functions over

a two-year period. “We recruited members from

the community and provided them with training and

supervision, allowing them to take over key

operational elements,” says Benoît Le Roy,

General Manager of Sediba.

Following training, personnel were employed by

Sediba for a two year period, after which the entire

OMM programme would be transferred to the

district municipalities. This process began last year,

with several projects having been successfully

transferred to date. About four to five people were

trained and hired per project, amounting to a total of

75 – 100 people across more than 20 projects.

DWAF received international recognition for the

success of the rural water project at the World Globe

Awards in Austria in March 2002.

Social responsibility continued

“We have put measures in place to ensure theysucceed, for if they fail, wefail. We provide support onsite and back-up training.Initially this calls for a duplication ofresources, but this is theprice we are prepared topay to foster empowermentand upliftment.” Thabiso Taaka, Millennium.

Members of the Gauteng region’s office cleaning team

currently undergoing the ABET programme.

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Holfontein landfill facility – skills transfer and empowerment

The communities surrounding the Holfontein landfill

facility have always been closely involved with the

site in terms of support and providing the site with

both skilled and unskilled labour.

However, the site has a limited ability to provide

permanent employment opportunities as the

required specialist skills and construction standards

have in many cases prevented the use of the

community’s emerging contractors.

In an attempt to address the high unemployment

rate in neighbouring communities, the site

management team, community representatives and

emerging contractors have developed a strategy to

slowly impart and develop the necessary skills

required in landfill construction and operation.

This envisaged process currently involves the

following phases:

• Encouraging large specialist construction

companies currently performing work at

Holfontein to use community labour, thereby

informally imparting skills and knowledge to

community individuals;

• Training and capacity building seminars

presented by site management and specialist

engineers;

• Hands-on training of community members in

specific specialist tasks; and

• Identifying small to medium sized contracts to

build capacity for the emerging contractors

and to build trust for EnviroServ in terms of

delivery, capability and quality of

workmanship.

Through ongoing collaboration and commitment, the

Group hopes to impart the necessary skills and

experience to the emerging contractors, enabling

them to become competent, and competitive role

players and role models, not only at Holfontein but

within the larger construction industry.

“We felt it was really important to develop community skills in amanner that would ensure long-term sustainability, an element thatis essential for the success of any developmental project.”Benoît Le Roy – General Manager of Sediba.

Safety, Health,Environment, Risk andQuality management

During the year EnviroServ continued towards itsgoal of implementating the SHERQ (Safety, Health,Environment, Risk and Quality) management systemthroughout the entire Group to ensure all operationalpractices meet internationally recognised standards.This system comprises the following:

• ISO 14001 (Environmental Management);

• ISO 9001 (Quality Management); and

• NOSA (Occupational Health and SafetyManagement).

These standards are all part of an internationallyrecognised model that ensures operationalprocedures result in products and services thatcomply with internal and external quality standards.Compliance is audited by an external AccreditedBody for certification and maintenance ofcertification.

The current implementation of these managementsystems has already enabled the Group to:

• clearly identify those aspects of business thathave an impact on health, safety and theenvironment;

• compile a comprehensive database on thelegal and industry standards it needs to meet;

• set objectives and targets to manage ourbusiness impacts;

• train our staff in all relevant SHERQ matters;and

• audit and review our compliance with nationallegal standards.

On completion of the implementation, thesemanagement systems will be fully integrated into ourIT system and will ensure compliance with localrequirements and legislation. The electronicmanagement system will allow real-time informationto be available at all levels within the organisation.

EnviroServ currently operates an internal auditingprogramme that is used as a tool to measure thelevels of compliance within all divisions, creating aheightened awareness of the need to comply withhealth, safety and environmental standards. Thisawareness has led to a significant drop in theaccident/incident rate and has resulted inEnviroServ not only achieving but also maintaininga preferential assessment rate with theCompensation Commissioner.

Health and safety

Occupational Health services over the past yearhave reflected EnviroServ’s commitment to creatinga healthy and safe environment for all employees,as well as ensuring compliance with currentlegislation. Close co-operation betweenmanagement, safety and environmental monitoringservices and Occupational Health has enabled earlydetection of unsafe or unhealthy exposures toensure precautionary measures are taken tosafeguard employees and the community.

A focused HIV programme commenced in theGauteng region. This first phase programmeensures that employees not only understand theunderlying pathology of HIV, but that they gain aclear insight into the macro economic impact of thedisease and the effect it will have on families if leftunchecked. The focus of the programme is to

Environmental review

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create an understanding of the individual’s role instemming the epidemic by knowing their HIV status.It is envisaged that this programme will be rolled outnationally in the near future.

Hygiene

The Occupational Hygiene Programme implementedby EnviroServ, fulfils the legal and moral obligationto ensure that health hazards associated with theGroup’s operations do not pose an unnecessary riskto employees or to members of the public.

The Programme was initiated by determining thehazards associated with each activity carried out inEnviroServ’s operations and a qualification of riskwas assigned within this recognition phase. Oncethe health hazard had been determined for eachactivity, the evaluation phase was implemented inwhich actual measurement of chemical, physicaland biological hazards was undertaken.

The control measures implemented as part of theProgramme take into account the hierarchy ofoccupational hygiene control. Substitution1,Engineering Control2 and Administrative Control3 arethe preferred methods. Personal ProtectiveEquipment is used as a last resort when for practicalreasons it is impossible to implement other types of control.

New Programme initiatives include:

• a procedure for the sampling and analysis ofunknown waste in-situ. The procedure is acost-effective way to determine a responsibleand safe disposal method; and

• a new methodology developed for the accuratedetermination of emission flux from landfillsites that will contribute to improved air qualitymonitoring and dispersion monitoring.

Environment

EnviroServ plans to continue offering waste solutionsthat lead the industry and exceed legislativerequirements. We fully support the efforts of ourGovernment towards waste minimisation andconsider it our duty to supply our clients withsolutions that achieve this goal.

We have embarked on three initiatives to achievewaste minimisation:

• Reduce liquids to landfill. This project toestablish alternative pre-treatmenttechnologies of the waste-streams prior todisposal to landfill was initiated with a goal toreduce the amount of liquids entering thelandfill sites.

• Leachate treatment. This initiative aims tominimise the Group’s long-term liabilityassociated with leachate generated by ourlandfills, through identifying suitable leachatetreatment technologies for each of our landfillsites. Two of our facilities will be equippedwith leachate treatment plants in the nextfinancial year.

• Incinerator upgrading, which involves anindependent review of the technologiesavailable for the treatment of healthcare riskwaste completed by an external expert. Thereview concluded that hi-tech incinerators,fitted with Environmental Gas CleaningSystems (EGCS) were the most suitable andcost effective option to offer our clients. Theroll-out programme to reach compliance withthe regional requirements in each provincehas started. Our Gauteng facility will be thefirst to be upgraded and equipped with EGCSto meet current and proposed legislation.

1 Substitution: The removal and/or replacement of chemicals or agents to mitigate or eliminate a risk or exposure.2 Engineering Control: The use of guards, barriers, silencing, extraction, ventilation, cooling etc, to design out exposure to risks.3 Admin Control: The rotation of personnel or correct placement of a person in a manner to lessen or minimise exposure to risk.

40

The Environmental management system

(ISO 14001) which is currently being implemented

has already allowed EnviroServ to identify various

risks relative to surface water management, ground

water management, air quality management, soil

contamination, and employees. Management

procedures, including operational controls,

engineering and technological controls, monitoring,

as well as internal and external auditing have been

implemented to minimise the impact of each risk.

The system rollout progress is as follows:

• Saldanha depot achieved SABS ISO 14001

certification in 2000;

• KwaZulu-Natal region was successfully audited

by the SABS during July 2003 for compliance

with ISO 14001 and received certification in

August; and

• Gauteng, Western Cape and Eastern Cape are

scheduled for SABS ISO 14001 certification

in 2004.

Environmental review continued

Corporate governance

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General principles

The directors reaffirm their commitment to the

principles of transparency, accountability,

responsibility and integrity as advocated in the

King II Report on Corporate Governance for South

Africa. The directors of EnviroServ Holdings Limited

regard Corporate Governance as vital to the success

of the business of the Group and are unreservedly

committed to applying these principles in all

business dealings with relevant stakeholders.

The board is the focal point of EnviroServ Holdings

Limited’s Corporate Governance system and is

ultimately accountable and responsible for the

performance and affairs of the Group.

The board believes that the Group has been in

compliance with the King II Code of Corporate

Practice throughout the past financial year, to the

extent considered practical.

Ethical standards

The Group subscribes to the pursuit of the highest

ethical standards of behaviour and requires total

honesty and integrity from its employees. The

company’s vision of leadership in environmentally

responsible waste management is embodied in its

values of integrity, innovation, quality and teamwork.

These values have been distributed and enforced

throughout the Group as a set of integrated policies

and incorporate a disciplinary and performance

management code and the ethical standards

required of employees in their interaction with one

another and with all stakeholders. Having regard to

the provisions of the Insider Trading Act, policies

and procedures are in place covering the regulation

and reporting of transactions in securities of the

company by its directors and officers during “closed

periods” and at other times whenever warranted by

specific circumstances. The Group’s policies and

procedures are regularly reviewed to ensure they

promote best practice in Corporate Governance.

Risk management and internal control

The board of directors acknowledges that it is

responsible for the total process of risk

management, recognising the risks to which the

Group is exposed and ensuring that the proper

policies of control and mitigation are put in place.

The board is satisfied that there is in place an

adequate ongoing risk management process, which

identifies, evaluates and manages the significant

risks faced by the Group.

EnviroServ Holdings Limited and its subsidiaries

maintain systems of internal control over financial

reporting and over safeguarding of assets against

unauthorised acquisitions, use or disposal. These

systems are designed to provide reasonable

assurance to the Group and each subsidiary’s

management and boards of directors regarding the

preparation of reliable published financial statements

and the safeguarding of the Group’s assets.

The abovementioned systems of internal control,

which have been implemented at all key operations

and are tailored to suit the specific circumstances of

each business unit, provide reasonable rather than

absolute assurance that the Group’s business

objectives will be achieved within the prescribed risk

tolerance levels.

Furthermore, the effectiveness of an internal control

system can change with circumstances.

42

from that of the chief executive officer who hasoverall responsibility for the performance andmanagement of the Group.

There is no formally constituted nominationcommittee for the election of directors. The boardconsiders that such a committee is not required. It is policy for details of any proposed candidate tobe distributed to directors for formal consideration.

A formalised charter for the board, setting out itsresponsibilities and specific decision areas, will bedeveloped in the forthcoming year. The boardintends formalising a process for evaluating theeffectiveness of the board and its committees in theforthcoming year.

All directors are entitled to seek independentprofessional advice about the affairs of the Group atthe Group’s expense.

Board of directors

In the pursuit of good Corporate Governance, theboard has a balanced mix of executive, non-executive and independent non-executive directorswho bring to the board a wide range of expertise,including significant financial, environmental andcommercial experience and in the case of non-executive directors, independent perspectives andjudgement. The company’s current board comprisesseven executive, two non-executive, and threeindependent non-executive directors.

The board meets at least quarterly and sets theGroup’s objectives and strategies and exerciseseffective control over the other companies andoperations in the Group. The EnviroServ HoldingsLimited board is currently chaired by an executivechairman and the function of this office is separate

Details of attendance by directors at board meetings during 2003 are set out below:

Directors’ attendance at board meetings – 2002/2003

NAME 12 Aug’02 4 Nov’02 10 Feb’03 12 May’03 18 Aug’03

MDN Dube P P A P P

P Fourie P P P P P

E Gombault NAD NAD NAD NAD P

DK Gordon P P P P P

B Joffe P P P A P

D Lavarinhas P P P P A

MR Maruma P P P P P

A McLean P P P P P

EK Motebang P P P P P

JL Pamensky P A A P P

LP Ralphs P P P P A

RP Rocher P P P P P

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

Corporate governance continued

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has also conferred the following powers upon the

members of the Audit Committee:

• To oversee the external and internal audit

functions and ensure the co-ordination

between the two;

• Examine interim and annual financial

statements before submission to the board

and prior to press announcements;

• Review significant cases of employee conflict

of interest, misconduct or fraud; and

• Consider other topics as defined by the board

from time to time.

The external auditors have unrestricted access to

the committee and the committee has unrestricted

access to the Group’s management, employees,

internal and external auditors and outside

consultants. The committee consists of an

independent non-executive chairman and two non-

executive directors. It meets at least three times

annually with the company’s management as well as

the internal and external auditors to discuss

accounting, auditing, internal control and financial

reporting matters.

The Group operates a 24 hours toll-free fraud

hotline with the assistance of Ernst & Young. All

reports are handled with complete confidentiality

and are brought directly to the attention of the

Audit Committee. The fraud hotline number is

083 652 5638.

The board has determined that the Audit Committee

has satisfied its responsibilities for the year under

review in compliance with its terms of reference.

Company secretary

All directors have access to the advice and services

of the Company Secretary, who is responsible to

the board for ensuring that appropriate procedures

are followed.

The Company Secretary has compiled a schedule

of legislation with which the Group must comply.

This will be converted into electronic format for

distribution and compliance by all operations

throughout the Group.

Internal audit

An internal audit function has been established

which reports directly to the Audit Committee. Its

terms of reference include an evaluation and

assessment of the Group’s compliance with its

internal control procedures and policies. In addition

to the above, a step by step audit process of

compliance with the company’s technical and

environmental policy is currently operational.

Remuneration committee and philosophy

The Remuneration Committee, which meets at least

annually, is responsible for ensuring that the Group’s

directors are fairly rewarded for their contributions to

the Group’s overall performance. The committee

consists of the executive chairman and two non-

executive directors. Current members are Messrs

MR Maruma (Chairman), L Ralphs and A McLean.

Audit committee

The Audit Committee has written terms of reference

that deal adequately with its membership, authority

and duties. It has been tasked with, inter alia,

ensuring that the systems of internal control within

the organisation are effective. The board of directors

44

Corporate governance continued

The chairman of the Audit Committee, or in his

absence, any one other member of the Audit

Committee shall be in attendance at annual general

meetings of members of the company and respond

to any questions relating to the work of the

Audit Committee.

Current members of the committee are

Messrs JL Pamensky (Chairman), LP Ralphs, and

Ms MBN Dube. Secretary O Deftereos.

Executive committee

The Executive Committee is chaired by the chief

executive officer and comprises senior executives

from the various business divisions. It meets

monthly and deals with strategic policy and

operational matters and where appropriate, refers

relevant issues to the board. The Executive

Committee holds monthly meetings with the

management of each division.

Employment participation and employment equity

An employment equity consultation forum

comprising designated members of EnviroServ’s

management team, staff and trade unions has been

established. This team consults and reaches

consensus regarding the issues identified in the

relevant Employment Equity and Skills Development

legislation and assists in the successful

implementation of the legislation.

A formal employment equity policy has been

adopted, which is aligned with the requirements of

the Employment Equity Act. There is continual

monitoring and enforcing of the Employment Equity

plan and the employment equity forum continually

monitors, implements and manages the progress to

ensure that the legislative provisions are upheld.

Investor and stakeholder relations

The Group’s stakeholders philosophy remains the

active pursuance of communication and dialogue

with the various interested parties and the different

stakeholder groups, providing objective, relevant

and transparent information timeously whilst

operating within the parameters of current

regulatory requirements.

Presentations, are made to institutional investors,

analysts and the media where appropriate.

A corporate website (www.enviroserv.co.za)

facilitates the dissemination of the latest Group

financial and historical information.

HIV/AIDS

The group ensures that the rights of affected

employees are consistent with the rights of other

employees, and is committed to provide a safe and

productive environment for all.

The group has commenced a focused HIV/AIDS

programme as part of its Safety, Health and

Environment Risk and Quality Management system.

Going concern

The directors have reviewed the Group’s budget and

cash flow forecast for the year to 30 June 2004.

On the basis of this review, and in the light of the

current financial position and existing borrowing

facilities, the directors have no reason to believe that

EnviroServ Holdings Limited will not be a going

concern in the period to the next financial

statements and have continued to adopt the going

concern basis in preparing the financial statements.

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2002

Re-invested in the Group

Government

Employees

Providers of capital

2003

Re-invested in the Group

Government

Employees

Providers of capital

Value added statement

for the year ended 30 June 2003

Value added is a measure of the wealth the Group has been able to create in its operations by adding value to the cost ofconsumables, products, and services purchased. The statement summarises the total wealth created and shows how it wasshared by employees and other parties who contributed to the Groups operations. The calculation takes into account theamounts retained and re-invested in the Group for the replacement of assets and development of operations.

2003 2002% R’000 R’000 %

Revenue 426 086 377 946Paid to suppliers for consumables and services (234 331) (206 002)

Total wealth created 100 191 755 171 944 100

Distributed as follows:Employees – Salaries, wages and other

employment costs 37 71 432 65 974 38Providers of capital 5 8 601 6 939 4

– finance cost of borrowings 8 601 6 939– dividends declared – –

Government 12 23 751 19 795 12

– S A normal and deferred taxation 7 262 4 695– PAYE and SITE 15 434 14 173– RSC levies 1 055 927

Re-invested in the Group to maintain and develop current and future operations 46 87 991 79 236 46

– retained earnings 36 911 31 716– depreciation and environmental remediation provisions 51 080 47 520

Total wealth distributed 191 755 171 944 100

48 Approval of annual financial statements

48 Report of the independent auditors

48 Statement by company secretary

49 Directors’ report

53 Accounting policies

56 Consolidated income statement

57 Consolidated balance sheet

58 Consolidated statement of changes in equity

59 Consolidated cash flow statement

60 Notes to the consolidated cash flow statement

62 Notes to the consolidated annual financial statements

70 Company annual financial statements

72 Annexure A – details of subsidiary

companies, joint ventures and associate

73 Ratios and statistics

Contents

Annual financial statements

48

Approval of Annual Financial Statements

The Group’s annual financial statements which appear on pages 49 to 72 were approved by the board on 18 August 2003 and are signed on its behalf by:

DK Gordon A McLeanChief Executive Officer Chairman

Report of the Independent Auditors

Statement by Company Secretary

In terms of Section 268G of the Companies Act, as amended, I, Orestis Deftereos, being the Company Secretary of EnviroServ Holdings Limited, certify that all returns required of a public company have, in respect of the year under review, been lodged with the Registrar of Companies and that all such returns are true, correct and up-to-date.

O DeftereosCompany Secretary 18 August 2003

To the members of EnviroServ Holdings Limited

We have audited the Group annual financial statements set out on pages 49 to 69 for the year ended 30 June 2003, and the company annual financial statements set out on pages 70 to 72. These financialstatements are the responsibility of the company’s directors. Our responsibility is to express an opinion onthese financial statements based on our audit.

Scope

We conducted our audit in accordance with statements of South African Auditing Standards. These standardsrequire that we plan and perform the audit to obtain reasonable assurance that the financial statements arefree of material misstatement. An audit includes:

• examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements;• assessing the accounting principles used and significant estimates made by management; and• evaluating the overall financial statements presentation.

We believe that our audit provides a reasonable basis for our opinion.

Audit opinion

In our opinion, the financial statements fairly present, in all material respects, the company and the Groupfinancial position at 30 June 2003 and the results of their operations and cash flow for the year then ended inaccordance with South African Statements of Generally Accepted Accounting Practice, and in the mannerrequired by the Companies Act in South Africa.

Ernst & Young JohannesburgChartered Accountants (SA) 18 August 2003

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Directors’ Report

The directors have pleasure in submitting the annual financial statements of the company together with theconsolidated annual financial statements of the Group for the year ended 30 June 2003. The directors are ofthe opinion that shareholders interests are best served by seperating the Group financial statements fromthose of the company.

Principal activities of the GroupEnviroServ Holdings Limited is an investment holding company whose subsidiaries are engaged in wastemanagement in southern Africa. The business of the Group includes all aspects of the transportation, disposaland management of waste streams.

Results of operationsThe results of operations and financial position of the company and the Group as at 30 June 2003 are set outin the accompanying financial statements on pages 49 to 72.

Share capitalAuthorised: 150 000 000 ordinary shares of 1 cent each being R1 500 000 (2002: R1 500 000)

Issued: 117 276 476 ordinary shares of 1 cent each of which 11 727 647 ordinary shares of 1 cent each areheld by a wholly owned subsidiary company in terms of a share buy-back. Shares held by the subsidiary donot vote and are not taken into account in the calculation of earnings per share.

Net issued share capital: R1 055 488 (2002: R1 055 488)

Further details of the authorised and issued share capital are given in note 13 to the financial statements.

Directorate Details and changes in the board of directors are listed hereunder:

Executive directorsMessrs A McLean, P Fourie, DK Gordon, EK Motebang and RP Rocher and Ms D Lavarinhas were directorsthroughout the year. Ms E Gombault was appointed director on 18 August 2003.

Non-executive directorsMessrs B Joffe and LP Ralphs were non-executive directors throughout the year.

Independent non-executive directorsMs MBN Dube and Messrs MR Maruma and JL Pamensky were independent non-executive directors throughoutthe year.

Directors’ interest in sharesThe shareholdings of the individual directors are as follows:

Beneficial Non-beneficial

Indirect 2003 2002 2003 2002

P Fourie 263 000 212 000 – –

E Gombault 358 000 – – –

DK Gordon 873 800 822 800 – –

D Lavarinhas 270 000 237 000 – –

A McLean 724 700 673 700 26 438 549 26 348 549

MR Maruma 1 081 952 1 081 952 – –

EK Motebang 448 000 448 000 – –

RP Rocher 439 000 388 000 – –

4 458 452 3 863 452 26 438 549 26 348 549

The following directors do not hold a beneficial or non-beneficial shareholding whether directly or indirectly.Messrs B Joffe, JL Pamensky, LP Ralphs and Ms MBN Dube. The company has not been informed of anymaterial changes in these figures since 30 June 2003 to the date of this report.

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Directors’ Report continued

Director’s emoluments for the year ended 30 June 2003

Motor Pension

Directors Fees Salary & travel Bonus contribution Other Total 2002

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

Executive

P Fourie – 459 123 195 64 58 899 67

E Gombault – – – – – – – –

DK Gordon – 643 160 273 86 95 1 257 1185

D Lavarinhas – 228 86 77 29 31 451 315

A McLean – 715 217 304 103 92 1 431 1240

EK Motebang – 339 127 144 44 88 742 635

RP Rocher – 455 120 193 61 64 893 723

Non-executive

MBN Dube 20 – – – – – 20 15

B Joffe – – – – – – – –

MR Maruma 37 – – – – – 37 53

JL Pamensky 30 – – – – – 30 50

LP Ralphs – – – – – – – –

Service contracts

No service contract exists between the company and any of its directors having notice periods exceeding onemonth or providing for compensation and benefits in excess of one month’s salary.

Property, plant and equipment

There was no change in the nature of the property, plant and equipment or in the policy regarding their use.The accompanying financial statements and notes thereto clearly set out the acquisition of property, plant andequipment during the year ended 30 June 2003.

Secretary

The office of secretary was held by Mr O Deftereos during the period covered by this report. The secretary’sbusiness and postal address are as follows:

Business address Postal address18 Dusseldorf Street, Apex, Benoni 1501 PO Box 2207, Benoni 1500

Subsidiary companies

A list of subsidiary and joint venture companies appears on page 72 of this report.

The interests of the company in the aggregate amounts earned by subsidiary companies, joint ventures andassociate companies after tax were:

30 June 2003 30 June 2002

R’000 R’000

Income 33 856 26 987

Losses 9 644 7 461

No special resolutions, the nature of which might be of significance to members in their appreciation of the state ofaffairs of the Group, were passed by any of the company’s subsidiaries during the year covered by this report.

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Share incentive schemeThe directors have established the EnviroServ Holdings Limited Share Incentive Trust under the provisions ofsection 38(2)(b) of the Companies Act on 14 May 1997.

The aggregate number of shares which may be made available for the purposes of the scheme shall be amultiple of 100 not exceeding 17 591 400 being 15% of the issued share capital of the company.

The aggregate number of shares which may be acquired by any one participant under the scheme shall notexceed 1 100 000 shares, being approximately 1% of the issued share capital of the company.

2003 2002

Number of shares available for allocation 1 July 2002 130 086 1 595 686

Number of shares acquired net of sales 1 039 438 –

Number of shares taken up by employees during the year (1 275 000) (2 136 000)

Number of shares re-acquired from employees 1 131 400 670 400

Number of shares available for allocation at 30 June 2003 1 025 924 130 086

Number of scheme shares held by employees at 30 June 2003 9 959 600 9 549 400

Distribution of share premium in lieu of a dividend

The directors have resolved to pay a cash distribution of 12,0 cents (2002: 10,0 cents) per ordinary sharepayable out of share premium, in lieu of a final dividend (“the distribution”), for the year ended 30 June 2003.The last day to trade “CUM” the distribution in order to participate in the distribution will be Friday, 17 October 2003. The shares of EnviroServ will commence trading “EX” the distribution from thecommencement of business on Monday, 20 October 2003 and the record date will be Friday, 24 October 2003. Share certificates may not be dematerialised or rematerialised from Monday, 20 October 2003 to Friday, 24 October 2003 both days inclusive. Payment will be made to shareholders on Monday, 27 October 2003.

General authority to permit the company to acquire its own shares

Shareholders are referred to the attached Notice of Annual General Meeting regarding the implementation of afurther buy-back programme. This will provide the board with the flexibility to re-purchase such shares as andwhen the best interests of the company require it to do so.

Directors’ responsibilities in relation to financial statements

The annual financial statements referred to in this report have been prepared by management in accordancewith South African Statements of Generally Accepted Accounting Practice and in compliance with theCompanies Act, No. 61 of 1973 (as amended.) They are based on appropriate accounting policies which havebeen consistently applied (except where disclosed) and which are supported by reasonable and prudentjudgements and estimates. The annual financial statements have been prepared on a going concern basis andthe directors have every reason to believe that the Group will be able to continue its operation for theforeseeable future.

The directors are of the opinion that the internal financial controls are adequate for preparing the financialstatements and maintaining accountability for assets and liabilities.

The directors believe that assets are safeguarded and used as intended with appropriate authorisation.

Nothing has come to the attention of the directors to indicate that any material breakdown in the functioning ofthese controls, procedures and systems has occurred during the year under review.

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Directors’ Report continued

Conversion to the STRATE (Share Transactions Totally Electronic) electronic settlement system

Shareholders are encouraged to deposit their shares in safe custody with a Central Securities Depository

Participant or a qualifying stockbroker. Paper share certificates will not lose their value with the move to the

STRATE system, but they are no longer acceptable for the purposes of settlement. Shareholders are within

their rights to retain their shares in paper form until they wish to sell them, but in the interests of efficiency and

security, are encouraged to convert them into electronic form.

Events subsequent to the year-end

No events have occurred from 30 June 2003 to date of this report that have a material impact on the earnings

of the company and the Group or its financial position at 30 June 2003.

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Accounting Policies

The financial statements are prepared on the historical cost basis and incorporate the following principalaccounting policies which are in accordance with Statements of South African Generally Accepted AccountingPractice and are consistent with those applied in the previous year except in regard to the adoption of AC133Financial Instruments: Recognition and Measurements at the beginning of the year. There was no materialimpact in the financial statements on adoption of the statement and hence no adjustment was done in theopening balance of distributable reserves.

Consolidation

SubsidiariesThe consolidated financial statements include those of the company and its subsidiaries. The results of anysubsidiaries acquired or disposed of during the year are included from the effective dates of acquisition andup to the effective dates of disposal.

At the date of acquisition of a subsidiary, the cost of the investment is allocated to the fair value of the individualidentifiable assets and liabilities of the subsidiary on the basis of fair value at the date of acquisition. Unrealisedincome arising from transactions within the Group and inter-company balances have been eliminated.

AssociatesAn associate company is one over which the company has the ability to exercise significant influence, but notcontrol, and which it intends to hold as a long-term investment. The Group’s share of post-acquisition resultsof associate companies are incorporated in the financial statements, using the equity method of accounting,from the effective dates of their acquisition until the effective dates of their disposal. The investment inassociates is carried in the balance sheet at cost plus post-acquisition changes in the Group’s share of netassets of the associate, less any impairment in value. The Group’s investment in associates includes goodwill(net of accumulated amortisation) on acquisition. Goodwill arising on the acquisition of associates is accountedfor in the same way as goodwill on the acquisition of subsidiaries.

Joint venturesJoint ventures are those investments in which the Group has joint control. The proportion of assets, liabilities,cash flows, income and expenses attributable to the interests of the Group in joint ventures has beenincorporated in the consolidated financial statements. The results of joint ventures are included from theeffective dates of acquisition and up to the effective dates of disposal.

GoodwillAny remaining difference between the purchase price of shares in subsidiaries, joint ventures or associatesand the net asset value is dealt with as follows:

• The excess of the net asset value of the identifiable assets over the purchase consideration is eitherrecognised in income on a systematic basis over the useful life of the identifiable net non-monetaryassets, or as future anticipated expenses are incurred, or it is recognised in income immediately when itexceeds the identifiable net non-monetary assets acquired.

• The excess of the purchase price over the net asset value is recognised as an asset and amortised on astraight-line basis over its useful life.

Goodwill is stated at cost less accumulated amortisation and any impairment in value.

Deferred taxationDeferred taxation is provided using a balance sheet liability method on all temporary differences betweencarrying amounts for financial reporting purposes and the amounts used for taxation purposes, exceptdifferences relating to goodwill not deductible for taxation purposes and the initial recognition of assets orliabilities which affect neither accounting nor taxable profit or loss.

54

Accounting Policies continued

A deferred tax asset is recognised to the extent that it is probable that future taxable profits will be availableagainst which the associated unused tax losses and deductible temporary differences can be utilised. Deferredtaxation is calculated using taxation rates that have been enacted at balance sheet date. The effect ondeferred taxation of any changes in taxation rates is charged to the income statement, except to the extent thatit relates to items previously charged or credited directly to equity.

Property, plant and equipmentProperty, plant and equipment are stated at cost less accumulated depreciation and any impairment in value.Depreciation is provided for on the straight-line basis over the estimated useful life of an asset, except forfreehold landfill sites, which are depreciated on the basis of airspace consumed. Land is not depreciated. Thecarrying amounts are reviewed at each balance sheet date to assess whether they are recorded in excess oftheir recoverable amounts, and where the carrying amounts exceed this estimated recoverable amount, assetsare written down to their recoverable amount. Impairment losses are recognised in the income statement.

Depreciation rates:

Landfill sites – airspace consumedVehicles – 5 years Light delivery vehicles – 4 yearsPlant – 5 yearsComputers – 3 yearsOffice equipment – 5 yearsBins – 1 to 5 yearsBuildings – 10 to 30 years

InvestmentsInvestments are carried at fair value less any impairment in value.

Leased assetsPlant and equipment held under finance leases are capitalised, where substantially all the risks and rewardsassociated with ownership of an asset are transferred from the lessor to the Group as lessee, at the inceptionof the lease at the fair value of the leased property or, if lower, at the present value of the minimum leasepayments. Such assets are depreciated in terms of the aforementioned accounting policy for property, plantand equipment.

Lease finance charges, which are recognised in the income statement, are allocated to accounting periodsover the duration of the leases using the effective interest rate method, which reflect the extent and cost oflease finance utilised in each accounting period.

All other leases are treated as operating leases and the relevant rentals are recognised as an expense in theincome statement on a straight line basis over the lease term.

Borrowing costsBorrowing costs incurred in respect of assets which take a substantial period of time to prepare for theirintended use are capitalised during the period of construction. All the other borrowing costs are recognised inthe income statement in the period when incurred.

InventoriesInventories are valued at the lower of cost, determined on the weighted average basis, and net realisable value.Net realisable value is the estimated selling price in the ordinary course of business, less estimated costsnecessary to make the sale. Redundant and slow-moving inventories are identified and written down to netrealisable value. Write-downs to net realisable value and inventory losses are expensed in the period in whichthe write-downs or losses occur.

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Revenue recognitionRevenue is recognised to the extent that it is probable that the economic benefits will flow to the Group andthe revenue can be reliably measured.

The following specific recognition criteria are adopted:

• Revenue from waste collection, disposal services, plant hire, container management and administrationfees is recognised when the sale which gives rise to the revenue takes place.

• Dividends are recognised when the shareholder’s right to receive the payment is established.

Foreign exchange transactionsForeign exchange transactions are translated at the spot rate ruling at the date of the transaction. At balancesheet date monetary items are translated at rates then ruling. Exchange differences occurring on thesettlement of monetary items or on the reporting of outstanding monetary items, are brought into account inthe income statement for the period.

ProvisionsA provision is recognised when there is a legal or constructive obligation as a result of a past event for which itis probable that a transfer of economic benefits will be required to settle the obligation and a reliable estimatecan be made of the amount of the obligation.

Environmental remediation provisionsFull provision has been made for the net present value (NPV) of the Group’s minimum unavoidable costs, inrespect of closure liabilities at the Group’s landfill sites. The Group continues to provide for all post closurecosts over the life of its landfill sites, based on the airspace consumed in the period, since liabilities in relationto these costs increase as waste is deposited. Estimates are reviewed annually and any differences arising arebrought into account in the income for the period.

Research and development expenditureThis expenditure is charged against operating profit when incurred.

Retirement benefitsAll current contributions to retirement funds are charged against income as incurred.

DefinitionsEarnings per share – earnings divided by the weighted average number of net shares in issue.Headline earnings per share – headline earnings divided by the weighted average number of net shares in issue.Market price/net asset value – market value of the shares at the end of the year divided by shareholders’ equity.Closing price/earnings ratio – market value of shares at the end of the year divided by headline earnings.Closing distribution/dividend yield – distribution/dividends per share as a percentage of market value per shareat the end of the year.Headline earnings – as calculated in note 6.Current ratio – current assets divided by current liabilities. (A broad indicator of the Group’s short-term liquidity.)Return on shareholders’ equity – headline earnings as a percentage of average shareholders’ equity. (Anobjective measure of the Group’s profitability for shareholders.)Return on total assets – operating profit before goodwill amortisation as a percentage of average total assets. (A measurement of the effectiveness with which management uses the assets at its disposal.)Operating margin – operating profit before goodwill amortisation as a percentage of revenue.Debt/equity ratio – net interest bearing debt as a percentage of total shareholders’ equity.Interest cover – operating profit before goodwill amortisation divided by interest paid.Revenue per employee – revenue divided by number of employees.

Revenue 1 426 086 377 946Cost of operations 252 099 232 148

Gross profit 173 987 145 798Overheads and other expenses/(income) 122 120 103 847

Operating profit 2 51 867 41 951Net finance costs 3 8 601 6 939Share of profit in associate company 4 907 1 399

Profit before taxation 44 173 36 411Taxation 5 7 262 4 695

Net profits attributable to shareholders 36 911 31 716

Earnings per share (cents) 6 34,97 30,05Headline earnings per share (cents) 6 35,68 30,59

56

Consolidated Income Statement

for the year ended 30 June 2003

GROUP

2003 2002Note R’000 R’000

GROUP

2003 2002Note R’000 R’000

ASSETSNon-current assets 292 090 263 504

Property, plant and equipment 7 264 868 242 830Investment in preference shares 8 8 428 8 428Investment in associate 9 9 935 10 106Goodwill 10 8 859 2 140

Current assets 112 908 107 664

Inventories 11 6 596 4 474 Accounts receivable 12 102 618 92 480Cash and cash equivalents 3 694 10 710

Total assets 404 998 371 168

EQUITY AND LIABILITIESCapital and reserves 157 179 130 823

Ordinary share capital and share premium 13 49 707 60 262Distributable reserves 14 107 472 70 561

Non-current liabilities 133 817 136 632

Deferred taxation 15 13 688 10 643Environmental remediation provisions 16 87 428 79 220Long-term borrowings 17 28 625 42 238Deferred income 18 4 076 4 531

Current liabilities 114 002 103 713

Accounts payable 19 68 487 69 281Short-term provisions 20 17 450 17 120Current portion of long-term borrowings 21 23 148 16 229Taxation 4 917 1 083

404 998 371 168

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Consolidated Balance Sheet

as at 30 June 2003

GROUP

2003 2002Note R’000 R’000

Ordinary share capital and share premium 13Share capital

At beginning of year 1 055 1 055

At end of year 1 055 1 055

Share premiumAt beginning of year 59 207 59 207Cash distribution (10 555) –

At end of year 48 652 59 207

Distributable reserves 14At beginning of year 70 561 38 845Net profit attributable to ordinary shareholders 36 911 31 716

At end of year 107 472 70 561

58

Consolidated Statement of Changes in Equity

for the year ended 30 June 2003

GROUP

2003 2002Note R’000 R’000

CASH RETAINED FROM OPERATING ACTIVITIES 73 184 43 842

Cash generated by operations A 103 362 89 858Utilised to increase working capital B (10 639) (16 809)

Cash generated by operating activities 92 723 73 049Net finance costs (8 601) (6 939)Taxation paid C (383) (13 824)

Cash available from operating activities 83 739 52 286Distribution/dividend paid to shareholders D (10 555) (8 444)

CASH UTILISED IN INVESTING ACTIVITIES (61 585) (99 161)

Acquisitions of subsidiaries, associate and joint venture E (10 380) (23 944)Additions to property, plant and equipment (18 099) (26 010)Replacement of property, plant and equipment (35 027) (72 262)Proceeds on disposal of property, plant and equipment 1 614 7 154Dividend received from associate 307 –Disposal of operations F – 15 901

CASH EFFECTS OF FINANCING ACTIVITIES (18 615) 49 934

(Decrease)/increase in long-term liabilities (13 613) 37 691Utilised from environmental remediation provisions (11 921) (3 173)Increase in short-term borrowings 6 919 15 416

NET DECREASE IN CASH AND CASH EQUIVALENTS (7 016) (5 385)Balance at the beginning of year 10 710 16 095

Balance at the end of year G 3 694 10 710

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Consolidated Cash Flow Statement

for the year ended 30 June 2003

A. CASH GENERATED BY OPERATIONSOperating profit 51 867 41 951Adjusted for non-cash flow items:

Depreciation 30 951 31 594Provision for environmental remediation 20 129 15 926Profit on disposal of property, plant and equipment (1 094) (4 393)Impairment of property, plant and equipment – 3 772Amortisation of goodwill 1 509 1 008

103 362 89 858

B. UTILISED TO INCREASE WORKING CAPITALMovement in inventories (1 870) 13Movement in accounts receivable (7 546) (6 048)Movement in accounts payable (768) (10 364)Movement in deferred income (455) (410)

(10 639) (16 809)

C. TAXATION PAIDAmount owing at beginning of year (1 083) (6 918)On acquisition of subsidiary – (11)Current taxation charged per income statement (4 217) (7 978)Amount owing at end of year 4 917 1 083

(383) (13 824)

D. DISTRIBUTION/DIVIDEND PAID TO SHAREHOLDERSAmount owing at beginning of year – (8 444)Cash distribution from share premium (10 555) –Amount owing at the end of the year – –

(10 555) (8 444)

GROUP

2003 2002R’000 R’000

60

Notes to the Consolidated Cash Flow Statement

for the year ended 30 June 2003

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for the year ended 30 June 2003

GROUP

2003 2002R’000 R’000

E. ACQUISITIONS OF SUBSIDIARIES, ASSOCIATE AND JOINT VENTUREThe fair value of assets acquired and liabilities assumed were as follows:

SubsidiariesProperty, plant and equipment 383 11 516Accounts receivable 2 592 4 242Inventories 252 –Overdraft (9) (387)Deferred taxation – 300Accounts payable (3 271) (8 446)

(53) 7 225Intangibles acquired on acquisition 7 457 493

Net asset value acquired 7 404 7 718Overdraft acquired (9) (387)

Purchase consideration payable 7 413 8 105Amount outstanding previous year – paid 2 967 –Amount outstanding – (2 967)

Purchase consideration paid 10 380 5 138

Joint ventureProperty, plant and equipment – 5 250Inventories – 799Accounts receivable – 5 593Accounts payable – (4 169)Investment in preference shares – 8 428

Cash flow on acquisition – 15 901

AssociatePurchase consideration paid – 2 905

F. DISPOSAL OF OPERATIONSCertain divisions of the Group were disposed of to MillenniumWaste Management (Pty) Ltd:Property, plant and equipment – 11 171Inventories – 1 700Accounts receivable – 11 899Accounts payable – (8 869)

Cash flow on disposal – 15 901

G. CASH AND CASH EQUIVALENTSCash and cash equivalents included in the cash flow statement comprise the following balance sheet amounts:Bank balances and cash 3 694 10 710

62

Notes to the Consolidated Annual Financial Statements

for the year ended 30 June 2003

GROUP

2003 2002R’000 R’000

1. REVENUERevenue represents net invoiced sales to customers for services exclusive of value added tax.Waste services 368 496 338 864Container management 22 409 23 778Plant hire 35 181 15 304

426 086 377 946

2. OPERATING PROFITOperating profit is stated after:Amortisation of goodwill 1 509 1 008Auditors’ remuneration

Audit fee 1 336 780Other services 54 520

Profit on disposal of property, plant and equipment (1 094) (4 393)Impairment of property, plant and equipment – 3 772Depreciation and amortisation

Landfill sites 3 431 10 371Plant and vehicles 23 930 18 308Furniture and equipment 3 590 2 915

Directors’ remunerationServices as directors – non-executive 88 118Services as executives 5 673 5 168

5 761 5 286

Operating leasesProperties 1 367 1 385Plant and equipment 7 692 3 974

Fees for professional services 4 556 4 047Staff costs 81 193 60 806

3. NET FINANCE COSTSInterest paid/(received) on:Long-term loans 6 547 8 016Short-term deposits (327) (1 535)Other 2 381 458

8 601 6 939

4. SHARE OF PROFIT IN ASSOCIATE COMPANYAttributable share of after tax profit 907 1 399

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for the year ended 30 June 2003

GROUP

2003 2002R’000 R’000

5. TAXATIONSouth African normal taxationCurrent taxation 4 217 7 978

– current year 3 866 7 978– prior year underprovision 351 –

Deferred taxation 3 045 (3 283)

– current year 3 396 (3 283)– prior year overprovision (351) –

7 262 4 695

Reconciliation of taxation rate % %SA normal tax rate 30,0 30,0

Adjusted for:Exempt income (9,9) (10,5)Disallowable expenditure 2,1 1,6Amortisation of trademarks (5,6) (7,0)Included in after tax profit of associate (0,6) (1,2)

Effective taxation rate 16,0 12,9

6. EARNINGS PER SHAREEarnings per share is based on earnings of R36 910 658 (2002: R31 716 475) and a weighted average of 105 548 829 (2002: 105 548 829) ordinary shares in issue during the year.

Headline earnings per share is based on earnings of R37 653 986 (2002: R32 289 498) and a weighted average of 105 548 829 (2002: 105 548 829) ordinary shares in issue during the year. See note 13.

Reconciliation of headline earningsNet profits attributable to ordinary shareholders 36 911 31 716

Adjusted by:Impairment of property, plant and equipment – 3 772Amortisation of goodwill 1 509 1 008Profit on disposal of property, plant and equipment (1 094) (4 393)

37 326 32 103Taxation on above adjustments 328 186

Headline earnings 37 654 32 289

64

Notes to the Consolidated Annual Financial Statements continued

for the year ended 30 June 2003

GROUP

2003 2002R’000 R’000

7. PROPERTY, PLANT AND EQUIPMENTLand and buildings 22 499 22 054

at the beginning of the year 22 054 21 462additions 445 592

Landfill sites 123 367 104 453

Cost 189 630 167 285

at the beginning of the year 167 285 142 954additions 22 345 24 331

Amortisation 66 263 62 832

at the beginning of the year 62 832 52 461charged in the current year 3 431 10 371

Plant and vehicles 107 312 106 774

Cost 217 951 204 172

at the beginning of the year 204 172 170 617on acquisition of subsidiary and joint venture 383 30 075additions 24 600 68 202disposals (11 204) (64 722)

Accumulated depreciation 110 639 97 398

at the beginning of the year 97 398 112 850on acquisition of subsidiary and joint venture – 13 405charged in the current year 23 930 18 308impairment of assets – 3 772disposals (10 689) (50 937)

Furniture and equipment 10 269 8 588

Cost 23 700 18 435

at the beginning of the year 18 435 10 540on acquisition of subsidiary and joint venture – 423additions 5 276 8 709disposals (11) (1 237)

Accumulated depreciation 13 431 9 847

at the beginning of the year 9 847 7 694on acquisition of subsidiary and joint venture – 327charged in the current year 3 590 2 915disposals (6) (1 089)

Capital work in progress 1 421 961

at the beginning of the year 961 4 523capitalised during the year (961) (4 523)additions 1 421 961

264 868 242 830

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for the year ended 30 June 2003

GROUP

2003 2002R’000 R’000

7. PROPERTY, PLANT AND EQUIPMENT (continued)A register containing the information required by paragraph 22(3) of schedule 4 of the Companies Act is available for inspection at the registered office of the company.

The carrying value of plant held under hire purchase agreements at 30 June 2003 is R9,8 million (2002: R7,8 million). Assets under hire purchase agreements are pledged as security for the related hire purchase liabilities in terms of note 17. Vehicles with a carrying value of R55,1 million are pledged as security in terms of note 17.

8. INVESTMENT IN PREFERENCE SHARESInvestment in preference shares 8 428 8 428

8 428 8 428

9. INVESTMENT IN ASSOCIATEUnlisted Attributable net assets of associate at acquisition 1 290 1 290The excess of the purchase consideration over the fair value of the assets and liabilities at date of acquisition of the investment in the associate 7 710 7 710

Shares at cost 9 000 9 000Share of post acquisition reserves 3 520 2 613

– Prior years 2 613 1 214– Current year 907 1 399

Dividend received (307) –

12 213 11 613Amortisation of goodwill– amortisation to date (2 278) (1 507)

Carrying value of investment 9 935 10 106

Directors’ valuation approximates carrying value.Goodwill in associate on acquisition 7 710 7 710Accumulated amortisation at beginning of year (1 507) (736)Amortisation recognised during current year (771) (771)

Balance of goodwill in associate 5 432 6 203

Remaining life 7 years 8 years

10. GOODWILLGross amount of goodwill at the beginning of the year 2 493 2 000Accumulated amortisation at the beginning of the year (353) (116)Goodwill recognised during the year 7 457 493Amortisation recognised during the current year (738) (237)

Balance of goodwill 8 859 2 140

66

Notes to the Consolidated Annual Financial Statements continued

for the year ended 30 June 2003

GROUP

2003 2002R’000 R’000

11. INVENTORIESConsumables and spares 5 614 3 518Fuel and oil 982 956

6 596 4 474

12. ACCOUNTS RECEIVABLETrade receivables 94 477 77 783Prepayments 3 907 4 301Joint venture receivables – 6 209Other 4 234 4 187

102 618 92 480

13. ORDINARY SHARE CAPITAL AND SHARE PREMIUMAuthorised share capital

150 000 000 (2002: 150 000 000) ordinary shares of 1 cent each 1 500 1 500

Issued share capital117 276 476 ( 2002: 117 276 476) ordinary shares of 1 cent each 1 173 1 173

Held in subsidiary in terms of share buy-back (118) (118)

These shares do not carry voting rights and are not taken into account in the calculation of earnings per share 1 055 1 055

Share premium 48 652 73 009Share buy-back – (13 802)

48 652 59 207

Ordinary share capital and share premium 49 707 60 262

The unissued ordinary shares have been placed under the control of the directors. This authority expires at the next Annual General Meeting

14. DISTRIBUTABLE RESERVESRetained earnings Comprising:

Company 117 928 105 229Subsidiaries and associate (12 293) (35 383)Joint ventures 1 837 715

107 472 70 561

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for the year ended 30 June 2003

GROUP

2003 2002R’000 R’000

15. DEFERRED TAXATIONBalance at the beginning of the year 10 643 14 226

Movements during the year attributable to:On acquisition of subsidiary – (300)Charged to the income statement 3 045 (3 283)

Balance at the end of the year 13 688 10 643

Balance comprises:Capital allowances 17 918 17 234Provisions (7 119) (8 141)Prepayments 1 133 (794)Other 1 756 2 344

13 688 10 643

16. ENVIRONMENTAL REMEDIATION PROVISIONSProvisions for site rehabilitation, closure and post closure

– at the beginning of the year 79 220 66 467– charged in the current year 20 129 15 926– utilised in the current year (11 921) (3 173)

87 428 79 220

17. LONG-TERM BORROWINGSSecuredLoan agreement secured over vehicles with a book value of R55,1 million (2002: R57,9 million) bearing interest at 13,57% per annum See note 7. 44 276 50 975Hire purchase agreements secured over plant with carrying value of R9,8 million (2002: R7,8 million) at interest rates varying from 10,64% to 16% See note 7. 7 497 7 492

51 773 58 467Less: current portion included under current liabilities. See note 21. 23 148 16 229

28 625 42 238

Repayable during the years ending June 2003 – 16 2292004 23 148 17 0222005 18 128 16 854 2006 9 395 8 1212007 1 102 241

The company’s borrowings are not restricted by its articles of association.

18. DEFERRED INCOMEDeferred income represents advance payments on pre-sold airspace. This amount is recognised as income as the airspace is consumed. 4 076 4 531

19. ACCOUNTS PAYABLETrade creditors 45 980 44 932 Accruals 17 467 17 473Other 5 040 6 876

68 487 69 281

Short-term environmental

Bonus Leave pay provisions Other Total

20. SHORT-TERM PROVISIONSBalance as at 30 June 2001 4 351 2 343 6 300 4 593 17 587Utilised during the year (4 351) – (97) (343) (4 791)Provided during the year 3 986 338 – – 4 324

Balance as at 30 June 2002 3 986 2 681 6 203 4 250 17 120Utilised during the year (3 986) – (1 284) – (5 270)Provided during the year 3 000 962 – 1 638 5 600

Balance as at 30 June 2003 3 000 3 643 4 919 5 888 17 450

GROUP

2003 2002R’000 R’000

21. CURRENT PORTION OF LONG-TERM BORROWINGSLoan agreement 19 859 12 661 Hire purchase agreements 3 289 3 568

23 148 16 229

22. CONTINGENCIESSuretyship for bank overdrafts and guarantees 12 043 8 372

23. CAPITAL COMMITMENTSApprovedContracted for 19 524 24 636Not yet contracted for 135 211 76 909The capital expenditure will be financed from the Group’s existing borrowing facilities.

68

Notes to the Consolidated Annual Financial Statements continued

for the year ended 30 June 2003

GROUP

2003 2002R’000 R’000

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24. RETIREMENT BENEFIT INFORMATIONAll salaried employees under the age of 63 are contributory members of the Group’s retirement benefit fund.

Contributions are charged to income as incurred and amounted to R4 560 465 (2002: R3 465 964) for the year,which is included under staff costs in note 2.

The fund is a defined contribution fund and is registered under the Pensions Fund Act of 1956, as amended.

Waged employees have the choice of joining the Group’s retirement benefit fund or joining the TGAWU pension fund.

25. FINANCIAL INSTRUMENTSFinancial instruments recognised on the balance sheet include Investments, Accounts receivable, Cash and cashequivalents, Accounts payable and Borrowings.

All financial instruments are recognised at the time the Group becomes party to the contractual provisions of theinstruments. All financial instruments are initially measured at cost, being fair value of the consideration given.Subsequently the financial instruments are measured as follows:

InvestmentsThe company’s investment in unlisted preference shares is carried at cost.

Accounts receivablesAccounts receivable, which generally have 30 to 90 day terms, are recognised at original invoice amount less anallowance for any uncollectable amounts. An estimate for doubtful debts is made when collection of any amountoutstanding is no longer probable. Bad debts are written off when identified.

Cash and cash equivalentsCash and cash equivalents comprise cash at bank and in hand.

Accounts payableAccounts payable, which are normally settled on 30 to 90 day terms, are carried at cost which is the fair value of theconsideration to be paid in the future for goods and services received, whether or not billed to the Group.

BorrowingsBorrowings are subsequently measured at amortised cost using the effective rate method. Amortised cost is calculatedtaking into account any transaction costs, and any discount or premium on settlement.

26. RELATED PARTIESManagement fees amounting to R3 500 676 (2002: R3 442 440) have been charged to Millennium WasteManagement (Pty) Ltd.

Plant hire charges amounting to R5 241 675 (2002: R2 924 915) were charged by Conquip (Pty) Ltd to Group companies.

All transactions with related parties occurred at arm’s length and have been eliminated on consolidation.

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

28. SEGMENTAL REPORTINGThe directors are of the opinion that the Group operates under one business segment being waste management andone geographic segment being South Africa. Hence both primary and secondary segmental disclosure requirementsare included in the financial statements.

29. CONTINGENT LIABILITYIn terms of a tax directive received from SARS, one of the subsidiaries within the Group has claimed a deduction fortaxation purposes on the cost of certain trademarks acquired. SARS has since revoked their directive. The companyhas lodged an objection which is still under consideration with SARS. Management is confident that the objection willbe upheld and therefore no provision has been raised for the additional taxation.

for the year ended 30 June 2003

for the year ended 30 June 2003

70

Company Annual Financial Statements

INCOME STATEMENTOperating profit 1 12 699 11 192 Taxation – –

Net profit attributable to ordinary shareholders 12 699 11 192

BALANCE SHEETas at 30 June 2003

AssetsInvestments in subsidiaries and joint ventures 2 181 555 179 411

EquityCapital and reservesOrdinary share capital and share premium 3 63 627 74 182 Distributable reserves 117 928 105 229

Total equity 181 555 179 411

STATEMENT OF CHANGES IN EQUITYOrdinary share capital and share premium 3Ordinary share capital at the beginning and end of the year 1 173 1 173

Share premiumAt the beginning of the year 73 009 73 009 Cash distribution (10 555) –

At the end of the year 62 454 73 009

DISTRIBUTABLE RESERVESAt the beginning of the year 105 229 94 037 Net profit attributable to ordinary shareholders 12 699 11 192

At the end of the year 117 928 105 229

CASH FLOW STATEMENTCash retained from operating activities (10 555) 3 156

Cash generated by operations 4 – –Utilised to decrease working capital – 11 600 Distribution/dividend paid to shareholders 5 (10 555) (8 444)

Cash effects of financing activities 10 555 (3 156)

Increase/(decrease) in loans to subsidiaries 10 555 (3 156)

Movement in cash and cash equivalents – –

COMPANY

2003 2002Note R’000 R’000

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COMPANY

2003 2002Note R’000 R’000

NOTES TO THE COMPANY ANNUAL FINANCIAL STATEMENTS

1. OPERATING PROFITOperating profit is stated after:Directors’ remunerationServices as directors – non-executive 88 118 Services as executives 5 673 5 168

5 761 5 286 Paid by subsidiaries (5 761) (5 286)

– –

Revaluation of investment in subsidiary 12 699 11 192

2. INVESTMENTS IN SUBSIDIARIES AND JOINT VENTURESShares in subsidiaries – Annexure A 122 554 109 855 Loans to subsidiaries – Annexure A 59 001 69 556

181 555 179 411

3. ORDINARY SHARE CAPITAL AND SHARE PREMIUMAuthorised share capital150 000 000 (2002:150 000 000) ordinary shares of 1 cent each 1 500 1 500

Issued share capital117 276 476 (2002:117 276 476) ordinary shares of 1 cent each 1 173 1 173

Share premium 62 454 73 009

4. CASH GENERATED BY OPERATIONSOperating profit 12 699 11 192 Adjusted for non-cash flow items:Revaluation of investment in subsidiary (12 699) (11 192)

– –

5. DISTRIBUTION/DIVIDEND PAID TO SHAREHOLDERSAmount owing at beginning of year – (8 444)Cash distribution from share premium (10 555) –

(10 555) (8 444)

INTEREST OF HOLDING COMPANY

Issued % held Shares Loansshare

Nature of capital 2003 2002 2003 2002 2003 2002Name business R’000 R’000 R’000 R’000

Direct subsidiariesSignificant subsidiariesEnviroServ Investments (Pty) Ltd Investment company 190 100 100EnviroServ Site (Holfontein) (Pty) Ltd Property holding company 120 100 100 27 27 – 17 EnviroServ Waste Management (Pty) Ltd Waste management and disposal 1 100 100 100 068 87 369 68 663 79 218 EnviroDrum (Pty) Ltd Drum recycling 1 000 100 100Organic Recycling (Pty) Ltd Property holding company 10 000 100 100 385 385 77 77 Waste-tech Landfill (Pty) Ltd Property holding company 100 100 100 4 122 4 158Waste-tech (Transvaal)) (Pty) Ltd Property holding company 6 000 100 100

Insignificant subsidiaries Dormant 100 100 17 952 17 916 (9 739) (9 756)

Indirect subsidiariesVissershok Landfill (Pty) Ltd Waste disposal 100 100 100EnviroServ Coastal Property Company (Pty) Ltd Property holding company 100 100 100Rapid Services (Pty) Ltd Plant hire 125 100 100Eastern Cape Incineration Services (Pty) Ltd Waste incineration 100 100 50Indirect joint venturesAmatola Waste (Pty) Ltd Waste collection 100 50 50Millennium Waste Management (Pty) Ltd Waste management and disposal 100 47 47Separation and Recovery Systems (Pty) Ltd Waste processing 100 50 50Vissershok Waste Management (Pty) Ltd Waste disposal 2 50 50

Indirect associateChargold (Pty) Ltd Manufacturing 415 100 35 35

122 554 109 855 59 001 69 556

2003 2002R’000 R’000

Aggregate financial information relating to joint ventures:

Balance sheetProperty, plant and equipment 26 926 15 410Current assets 39 398 14 134Current liabilities 45 656 9 821

Income statementRevenue 153 372 107 283

Loss before taxation (2 269) (744)Taxation 183 170

Loss after taxation (2 452) (914)

There are no contingent liabilities as at 30 June 2003.

Aggregate financial information relating to associate:

Balance sheetProperty, plant and equipment 4 440 6 197Current assets 15 525 12 000Long-term liabilities 1 205 148Current liabilities 4 865 4 481

Income statementRevenue 41 174 31 017

Profit before taxation 3 812 5 695Taxation 1 220 1 709

Profit after taxation 2 592 3 986

There are no contingent liabilities as at 30 June 2003.

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

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June June June June June June June2003 2002 2001 2000 1999 1998 1997

Ratios and Statistics

for the year ended 30 June 2003

* *

STOCK EXCHANGE PERFORMANCEMarket price – high (cents) 230 175 150 125 145 630 630Market price – low (cents) 113 110 56 50 47 90 290Market price – year-end (cents) 220 130 129 64 101 115 500Market capitalisation (R million) 232,2 137,2 136,2 75,1 118,5 134,9 549,5Earnings per share (cents) 34,97 30,05 2,59 20,45 19,06 (5,09) 14,33Headline earnings per share (cents) 35,68 30,59 26,15 22,10 20,08 8,08 14,33Value of shares traded (R’000) 10 222 9 719 62 376 27 732 35 073 86 046 44 975 Number traded (000’s) 6 433 7 398 46 508 32 350 39 489 24 935 9 373 Percentage traded 6,09 7,01 44,06 27,58 33,67 31,83 8,53Market price/net asset value (percent) 148 105 153 65 119 161 618 Closing price/earnings ratio 6,17 4,65 4,93 2,9 5,03 14,23 21,58 Closing distribution/dividend yield (percent) 5,5 7,7 6,2 10,9 5,0 n/a n/a

BUSINESS PERFORMANCERevenue (R’000) 426 086 377 946 379 887 331 608 342 927 340 117 255 581 Earnings (R’000) 36 911 31 716 2 879 23 978 22 356 (5 235) 14 965 Headline earnings (R’000) 37 654 32 289 29 036 25 920 23 547 9 527 14 965 Distribution/dividends 12,0 10,0 8,0 7,0 5,0 – –Current ratio(percent) 99,04 103,8 100,7 141,4 108,6 83,6 139,8Return on shareholders’ equity (percent) 26,1 28,1 27,1 24,1 25,7 10,9 16,4Return on total assets (percent) 13,8 12,8 13,2 12,9 9,1 4,4 13,4Profit margin (percent) 12,5 11,4 10,0 10,6 9,5 5,2 10,4Debt/equity ratio (percent) 30,6 36,5 – – – 44,5 41,0Interest cover (times) 6,2 6,2 24,3 20,2 3,5 1,7 4,8Cash generated by operations (R’000) 103 362 89 858 78 521 70 433 70 228 69 831 37 143

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

Definitions of how these ratios were calculated are included in the accounting policies note on page 55. * Comparative figures have been restated on a pro forma basis to include the acquisition of Waste-tech and all current accounting

policies as if they were in effect from 1 January 1997.

Category Number of % of Number % of

shareholders shareholders of shares issued shares

Nominees & banks 78 6,40 3 310 718 2,82

Individuals 1 065 87,44 35 371 798 30,16

Investment trust & Other Companies 75 6,16 78 593 960 67,02

Total 1 218 100,00 117 276 476 100,00

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

No of shareholders No of shareholders

Shareholder type In SA other than in SA Total shareholders

Nominal Nominal Nominal

Number Percentage Number Percentage Number Percentage

Public 1 052 86,37 155 12,73 1 207 99,10

Directors 8 0,66 Nil Nil 8 0,66

Other (anything that

falls outside the scope

or description of those

mentioned above) 3 0,24 Nil Nil 3 0,24

Total 1 063 87,27 155 12,73 1 218 100,00

According to the records of the company, the only shareholders, other than directors, registered as holding five percent or

more of the company’s shares at 30 June 2003 are the following:

Percentage of

Number of Net shares

shares Percentage in issue

BB Investment Co. (Pty) Ltd 28 712 058 24,48 27,20

Zader Investments (Pty) Ltd 8 986 145 7,66 8,51

Old Mutual Group 18 112 692 15,44 17,16

as at 30 June 2003

Analysis of Shareholders

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Shareholders’ Diary

for the year ended 30 June 2003

Financial year-end 30 June 2003

Annual general meeting 10 October 2003

Reports

– Interim March

– Announcement of annual results August

– Annual financial statements September

Distribution of share premium in lieu of dividend

– Declared 18 August 2003

– Last day to trade ordinary shares “cum” distribution 17 October 2003

– Ordinary shares trade “ex” distribution 20 October 2003

– Record date 24 October 2003

– Payment date 27 October 2003

– Period of no dematerialisation/rematerialisation 20 to 24 October 2003, both dates inclusive

76

Notice to Shareholders

NOTICE OF ANNUAL GENERAL MEETINGNotice is hereby given that the seventh Annual General Meeting of the shareholders of the company will beheld at 18 Dusseldorf Street, Apex, Benoni at 09h00 on Friday, 10 October 2003 for the following purposes:

Ordinary business

1. To receive and adopt the annual financial statements for the year ended 30 June 2003.

2. To re-elect by way of single resolution, or otherwise, the following directors who retire in terms of thecompany’s articles of association and, being eligible, offer themselves for re-election:

2.1 E Gombault

2.2 DK Gordon

2.3 B Joffe

2.4 A McLean

2.5 RP Rocher

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

4. To transact such other business as may be transacted at an annual general meeting.

Special business

Shareholders will be asked to consider and if deemed fit, to pass, with or without modification, the followingresolutions:

Special resolution number 1“Resolved that, the company or any of its subsidiaries be and are hereby authorised by way of a generalapproval, to acquire a further 20% of its ordinary issued share capital, in terms of section 85 (2) and 85 (3) ofthe Companies Act 61 of 1973 and in terms of the rules and requirements of the JSE Securities ExchangeSouth Africa (’’the JSE’’) being that:

• Any such acquisition of ordinary shares shall be implemented on the open market of the JSE;

• This general authority shall be valid until the company’s next Annual General Meeting, provided that itshall not extend beyond fifteen months from the date of passing of this special resolution;

• An announcement will be published as soon as the company has acquired ordinary shares constituting,on a cumulative basis, 3% of the number of ordinary shares in issue prior to the acquisition pursuant towhich the aforesaid 3% threshold is reached, containing full details of such acquisitions;

• Acquisitions of shares in aggregate in any one financial year may not exceed 20% of the company’sordinary issued share capital as at the date of passing of this special resolution.

• In determining the price at which ordinary shares issued by the company are acquired by it in terms ofthis general authority, the maximum premium at which such ordinary shares may be acquired will be10% of the weighted average of the market value at which such ordinary shares are traded on the JSE asdetermined over the five trading days immediately preceding the date of repurchase of such ordinaryshares by the company.

The reason for and effect of special resolution number 1The effect of special resolution number 1 and the reason therefor, is to grant the company a general approvalin terms of the Companies Act No 61 of 1973 (as amended) for the acquisition by the company of a further

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20% of the company’s ordinary issued share capital, which general approval shall be valid until the earlier ofsuch next Annual General Meeting of the company or its variation or revocation of such general authority byspecial resolution at any subsequent general meeting of the company; provided that the general authority shallnot extend beyond fifteen months from the date of this Annual General Meeting.

Opinion of the directorsShould the authority be granted at the company’s Annual General Meeting, it will provide the board of directorswith the flexibility to re-purchase such shares as and when the best interests of the company require it to do so.

The directors of EnviroServ Holdings Limited (“EnviroServ”) have considered the impact of the sharerepurchase and are of the opinion that:

1. The company and the Group will be able, in the ordinary course of business, to pay its debts for a periodof 12 months from the date of this notice.

2. The assets of the company and the Group are in excess of the liabilities, measured in accordance withthe accounting policies used in the audited annual financial statements for the year ended 30 June 2003.

3. The ordinary share capital and reserves of the company and the Group will be adequate for a period of 12 months from the date of this notice.

4. The working capital of the company and the Group will be adequate for a period of 12 months from thedate of this notice.

The company undertakes to advise the sponsor before entering the market to commence any share re-purchases, in order to enable the sponsor to furnish the JSE with written confirmation of the company’sworking capital.

Ordinary resolution number 1“Resolved that all of the ordinary shares in the authorised but unissued share capital of the company be andare hereby placed at the disposal and under the control of the directors, and that the directors be and arehereby authorised and empowered, subject to the provisions of the Act, and the Listings Requirements of theJSE, to allot, issue and otherwise dispose of such shares to such person/s on such terms and conditions andat such times as the directors may from time to time in their discretion deem fit.”

Ordinary resolution number 2“Resolved that, subject to the prior approval of the JSE, the directors of the company shall be entitled to payby way of a pro-rata reduction of share capital or share premium, in lieu of a dividend, an amount equal to50% (fifty percent) of the after tax profits of the company in any one financial year ending on or after 30 June 2004.”

Ordinary resolution number 3To approve a general authority for the directors to issue ordinary shares of 0,1 cent each for cash to publicshareholders as and when suitable situations arise, subject to the following conditions:

(a) that this authority shall be valid until the company’s next annual general meeting but shall in any eventnot extend beyond 15 months from the date of this annual general meeting;

(b) the shares must be issued to public shareholders and not to related parties;

(c) that a paid press announcement giving full details, including the impact on net asset value and earningsper share, will be published at the time of any issue representing, on a cumulative basis within onefinancial year, 5% or more of the number of shares of that class in issue prior to the issues;

78

Notice to Shareholders continued

(d) that issues in the aggregate in any one year may not exceed 10% of the number of shares of that class ofthe company’s issued share capital;

(e) that, in determining the price at which an issue of shares will be made in terms of this authority, themaximum discount permitted will be 10% of the weighted average traded price of the shares in question,as determined over the 30 days prior to the date determined or agreed to by the directors; and

(f) the approval of 75% majority of the votes cast by the shareholders present or represented by proxy at thismeeting is required for the resolution pertaining to the waiver of pre-emptive rights to become effective.

Ordinary resolution number 4

“Resolved that any one of the directors of the company be and is hereby authorised to do all such things, signall such documents and take such further and other actions as may be necessary to implement the resolutionsset out in this notice.”

Short biographies of directors seeking re-election

Executive directors

Esmé Gombault (39)

Esmé Gombault obtained her BSc (Chemistry) in 1985. Esmé has been in the Waste Management Industrysince 1986. She started her career as a Pollution Control Officer with the Department of Environmental Affairsand Tourism. She joined the Group in 1988 and is currently responsible for the management of EnviroServowned landfill and incineration facilities nationally. Her current position is Regional General Manager: Dispose-tech.

Desmond Gordon (42)

On 7 February 2001, Des was appointed Group Chief Executive of EnviroServ Holdings Limited. Prior to this,Des served as Group Financial Director for EnviroServ Holdings Limited from April 1997 and prior to that wasGroup Financial Director of Waste-tech from September 1996. Des was previously the Group FinancialManager from January 1991 until September 1996 for a construction and construction materialsmanufacturing company listed on the Johannesburg Stock Exchange. From January 1985 until December1990 Des was employed in the auditing profession with the Johannesburg office of one of the majorinternational auditing firms.

Alexander McLean (Alistair) (54)

Alistair has served as Executive Chairman of the EnviroServ Group since February 2001 and is responsible forstrategic management and planning as well as growth and new business development. Before this, Alistair wasGroup Chief Executive, a position he served in since 1996 and has been involved in EnviroServ since 1986,when he became a major shareholder. Over the years he has steered the Group through a series ofacquisitions and mergers to produce a group of businesses with good critical mass and diversity in relatedareas of waste management.

Raymon Rocher (35)

Raymon Rocher completed his studies at University of Natal (Pmb) in 1991. After completing his articles ofclerkship with KPMG in Pietermaritzburg, he joined Group Five Limited in 1995 as Group Accountant. In 1997 he joined EnviroServ as Group Financial Manager and was appointed to the Operational Board on 8 March 2000. After spending a year in Gauteng as the Regional Financial Manager in order to becomeacquainted with the operational side of the business, Raymon was appointed to the EnviroServ HoldingsLimited board as Group Financial Director on 7 August 2001.

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Non-executive director

Brian Joffe (56)

Brian is Chairman of The Bidvest Group Limited. Bidvest is the largest service company on the JSE and one ofthe largest industrial companies by market capitalisation. It employs 67 000 people and has subsidiaries listedon the London, Australian and Luxembourg Stock Exchanges. Before Bidvest, Brian held variouschairmanships and was Chief Executive of EW Tarry plc which was listed on the London Stock Exchange inAugust 1983. Brian graduated from the University of the Witwatersrand as a Chartered Accountant (SA) in1971 and served his Articles with Levitt Kirson Gross.

Voting and proxies

Certificated shareholders

A shareholder of the company entitled to attend and vote at the general meeting of shareholders is entitled toappoint one or more proxies (who need not be a shareholder of the company) to attend, vote and speak inhis/her stead. In order to be valid, completed forms of proxy must be lodged at the transfer secretariesComputershare Ltd, Investor Services Division, 70 Marshall Street, Johannesburg 2001 (PO Box 61051,Marshalltown 2107) by no later than 09h00 on Wednesday, 8 October 2003.

On a show of hands, every shareholder of the company present in person or represented by proxy shall haveone vote only. On a poll, every shareholder of the company present in person or represented by proxy shallhave one vote for every share held in the company by such shareholder.

Dematerialised shareholders

EnviroServ Holdings Limited shareholders who have already dematerialised their EnviroServ Holdings Limitedshares through a Central Securities Depository Participant (“CSDP”) or broker and who wish to attend thegeneral meeting must instruct their CSDP or broker to issue them with the necessary authority to attend.

Should EnviroServ Holdings Limited shareholders who have already dematerialised their shares wish to vote byway of proxy, they must provide their CSDP or broker with their voting instructions in terms of the custodyagreement entered into between them and their CSDP or broker, except for shareholders who have electedown-name registration in the sub-register through a CSDP or broker, which shareholders must complete theattached form of proxy and return it in accordance with the instructions contained therein to the transfersecretaries, Computershare Ltd, Investor Services Division, 70 Marshall Street, Johannesburg 2001 (PO Box 61051, Marshalltown 2107), so as to be received by them no later than 09h00 on Wednesday, 8 October 2003, or in terms of the custody agreement entered into between the dematerialised own-nameshareholders and their CSDP.

A proxy need not be a shareholder of the company.

In respect of dematerialised shares, it is important to ensure that the person or entity (such as a nominee)whose name has been entered into the relevant sub-register maintained by a CSDP completes the form ofproxy in terms of which he/she appoints a proxy to vote at the general meeting of shareholders in accordancewith the instructions received from dematerialised beneficial holders.

By order of the board

O DeftereosCompany Secretary

18 August 2003

EnviroServ Holdings Limited

(Incorporated in the Republic of South Africa)Registration number: 1994/000280/06Share Code: ENV ISIN ZAE 0000 10989

Secretary and registered office Auditors

Orestis Deftereos (ACIS) CA(SA) Ernst & YoungC/o EnviroServ Holdings Limited Chartered Accountants (SA)18 Dusseldorf Street Ernst & Young HouseApex 52 Wanderers Office ParkBenoni 1501 Corlett Drive, Illovo 2196P O Box 2207 P O Box 2322Benoni 1500 Johannesburg 2000

Transfer secretaries Bankers

Computershare Ltd, Investor Services Division First National Bank of Southern Africa LimitedRegistration Number: 2000/006082/06 ABSA Bank Limited70 Marshall Street Standard Bank of South Africa LimitedJohannesburg 2001P O Box 61051Marshalltown 2107

Offices Tel Fax E-mail

Head Office, Benoni (011) 422-2560 (011) 845-1495 info.ho@enviroserv.co.zaRietfontein, Germiston (011) 456-5400 (011) 453-7583 info.gp@enviroserv.co.zaProspecton, Durban (031) 902-1526 (031) 902-5778 info.kzn@enviroserv.co.zaBellville, Cape Town (021) 951-8420 (021) 951-8440 info.ct@enviroserv.co.zaWells Estate, Port Elizabeth (041) 466-2741 (041) 466-2745 info.pe@enviroserv.co.za

Website: www.enviroserv.co.za

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Administration

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Form of Proxy

EnviroServ Holdings LimitedRegistration No. 1994/000280/06Share Code: ENV ISIN:ZAE 0000 10989(“EnviroServ Holdings Limited” or “the company”)

For use by certificated and own-name dematerialised shareholders at the Annual General Meeting of shareholders to be held atthe registered office of EnviroServ Holdings Limited, 18 Dusseldorf Street, Apex, Benoni at 09h00 on Friday, 10 October 2003.

I/We

being the holder(s) of shares of EnviroServ Holdings Limited hereby appoint (see note 1)

1. or failing him*,

2. or failing him*,

3. or failing him, the chairman of the meeting, as my/our*proxy to act for me/us * at the Annual General Meeting of the company which will be held at 09h00 on Friday, 10 October 2003and at every adjournment or postponement thereof and to vote for and/or * against such resolutions and/or * abstain fromvoting in respect of the shares in the issued share capital of the company registered in my/our* name (see note 2) as follows:

NUMBER OF VOTES

In Favour of Against Abstain

ORDINARY BUSINESS1. To receive and adopt the annual financial statements for

the year ended 30 June 2003

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

2.1 E Gombault

2.2 DK Gordon

2.3 B Joffe

2.4 A McLean

2.5 RP Rocher

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

SPECIAL BUSINESS1. Special resolution number 1

2. Ordinary resolution number 1

3. Ordinary resolution number 2

4. Ordinary resolution number 3

5. Ordinary resolution number 4

and generally to act as my/our* proxy at the said general meeting. (Tick whichever is applicable. If no directions are given,the proxy holder will be entitled to vote or to abstain from voting as that proxy holder deems fit.)

Signed at: this day of 2003

Signature:

Assisted by me (where applicable)

(State capacity and full name)

Each shareholder is entitled to appoint one or more proxies (none of whom need be a shareholder/s of the company) toattend, speak and vote in place of that shareholder at the general meeting.*Delete as applicable.Please read the notes on the reverse hereof.

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Notes to Proxy

1. A shareholder may insert the name of a proxy or the names of two alternative proxies of the shareholder’s choice in

the space provided. The person whose name stands first on the form of proxy and who is present at the general

meeting will be entitled to act as proxy to the exclusion of those whose names follow.

2. A shareholder’s instructions to the proxy must be indicated by the insertion of the relevant number of votes exercisable

by the shareholder in the appropriate box provided. Failure to comply with the above will be deemed to authorise the

proxy to vote or to abstain from voting at the general meeting as he/she deems fit in respect of all the shareholder’s

votes exercisable thereat. A shareholder on the proxy is not obliged to use all the votes exercisable by the shareholder

or by the proxy, but the total of the votes cast and in respect of which abstention is recorded may not exceed the total

of the votes exercisable by the shareholder or by the proxy.

3. Forms of proxy must be lodged with or posted to the company’s transfer secretaries, Computershare Ltd, Investor

Services Division, 70 Marshall Street, Johannesburg 2001 (PO Box 61051, Marshalltown, 2107) to reach them no

later than 09h00 on Wednesday, 8 October 2003.

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

meeting and speaking and voting in person thereat to the exclusion of any proxy appointed in terms hereof.

5. Documentary evidence establishing the authority of a person signing this form of proxy in a representative capacity or

other legal capacity must be attached to this form of proxy unless previously recorded by the transfer secretaries or

waived by the chairman of the general meeting.

6. Any alteration or correction made to this form of proxy must be initialled by the signatory/ies.

7. If any shares are jointly held, the first name appearing in the register shall, in the event of any dispute, be taken as the

shareholder.

in environmentally responsible waste management

enviroserv holdings ltd 2003annual report

leadership

in environmental ly responsible waste management

This report is printed on environmentally friendly Naturalis paper.

Glossary of terms

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

BPEO – “Best Practicable Environmental Option.” The outcome of a systematic consultative

procedure that emphasises the protection of the environment. It establishes, for a given set

of objectives, the option that provides the most benefit or least damage to the environment

as a whole at acceptable cost.

CAIA – Chemical and Allied Industries Association.

Cell – This is the basic landfill unit within the landfill site into which waste is disposed.

Closure – The act of terminating the operation of a landfill. Closure is preceded by rehabilitation and

followed by post closure monitoring.

Domestic waste – Primarily household waste and garden refuse.

Duty of care – This requires that anyone who generates, transports, treats or disposes of waste must

ensure that there is no unauthorised transfer or escape of waste from their control, and

must retain documentation describing both the waste and any related transactions.

The person retains responsibility for the waste generated or handled.

Encapsulation – The procedure for disposing of high hazardous wastes, not suitable for direct landfilling,

by isolating the wastes in sealed, reinforced concrete cells located in a demarcated and

independently lined area of a Class H hazardous landfill site.

Hazardous waste – Waste, other than radioactive waste, which is legally defined as hazardous in the state in

which it is transported or disposed of, determined by the chemical reactivity, toxic,

explosive, corrosive or other characteristics which cause, or are likely to cause, danger to

health or the environment when improperly treated, stored, transported or disposed of.

Healthcare risk waste – Infectious waste emanating primarily from hospitals, clinics, surgeries, chemists and

sanitary services.

Industrial waste – Hazardous and non-hazardous waste in either a dry or liquid form from industrial and

commercial generators.

Landfill site – The area permitted for waste disposal on which landfill cells and other structures required

for the safe disposal of waste are constructed.

Leachate – An aqueous solution arising when water percolates through decomposing waste and as a

result of the biodegradation of the waste. It contains final and intermediate products of

decomposition, various solutes and waste residues.

Local authorities – Municipalities, district councils and government institutions.

OHSA – Occupational Health and Safety Act.

SHERQ – Safety, Health, Environment, Risk and Quality.

ISO 9001 – Specifies requirements for a quality management system where an organisation needs to

demonstrate its ability to consistently provide product that meets customer and applicable

regulatory requirements, and aims to enhance customer satisfaction through the effective

application of the system, including processes for continual improvement of the system and

the assurance of conformity to customer and applicable regulatory requirements.

ISO 14001 – Specifies requirements for an environmental management system, to enable an organisation

to formulate a policy and objectives taking into account legislative requirements and

information about significant environmental impacts.

ISO 17025 – Specifies the general requirements for the competence to carry out tests and/or calibrations,

including sampling.

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

you may e-mail annemaried@enviroserv.co.za.

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in environmentally responsible waste management

enviroserv holdings ltd 2003annual report

leadership

in environmental ly responsible waste management

This report is printed on environmentally friendly Naturalis paper.

Glossary of terms

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

BPEO – “Best Practicable Environmental Option.” The outcome of a systematic consultative

procedure that emphasises the protection of the environment. It establishes, for a given set

of objectives, the option that provides the most benefit or least damage to the environment

as a whole at acceptable cost.

CAIA – Chemical and Allied Industries Association.

Cell – This is the basic landfill unit within the landfill site into which waste is disposed.

Closure – The act of terminating the operation of a landfill. Closure is preceded by rehabilitation and

followed by post closure monitoring.

Domestic waste – Primarily household waste and garden refuse.

Duty of care – This requires that anyone who generates, transports, treats or disposes of waste must

ensure that there is no unauthorised transfer or escape of waste from their control, and

must retain documentation describing both the waste and any related transactions.

The person retains responsibility for the waste generated or handled.

Encapsulation – The procedure for disposing of high hazardous wastes, not suitable for direct landfilling,

by isolating the wastes in sealed, reinforced concrete cells located in a demarcated and

independently lined area of a Class H hazardous landfill site.

Hazardous waste – Waste, other than radioactive waste, which is legally defined as hazardous in the state in

which it is transported or disposed of, determined by the chemical reactivity, toxic,

explosive, corrosive or other characteristics which cause, or are likely to cause, danger to

health or the environment when improperly treated, stored, transported or disposed of.

Healthcare risk waste – Infectious waste emanating primarily from hospitals, clinics, surgeries, chemists and

sanitary services.

Industrial waste – Hazardous and non-hazardous waste in either a dry or liquid form from industrial and

commercial generators.

Landfill site – The area permitted for waste disposal on which landfill cells and other structures required

for the safe disposal of waste are constructed.

Leachate – An aqueous solution arising when water percolates through decomposing waste and as a

result of the biodegradation of the waste. It contains final and intermediate products of

decomposition, various solutes and waste residues.

Local authorities – Municipalities, district councils and government institutions.

OHSA – Occupational Health and Safety Act.

SHERQ – Safety, Health, Environment, Risk and Quality.

ISO 9001 – Specifies requirements for a quality management system where an organisation needs to

demonstrate its ability to consistently provide product that meets customer and applicable

regulatory requirements, and aims to enhance customer satisfaction through the effective

application of the system, including processes for continual improvement of the system and

the assurance of conformity to customer and applicable regulatory requirements.

ISO 14001 – Specifies requirements for an environmental management system, to enable an organisation

to formulate a policy and objectives taking into account legislative requirements and

information about significant environmental impacts.

ISO 17025 – Specifies the general requirements for the competence to carry out tests and/or calibrations,

including sampling.

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

you may e-mail annemaried@enviroserv.co.za.

enviroserv holdings ltd ann

ual re

po

rt 20

03