The sale of the company's 227 million disposal and power generation business to Waste Recycling Group last summer has left Shanks in a stronger position to bid for lucrative local authority contracts in the UK, company chiefs believe.
The result of the sale means overall turnover for Shanks is down 84 million to 504 million in the period up to March 31, 2005, according to today's preliminary results statement.
” These results provide further evidence that Shanks not only is in a sound financial position but is also strategically positioned.“
– Michael Averill, Shanks Group
But, headline profits for the Group rose 10% to 33.3 million, while operating profits before goodwill amortisation rose by 22% from 2004's 31.3 million to 38.3 million in this latest 12-month period.
The new-look UK arm of the Group – Shanks Waste Management – now concentrates on the collection and management of commercial/industrial wastes, contaminated land and hazardous wastes with its high-temperature incineration capability. Trading losses of 4.5 million have been turned into profits of 1.4 million, with the largest improvements seen in the company's collection business, it said.
PFI
Shanks is also concentrating on its long-term contracts treating municipal waste under the Private Finance Initiative. In his report, Group chief executive Michael Averill said 30% of the UK market for municipal waste will be tendered over the next five years as councils strive to meet the EU Landfill Directive landfill diversion targets.
Management actions over the past year have meant a significant cut in the Group's overall debt, from 309 million in March 2004 to 162 million in March 2005.
About 63 million of the continuing debt is directly related to the company's development of major waste treatment infrastructure for its PFI contracts, which involve the construction of waste plants using Italian mechanical biological treatment technology.
Mr Averill said: “These results provide further evidence that Shanks not only is in a sound financial position but is also strategically positioned at the higher technology based end of the waste treatment and disposal industry.
“We are therefore ideally placed to compete in the changing European waste market, particularly in the burgeoning UK municipal PFI market,” Mr Averill added.
Technology
Shanks has partnered Italian firm Ecodeco to provide MBT plants for the UK, and the company said today it was confident that rising Landfill Tax and regulations stemming from the Europe's Landfill Directive would provide further stimulus for councils to take up this kind of technological approach to waste.
The company is already working with the East London Waste Disposal Authority on two plants at Frog Island, with construction “well underway”. The technology is also to be used in Shanks' contract with Dumfries & Galloway.
The company is also one of five major waste firms shortlisted for the multi-billion pound, 25-year Greater Manchester Waste Disposal Authority waste disposal contract (see letsrecycle.com story).
Trading profits in Shanks Group's business in Continental Europe held steady, with a slight improvement for the Belgian operations and a slight downturn for the company in the Netherlands, mainly as the result of exchange rate changes.
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