Viridor increased its revenues by 13.6% in 2010/11 on the back of very strong recycling income underpinned by the acquisition of several new businesses, preliminary full-year results published by its parent company Pennon Group today (May 24) have revealed.
The increase in revenues from 626 million to 712 million was accompanied by a 14.2% increase in pre-tax profits from 55.1 million to 62.9 million.
Pennon attributed this continued strong growth to Viridors progress in recycling and an increased contribution from its joint-venture projects. This saw the Greater Manchester waste PFI Viridor Laing partnership contribute 11 million towards its profits, compared to 4.2 million in 2009/10, and the Lakeside EfW project it runs with Grundon contribute 9 million.
In total, 46% of Viridors profits came from recovering value from waste either by recycling or renewable energy generation.
Viridors increase in profits drove a 1.5% growth in pre-tax profits for Pennon Group as a whole, compensating for a 0.5% decline in the contribution made by South West Water.
And, in light of this, Pennon Group chairman Ken Harvey said: I am pleased to say that it has been another successful year for the Group. During the year South West Water continued to improve its operational performance and Viridor has once again delivered strong profit growth.
He added: Viridors long-term profit momentum is underpinned by its recycling business, its
major Energy from Waste planning successes, and its strong PPP pipeline.
The companys successes were also welcomed by Viridors chief executive Colin Drummond, who said: We have continued to show strong growth in demanding market conditions.
The fact that nearly half our profits now come from recycling and recovering energy from waste shows that the business continues to transform itself in line with the UKs recycling and resource efficiency agenda.
Acquisitions
In 2010/11, Viridor acquired a host of new recycling businesses, including Reconomy, Pearsons, Adapt Recycling, Swinnerton and Martock. Alongside the 2009/10 acquisitions of London Recycling and International Recycling, they accounted for 40.6 million of its revenues for 2010/11.
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This was augmented by a 44.9 million increase in revenues from its existing business including a 14 million increase in the amount of landfill tax collected.
The contribution from its recycling activities was driven by higher prices for recyclate, which Pennon said were back to the peak levels seen previously and more than offsetting lower gate fees and higher associated collection costs.
The company saw its recycling volumes rise by 22%, or 0.3 million tonnes, to 1.7 million tonnes, and it noted that profits per tonne were appreciably higher than from recycling
Energy
In terms of Viridors energy activities, Pennon Group noted that, while its overall landfill gas power generation capacity increased by eight megawatts (MW) to 108MW, the end of high price contracts for power generated meant average revenues per megawatt hour (MWh) fell by 9%, from 90 per MWh in 2009/10 to 82 per MWh in 2010/11.
However, Pennon also highlighted the companys increasing interest in a number of other energy-from-waste projects, including Lakeside, the various MBT/AD and EfW projects being developed under the Greater Manchester waste PFI and projects such as Ardley in Oxfordshire and Trident Park in Cardiff.
Taking into account these projects, Pennon said Viridor was aiming to increase its total operational renewable energy capacity from its current 136.5MW to over 300MW within the next five years.
Outlook
Commenting on Viridors future outlook, the results state: Recycling is now the companys largest single segment and will be key to profit growth in the next two years.
EfW/PPP projects are already starting to contribute to the bottom line and our healthy pipeline is expected to underpin the profit momentum of the company long-term.
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