Shanks looks to municipal work as Pontypool knocks profits

While headline profits were up, an exceptional item of 8.4 million hit the profit before taxation figure. The item allows for the “ceasing of operations” at Shanks Pontypool incineration plant “caused by the harsh conditions in the hazardous waste market”. It knocked the profit before taxation down to only 26.9 million compared to 35.6 million a year before.” Turnover stood at 529m compared to 502m the year before.

A brighter note in the results, which are for the year ending 31 March 2001, was sounded by the group over the municipal sector for which Shanks says it has technology which will avoid the need for incineration.

New technologies
After highlighting the fact the group is bidding on a number of long term local authority waste disposal contracts, a company statement noted: “An integrated array of innovative new technologies has been assembled which allows local authorities to meet the emerging requirements of the Landfill Directive, without resort to new incineration capacity.” Shanks is pioneering the development of bio-MRFs which it has proposed for East London and Milton Keynes.

Group chief executive Mike Averill told letsrecycle.com that while prices for recyclate had been disappointing, recycling remained very important for the company. “Of course it is important. If you don't recycle you are not going to win tenders from local authorities.”

He explained that Shanks bio-MRFs with their MBT [mechanical biological treatment] process gave the company a competitive advantage. “What we are doing is pitting these against incineration.”

Incineration
Mr Averill added: “Personally I have nothing against incineration. We are pragmatists. What's the point of going to the wall if you are never going to get planning permission.”

The company expects to finalise contracts with Dumfries and Galloway and the East London Waste Authority by the end of the year. It considers that such contracts will provide some certainty to earnings, saying “a select portfolio of these opportunities, project financed through the Private Finance Initiative could provide a high degree of certainty over future cash flows and earnings.”

Chairman Ian Clubb said that the collection and recycling activities in the UK had disappointed “due to a combination of strong competition and low recyclate prices.”