Shanks Group has said that it is trading in line with expectations despite challenging market conditions, according to its quarterly report covering October 2013 to February 2014 published today (February 3).
The firm, which completed the sale of its UK solid waste division to Biffa for 9.5 million in December, expects to see an immediate increase in profits and has secured its financing requirements for the next five years.
Since successfully completing the sale, Shanks has also seen its net debt fall sharply to 151 million from 182 million at the half year point.
The reduction, the firm claims, was in part due to strong working capital management, a timing difference in PFI construction payments, and an insurance payment relating to a fire at its Vliko facility in the Netherlands last August.
As a result, Shanks expects to finish the year with a comfortable net debt to EBITDA ratio, and a slight improvement on previous estimates.
Welcoming the latest figures, Group chief executive Peter Dilnot said the firm was delighted to have refinanced its core banking facility on a long term-basis.
He said: Our rigorous management of the business is delivering results in the face of market conditions that remain challenging. The successful exit from UK Solid Waste will increase profits immediately and allow us to focus on growth areas where we can deliver sustainable and attractive returns. We are also delighted to have refinanced our core banking facility on a long term basis.
Together with the Belgian bond raised earlier this year, we have secured our core financing requirements for the next five years. The Board remains confident that the Group will deliver a trading result in line with its expectations for the year ended 31 March 2014.
Sale
First announced in October 2013, Shanks opted to sell its solid waste business, which collects, sorts and processes commercial and industrial waste, after it claimed the division was not positioned to win in a competitive market (see letsrecycle.com story).
In addition, the sale also saw the closure of its materials recycling facilities in Blochaim and Kettering, with combined net proceeds estimated at 6 million after sale. Meanwhile, Shanks has turned its attention to its four remaining core divisions: UK municipal; organics; Benelux (Belgium, Netherlands and Luxembourg); and, solid and hazardous waste.
The firm has announced a cost reduction plan for its Benelux division is on-track, including the commencement of the first elements of the Shared Service Centres.
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And, as well as continued investment in its hazardous waste business, construction work at Shanks Wakefield and Barnsley, Doncaster and Rotherham (BDR) PFI sites worth in the region of 200 million is on schedule.
Final planning permission has also been secured for its PFI gasification plant in Derby, after an Inspectorates dismissal was overturned by the High Court in 2011 (see letsrecycle.com story).
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