Hazardous waste specialist Silverdell (SID) has indicated that profits before exceptional items for the year to September will be up 46 per cent from last year at around £6m and diluted earnings per share are expected to be around 1.2p. That leaves the shares trading on 12 times forecast EPS and, while the share price has nearly doubled from our buy tip (7.25p, 14 Jan 2011), the growth momentum suggests there is still more upside to come. Management has shown its confidence by announcing a maiden dividend for the year of between 0.15p and 0.2p a share.
Much of the improvement has come from providing consultancy services, where profits are expected to have risen by around 30 per cent, more than offsetting a 15 per cent fall in remediation revenue. The decrease reflects an unforeseen deferral on certain high-margin, shut-down and refurbishment work due to a change in customer plans, but this work is now under way. Following the successful integration of EDS, the enlarged group is now issuing tenders for large contracts in Australia and Canada, as well as in the UK and Europe. The current order book is worth over £200m, and three-quarters of the revenue is expected to come in 2013.
