Ignoring currency fluctuations, waste management firm Shanks reported a 7 per cent increase in overall revenues across its four territories: Netherlands, Belgium, UK and Canada. If you strip out swap derivative movements and exceptional items, this translated to a modest 2 per cent increase in adjusted pre-tax profits. However, this was depressed by a sharp fall in Belgian landfill profits, which declined from €10m to €3m after the government increased tax and banned the use of some sites. Adjust for that and group pre-tax profits would have increased 27 per cent at constant currencies.
The Netherlands, the group's largest revenue generator - accounting for two-thirds of profits - was boosted by higher volumes and increased prices for recycled waste. While profits in the Belgian business actually increased 5 per cent, excluding the landfill shortfall. Although the UK makes up a relatively small proportion of the business, the segment had a stellar half-year, with profits more than doubling to £2.1m. The division sold equity and debt in a number of PFI projects to John Laing Infrastructure while keeping the operating contracts, and also bought United Utilities' waste business.
Overall, the group achieved £9m of savings and this is expected to grow to £15m by the year-end. Strong cash flow and the PFI asset sales helped reduce net debt from £338m to £224m. Investec forecasts full-year EPS of 6.1p (6.4p in 2010), rising to 7.5p the year after.
Shanks (SKS) | ||||
|---|---|---|---|---|
| ORD PRICE: | 112p | MARKET VALUE: | £444m | |
| TOUCH: | 111.25-112p | 12-MONTH HIGH: | 136p | LOW: 82p |
| DIVIDEND YIELD: | 2.7% | PE RATIO: | 20 | |
| NET ASSET VALUE: | 95p* | NET DEBT: | 59% | |
| Half-year to 30 Sept | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2009 | 335 | 17.4 | 3.50 | 1.00 |
| 2010 | 348 | 10.5 | 4.30 | 1.00 |
| % change | +4 | -40 | +23 | - |
Ex-div:08 Dec Payment:14 Jan Includes intangible assets of £289m, or 72p a share. | ||||
