Double the number of exceptional costs at waste-to-product business Shanks (SKS) means its reported results look pretty awful. But more than £10m of the £16.3m in one-off charges are linked to its forthcoming merger with Van Gansewinkel Groep (VGG), which will help solidify its position in the Benelux market. Operationally, the company performed well, with trading profit in its commercial and hazardous waste divisions rising 20 per cent and 38 per cent, respectively, on a constant currency basis. Its municipal division suffered a major drop in trading profit of 81 per cent, but chief executive Peter Dilnot said a new range of products should help open up access to a wider number of markets there.
Mr Dilnot said a series of 'self-help' measures, including 'sweating' assets to make the most of their capacity and a reorganisation of its approach to sales, had already helped improve margins. He said these measures would also be helpful for VGG and will no doubt feed through to the targeted €40m (£34.3m) of cost synergies expected by the third year after the deal.
Analysts at Investec expect adjusted pre-tax profit of £27.5m in the year to March 2017, leading to EPS of 4.3p, compared with £21m and 4.2p in FY2016.
| SHANKS GROUP (SKS) | ||||
|---|---|---|---|---|
| ORD PRICE: | 96.5p | MARKET VALUE: | £588m | |
| TOUCH: | 96.3-96.5p | 12-MONTH HIGH: | 101p | LOW: 60p |
| DIVIDEND YIELD: | 3.4% | PE RATIO: | na | |
| NET ASSET VALUE: | 28p* | NET DEBT: | 147% | |
| Half-year to 30 Sep | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2015 | 296 | 2.6 | 0.2 | 1.10 |
| 2016 | 348 | -0.9 | -0.7 | 0.95 |
| % change | +18 | - | - | -14 |
Ex-div: 24 Nov Payment: 6 Jan *Includes intangible assets of £216m, or 35p a share | ||||
