Last checked at 3 Feb 2009 07:00
Shanks Group plc
Interim Management Statement
Shanks Group plc, a leading European environmental company focusing on the provision of sustainable waste management solutions, today issues the following Interim Management Statement.
Overall year on year organic sales growth in the nine months to 31 December 2008 is running at 5.6%.
Trading since our interim announcement in November in our Dutch business continued to be satisfactory with the hazardous waste business remaining buoyant. Volumes in our Solid Waste division have shown some softening, particularly during the very cold start to the New Year.
In Belgium overall trading was again satisfactory. Our landfill continues to benefit from new input streams offsetting the difficult trading conditions which have persisted in the wood waste market. Hazardous waste continued to show good year on year growth.
In the UK trading since November has been challenging due to the sharp fall in the value of recyclable materials and a slowdown in volumes. Swift action has been taken to reduce the cost base and this will lead to a restructuring charge of around £1.5m in our final quarter. This should deliver approximately £2m of annual cost savings going forward to help mitigate the current challenging trading conditions.
The banks are finalising their financial due diligence on the Cumbria municipal waste treatment contract and it remains our expectation that this will reach financial close during this financial year.
In Canada Orgaworld has secured an increase in volumes on our contract with the District of York which means that our first plant is now operating at near full capacity. Construction work on our second facility in Ottawa is continuing in line with plan.
Satisfactory progress is being made in refinancing the Group's £250m bank facility that expires in April 2010.
In the quarter to 31 December 2008 strong working capital management contributed to a net £8m cash inflow. This, however, was more than offset by an adverse exchange movement on our predominantly Euro denominated core debt as the value of Sterling fell to record lows at the end of December. Core net debt at 31 December 2008 stood at £317m (30 September 2008: £270m). PFI company and other non recourse project funding debt, excluding fair value of interest rate swaps, increased slightly to £118m (30 September 2008: £116m) as draw downs on project funding to finance our biomass combined heat and power project in Belgium offset the repayment of PFI company debt.
Aided by favourable exchange rates, overall results from trading remain broadly in line with our expectations before the restructuring costs in the UK and a small increase in projected current year finance charges associated with the refinancing.
Looking forward, the broad based nature of our portfolio and technologies provide relative resilience during the difficult economic outlook and position us to deliver good growth once conditions improve. During 2009 we will balance continued investment in our strategy against a strong focus on cash generation.
For further information please contact:
Tom Drury, Group Chief Executive
Fraser Welham, Group Finance Director
Shanks Group plc
Telephone +44 (0)1908 650582
David Allchurch, Stephen Malthouse
Tulchan Communications
Telephone +44 (0) 207 353 4200