Shanks Share Discussion Threads

[a1canary] 06/11/2002 13:56

Ok, call me thick - can somone please explain exactly what the T? column refers to in the Trades section. Obviously these are some kind of hidden trade where you don't know if it's a buy or a sell but what does it tend to signify?
For instance, there has been some steady but low volume of Shanks stocks today in the buy column but 625,000 went through on the T? column. How will this affect the price?
All advice appreciated.

[a1canary] 05/11/2002 11:49

This makes interesting reading - i fancy this for a bounce. Good defensive stcok too, there will always be waste!!

[halfpenny] 25/10/2002 00:42

SKS was recommended by a chap on Bloomberg....peerhaps he knows somethig we don't....

maybe worth a punt at these prices...

may wait for furher drops..

[wipo1] 24/10/2002 13:11

halfpenny , I think the shares may bounce to about 120p if the results are any good, but loads of stock overhang with some big sellers offloading, I think waste management is still a good business , maybe going through a slight bad patch, but may now be a bit overdone, no rush to get in a the moment, but still on me watch list.

[wipo1] 23/10/2002 15:47

Yeah mate , even the big fund managers got his one wrong, having all that debt is not good when trading slows down, yeah looks like only good results will save this one.

[halfpenny] 23/10/2002 15:04

looks like its to drop to 50p due to debt problems and lack of revenue...

50p to come sooonnn

BIG DROPS

[m.t.glass] 11/10/2002 01:21

Reshorted Oct 1 after banking Sep gain.
:o)

[theape] 11/10/2002 01:03

its not too late you know

.

[theape] 08/10/2002 12:47

whats gonna be good in results.

expansion of credit from the bank ?

reduced insurance costs ?

accountants no longer insist on a going concern clause because of a dramatic improvement in cshflow.

auditors insist it is alright to capitalise bid costs, and that FRS17 can be ignored.

it may wiggle a lot, but the conclusion is "probable"

[wipo1] 08/10/2002 00:04

Yeah , not a buyer in site, looks like the amount of debt shanks has is a problem, I started to get wary of shanks when I saw the amount of new companies starting up like William Tracey , Enviroscot ETC , looks like the stock has lost all support, so much for a safe haven, only safe haven is pound notes in the bank.

[matthewa] 07/10/2002 11:58

SKS - Moving lowqer again MMs must be alarmed @ massive discount sales going thru

[matthewa] 07/10/2002 11:58

SKS - Moving lowqer again MMs must be alarmed @ massive discount sales going thru

[theape] 07/10/2002 02:00

a detailed read of the financial statements always fascinating don't you think. reports end of the month.




[Highlights] [Chairman's statement] [Operating review] [Financial review] [The environment, the community and the Group] [Downloadable accounts]
Finance Function

The finance function continues to be proactively involved in all aspects of the business focusing on financial control, operating performance and business development opportunities.

All operating divisions are controlled against their headline profit and cash flow budgets. Headline profit is pre-tax profit before exceptional items and goodwill amortisation. Management of financial resources, particularly cash, working capital and capital expenditure, is key to the success of the Group’s strategy. All investment decisions are rigorously appraised.

Accounting Policies

The Group’s accounting policies and estimation techniques have been reviewed, as required by FRS 18 – Accounting Policies, against comparable waste management companies. No change has been made as a result.

FRS 17 – Retirement Benefits disclosures have been made for the first time. These show that based on a snapshot valuation at 31 March 2002, the Group’s defined benefit schemes have a net pension liability of £4m reflecting the recent weak performance of stock markets. However, at the time of the last actuarial valuation in April 2000, the schemes were in surplus by £10m.

FRS 19 – Deferred Tax has been adopted resulting in an increase in the prior year tax charge of £0.4m and the 2001 provision of £8m.

The Group continues to defer the expensing of costs relating to the acquisition of long term municipal waste contracts where it has reasonable certainty of success. At the year end, this deferral amounted to £1.6m and related only to those contracts where the Group has gained preferred bidder status.

Accounting for the long term liabilities of landfill sites is governed by FRS 12 – Provisions and Contingencies. A real discount factor of 2% has been used to assess the present value of the long term liabilities on landfill sites, which are expected to be incurred between now and circa 2050. The annual unwinding of this discount of £1.8m is shown in other finance charges (see notes 7 and 22 to the financial statements for details).



Turnover

Group turnover rose by 5% to £529m. UK grew by a modest 5%, including the effect of £1 per tonne hike in landfill tax, where a decline in Chemical Services activity partially offset the increase at Waste Services.

Netherlands increased by 9%, mainly due to the full year effect of prior year acquisitions but Belgium remained unchanged as reduced landfill volumes offset growth elsewhere.










Trading Results

The headline profit for the year grew by £0.2m to £45.3m from £45.1m. UK trading profit increased by £1.4m reflecting a good performance in Waste Services but an escalated loss of £4m in Chemical Services. Trading profits in the Netherlands rose by £0.9m but in Belgium they fell by £1.6m. Central costs were unchanged at £3.8m.

The Group incurred a non-operating exceptional loss of £8.4m due to the cessation of operations at the Pontypool hazardous waste incinerator. Further exceptional costs may arise in the next financial year and, as previously announced, the total is not expected to exceed £10m.

Interest costs increased marginally to £18.8m (2001: £18.6m) reflecting the profile of debt during the year. Other finance charges comprise discount unwind on long term landfill liabilities of £1.8m and amortisation of bank fees of £0.5m.

Goodwill amortisation rose by £0.6m to £10.0m mainly due to the full year effect of tuck-in acquisitions in the Netherlands completed in the past two years.



Taxation

The average tax rate on headline profit is 32% (2001: 34%). The underlying rates of tax in which the Group operates are UK: 30%, Belgium: 40% and the Netherlands: 35%. The Group suffers a higher UK charge as landfill void expenditure does not attract a tax credit.



Cash Flows

Year end net debt reduced by £12m to £290m (2001: £302m) as analysed in the table below.


2002 2001 Change








Operating profit*
66
65
1

Depreciation and landfill provisions
47
45
2

EBITDA
113
110
3

Working capital movement
(2)
(7)
5

Interest, tax and dividends
(45)
(44)
(1)

Net capital expenditure
(53)
(50)
(3)

Acquisitions (including debt)
(3)
(30)
27

Currency translation/other
2
(8)
10

Movement in borrowings
12
(29)
41




* before goodwill amortisation

Strong underlying cash generation, tight working capital control, less corporate activity and favourable exchange rates are the major reasons for the reduction in the level of debt. Earnings before tax, interest, depreciation, amortisation (EBITDA) improved to £113m (2001: £110m). The “net debt to EBITDA” ratio was comfortably below three times and interest cover at 3.6x, before exceptional items, remained at a satisfactory level.
Capital Expenditure and Acquisittions

The Group spent £58m gross on capital expenditure (2001: £53m). Sales of fixed assets, including surplus property raised £6m. The major capital items were the Wester Hatton landfill site, power generation equipment, the Fawley fluidised bed plant and replacement of operating assets, eg landfill cells, vehicles and containers. The Group is continuing its capital programme and had £18m of contracted capital commitments at the end of the year.

Three small tuck-in acquisitions at a total cost of £3m were also completed in the Netherlands. The Argyll and Bute acquisition for no cash consideration resulted in the Group taking responsibility for £5m of restoration liabilities on existing landfill sites.

Following the approval of the extension to the principal landfill site in Belgium, £5m was released from an escrow account. This resulted in a reduction in other debtors and an increase in the goodwill written off to reserves.

Treasury and Risk Management Policy

The high level of predictable inward cash flow leaves the Group well placed to service its debts. The “net debt to EBITDA” ratio of 2.57 to 1 at 31 March 2002 may rise slightly with the Group’s capital expenditure programme in the coming year but is expected to remain below 2.75 to 1.

The Group’s treasury policy is to use financial instruments with a spread of maturity dates and sources in order to reduce funding risk. Borrowings are drawn in the same currencies as the underlying investment to reduce cash and translation exposure on exchange rate movements. No other currency hedging mechanisms are used. The Group maintains a significant proportion of its debt on fixed rates of interest in order to protect interest cover. Where underlying interest rates are floating, swaps are used to achieve the desired level of fixed rates. The counterparties to these instruments are all AA rated banks and the contracts last between one and four years. Details of the Group’s borrowings are shown in note 20 to the financial statements.

During the year under review, the Group repaid part of its £300m floating rate credit facility with a syndicate of banks led by ABN AMRO and Royal Bank of Scotland. This facility has now been reduced to a €346m multicurrency revolving credit facility expiring in March 2005. The Group also has £46m of working capital facilities with various banks.

The $145m multicurrency private placement facility from Prudential Insurance Company of America (PRICOA) has various maturity dates and interest costs. During the year, £80m was drawn down in Euros for periods of between 8 and 12 years at an average fixed interest rate of 6.9%.

The Group has been successful in bidding for municipal contracts under the Private Finance Initiative (PFI). The borrowings of subsidiary PFI companies, created to finance the investment required to service these contracts, are carved out from the Group’s principal banking facilities, details of which are shown in note 20 to the financial statements. Typically the Group will invest approximately 10-20% of the capital requirement from its core borrowings in the form of equity or subordinated debt and the remainder, secured on the project with limited recourse to the Group, will be provided by a financial institution.

The policy on insurance cover is to secure the maximum amount of cover available in the market at reasonable prices. The Group therefore carries catastrophe insurance, including pollution cover but self-insures up to a maximum aggregate level of £2m. The current difficult insurance market conditions will result in considerably higher costs for the Group’s risk management programme.

Going Concern

The Directors have reviewed the Group’s 2002/03 budget and medium term plans thereafter in the light of its financial position at 31 March 2002. The Directors are satisfied that the Group has sufficient resources to continue operations for the foreseeable future. Accordingly, they continue to adopt the going concern basis in preparing the Group’s financial statements.




D J Downes
Group Finance Director








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[theape] 07/10/2002 01:48

If accounts were prepared on a going concern basis last year.

look out.

If you don't know what this means find out quick.

[wipo1] 17/9/2002 10:37

Yeah, bailed out again at a small loss, can't get this one right , and will definately leave this one alone for now.

There seems to be a lot of new companies starting doing waste recylcing, wonder if that is effecting shanks?

[m.t.glass] 17/9/2002 10:17

LONDON (AFX) - Shares in Shanks Group PLC were weaker in morning deals after
WestLB Panmure downgraded its recommendation on the waste disposal firm, dealers
said.
Shanks was moved to 'underperform' from 'neutral' by WestLB, which set a
downside target of 125 pence.
The broker noted that September marks the end of Shanks' first half, having
stated at its AGM in July that conditions were difficult.
It does not expect this position to have improved.
WestLB forecasts Shanks' first half profits to have fallen 9 pct on last
year. This led it to downgrade full year forecasts by 7 pct, to factor in a
relatively flat second-half on first- performance.
For the year to March 2003, its EPS expectation went to 12.4 pence from
13.27 earlier.
The broker's analysis of the sector also led it to suggest that market
conditions are unlikely to improve quickly.
For 2004 and 2005, WestLB's EPS expectations were cut to 13.4 pence and
14.2, from 14.01 and 14.75 respectively.
At 10.57 am, shares in Shanks were down 5 pence to 135.
bge/sk
NNN

That was yesterday. And still dropping some more..

[wipo1] 20/8/2002 20:44

I got back at 139p on Friday after selling at 143p , probably cost me as much in comission and stamp duty, but I needed the funds for other purchases at the time of selling, these shares are way oversold, and at 130p were at a near 10 year low, I think the fall is overdone, and shanks seem to produce solid results every year ,one for me pension fund methinks

[wipo1] 15/8/2002 16:37

Thinking of getting back in , think the waste recycling bad news is out the way now, and shares are now oversold, lots of big buyers coming in today, still a bit cautious, will see what happens tomorrow.

Anyone any thoughts?

[doctorbird] 13/8/2002 23:51

Continuing down today, and perhaps tomorrow if the FTSE follows the Dow.

[wipo1] 13/8/2002 14:42

Doctorbird, yeah I think the gearing is a bit of problem, but think the fall is more due to the rising costs , lower margins and more competition in this business, I held some thinking it was less risky recession proof business, bit of a mistake methinks, but well stop loss was in place so I just move on.

Think there have been rumours floating about WRC seem to have come true after todays awfull results, but I think if shanks can come up with no too bad results, and some new PFI contracts then the shares are looking oversold, I am not getting in yet because the stock looks very weak.

[doctorbird] 13/8/2002 01:11

Just passing by. The triangle I referred to in post 6 has done its stuff with a nice downside breakout. Not bad for an unvolatile/no fret share, CJohn. Perhaps I was not alone in being uneasy about the borrowings. In the present climate that is not a plus point. Now, the thing is, when is the time to buy back? Too early for me, I should like to see the chart giving clear evidence of a definite reversal.

[cjohn] 02/8/2002 00:23

yes, I think you're right. Is there any short term reason for the spectacular falls of recent days? SKS is currently trading at near to TBV.

[wipo1] 01/8/2002 13:04

I think the some big shareholders were not impressed by the AGM , and there is big sellers dumping the stock, this looks the only reason I can think of, stock might have bottomed if these big sellers are out the way.

Are you thinking of getting back in ?

Might be worth a punt at these levels ?

[wipo1] 01/8/2002 13:03

I think the some big shareholders were not impressed by the AGM , and there is big sellers dumping the stock, this looks the only reason I can think of, stock might have bottomed if these big sellers are out the way.

Are you thinking of getting back in ?

Might be worth a punt at these levels ?

[wipo1] 30/7/2002 19:05

Shanks recently released their AGM, trading still tough, although they are trading in line , don't really think the market wants to hear that at the moment and I would wait for a bit and see some recovery before buying in , maybe waste recyling results might boost the stock , other than that i can't see any recovery in price in the short term unless some big fund manager buying.