Shanks Share Discussion Threads

[cerrito] 27/1/2011 09:30

betman- saw that fall and have no idea
while much much smaller and in a different segment yesterday's announcement by AUG was mildly encouraging

[betman] 27/1/2011 09:21

Any particular reason for yesterdays fall in price - general impact of GDP ?

[vkx] 12/1/2011 15:46

Not a chartist, but there does appear to be quite a definite upward trend line from approx. the middle of last year onwards.

[timbo003] 18/12/2010 08:02

Shanks gets a plug from Questor in the Telegraph. Listen to it here:

[betman] 02/12/2010 15:00

The upgrade from JP Morgan is good news, I am a little surprised that JPM cover SKS but this news is very welsome. I think Institutions are mor elikely to take note from a heavy bank like JPM

[pifedayo] 02/12/2010 12:00

Further to 487 - Full test of mail from Project Reduce team:

Good Afternoon,



As you may well be aware, following a meeting held yesterday, November 30th, a recommendation has been made to cancel Project Reduce.

This decision comes as a result of the removal of £138million of government funding for the project announced in October this year and follows a month long review into the options for continuing the project.

This recommendation will now go forward to be approved at the next available cabinet meetings for both Milton Keynes Council and Northamptonshire County Council.

Although the Project Reduce will come to a close, both authorities are keen to stress that working in partnership has been, and continues to be, a very rewarding and positive experience. The option to continue working together on joint projects in the future is one that the authorities are still very keen to explore.



The full press release can be viewed by visiting the Project Reduce website.

On behalf of Milton Keynes Council and Northampton County Council we would like to thank you for taking an interest in the Project Reduce.

[nellie1973] 02/12/2010 10:58

Broker upgrade today

[keithk2t] 29/11/2010 14:10

On the 17th November Shanks put out a deeply flawed report about how much municapal solid waste (MSW) they could divert from landfill buy building incinerator.

The report is based on the wrong data. They claimed there was 32.8 million tonnes of MSW going to landfill in 2008/9 in the UK. In fact the total was just 17m tonnes. The treasury has just stopped 7 waste PFIs as there is now too little waste going to landfill to justify all the projects that were planned.

Shanks have taken over united utilites waste contracts. One of the main ones was a waste burner in Derby. That has just had its planning apeal rejected. Shanks will keep spinning the lots of new waste capacity needed myth but the reality is that waste tonnages are falling.

[betman] 18/11/2010 14:08

Uptrend resumed ? I think this kick up is more overall market recovery rather than specific SKS news, but it does improve the chart story if 116p is now a support level

[betman] 17/11/2010 13:48

No decisive breakout yet, maybe a pull back to this level is good news if this creates a new support level from which to move up from when overall market more positive

[betman] 15/11/2010 17:32

I think we are always learning and can be surprised by the market anytime. However this does look like a breakout on the candle chart ?? can anyone with more knowledge on candles confirm this, a break above about 117.4

[jc1619] 15/11/2010 17:23

betman sounds good to me i am still a novice

[betman] 15/11/2010 17:06

jc I think the rise in volume is quite significant, rising price and rising volume is very positive, whether its a renewed bid, or investors thinking this is an undervalued business. In the end the reason doesnt worry me, if someone wants my shares for 150p, I might consider selling !!
I have always understood that you cannot rely on the buy / sell quoted numbers for example its not always clear of the timing of the trade vs the mid point quote figure, and anyone can deal within the spread or do a deal outside the spread. And in any case if someone sells a share then someone has bought that share unless MMs are restocking. Happy to be corrected if this is all tosh

[jc1619] 15/11/2010 15:15

still on the rise despite the large amount of sell

[25babies] 15/11/2010 15:10

Lot of volume today and up nicely since the half-yearly.

[jc1619] 12/11/2010 14:41

I can!t find a reason for the rise,
just happy to sit and hold

[betman] 12/11/2010 12:23

Nice tick up in price on little volume or news, and FTSE off its 5870 high. Guess some buy orders on the results and appreciation of the long term value here. broken recent high of October so if it can push on to 120+ then are patience will be rewarded

[betman] 04/11/2010 12:59

Half year results to 30 Set 2010. Solid but unspectacular, bt I guess SKS isnt that sort of business

Financial Highlights
Profit before tax at constant currency up 7%
Excluding the one-off regulatory reduction in Belgian Landfill (GBP2.5m)
and the adverse effect of exchange (GBP1.0m) profit before tax up 27%
EBITDA GBP48.9m with EBITDA margin of 14.0% (09/10: 15.4%) impacted by
Belgian Landfill and currency
Revenue at constant currency up 7%
Strong cash generation with UFCF conversion of 74%. Reduction in core net
debt to GBP175m (GBP186m at March 2010)
Net debt to EBITDA ratio at 1.8x (management target below 2.5x)
5 year Benelux Retail Bond successfully completed raising EUR100m

Business Achievements
Strategic investment programme progressing well - annualised 8% post tax
returns so far on projects completed
Strengthened UK PFI strategy - equity sale and collaboration agreement to
share equity investments on future PFI contracts signed with John Laing
Investments; acquisition of UK waste activities of United Utilities
PFI margin improvement plan on track (6% year to date)
Further management cost initiatives to mitigate strong pricing pressure -
GBP9m savings realised in the first half and GBP15m expected for the full year
Rationalisation of the sorting centres as part of the Netherlands Fit for
the Future Programme has increased utilisation from 74% to 79%

[keithk2t] 06/10/2010 12:43

The united utility deal is very risky. UU were selling waste incinerator contracts to councils based on Enoergos technology. The UK demdisabledor plant for this on the isle of Wight has been repeatly shut down by the environment agency for releases of dioxins. Inverstors have no way of knowing if bigger plants that UU are contracted to build would also break dioxin limits and be forced to close. UU have done a runner and given the risk to Shanks

[timbo003] 05/10/2010 19:10

The slide set from the investors presentation earlier today is here:



A fair bit of growth potential by the looks of it.

Shanks are a possible takeover target, rights issue been and gone, very respectable balance sheet, unloved by the city, a reasonable divi so you are getting paid to wait, lookin' good, I'm hanging on in there.

As they say up North: Where there's muck there's brass.

[cerrito] 05/10/2010 09:41

A well balanced article in yesterday's telegraph
quote
One-hundred-and forty-year-old from Milton Keynes seeks partners for support and investment. Ability to see through past failings to inherent qualities obligatory. No time wasters.

Shanks is looking for friends. Europe's largest independent waste management company has found them a little hard to find in recent years but, for chief executive Tom Drury, enough is enough.



Tomorrow, Drury and fellow Shanks Group executives will host an investor day. The message will be simple. The City is failing to recognise Shanks' true potential – it's time to make friends.

How investors will react is altogether another thing. Brokerage KBC Peel Hunt recently released a research note on the company entitled "Unloved". Where shareholders are concerned, Shanks has a little work to do.

Drury, a down to earth 49-year- old Yorkshireman, chooses his words carefully but is honest about the challenge. "There is some baggage associated with Shanks. We're aware of that perception and perceptions do take time to correct," he says. "I don't think unloved is fair. But the fact is that we do trade at a discount to some of our peers and we need to close that gap."

At the very least, Drury has a compelling story to tell. Shanks specialises in recycling and turning waste into energy. In the UK and beyond, that is the future.

Europe produces some 3bn tonnes of waste a year, the equivalent to six tonnes for every man, woman and child. As governments crack down on landfill, those companies that can put that waste to good use will be well positioned.

Emphasising the political crackdown on landfill will be at the top of Drury's agenda tomorrow. In the UK, it is being driven on two fronts.

The snappily-named EU Landfill Directive requires all European governments to divert household waste away from holes in the ground and into other forms of disposal, whether via anaerobic digestion (using bacteria to break waste down), recycling or other technologies. Fines will follow for those who fail to meet the targets.

The other driver is landfill tax, which has long been high on the continent. The UK Government has been behind the curve but it's finally getting up to speed.

"Landfill tax has gone from almost nothing a few years ago to £48 a tonne today and will go to £80 a tonne by 2014," Drury says, comparing the UK to Belgium and Holland where the majority of Shanks' work is done. "They went through this in the 1990s. If you look at the amount of waste going to landfill in those markets, it's below 3pc. In the UK it's still over 50pc."

There are other drivers. The UK is Shanks' main growth engine and the Government has allocated £10bn for PFI projects aimed at establishing the infrastructure necessary for green -minded waste management. Shanks is also in the midst of a £100m investment programme launched to take advantage of those changes.

The state of the economy will also be key – Shanks has lost an estimated £20m to £25m in revenues in the recession as commercial clients have cut back on the amount of waste they produce. Drury suggests markets remain subdued, but he expects to get much of that back: "What hurt us on the down will help us on the up."

Given the background, shouldn't it all be coming up roses for Shanks?

Drury's answer is guarded. "We ought to be well positioned for growth," he says. "But you have to map alongside that the fact that it's a competitive market with some strong players and also that we've been hit hard by the crisis. Investors will have different views on the degree to which the returns on our investments will come through. There is an element there still of 'prove it'."

Look at Shanks' share price and it's easy to see why. On Friday last week, the share price closed at 112.6p. In the early 1990s, it was closer to 250p.

Return to that KBC Peel Hunt note and you quickly get an idea why. Explaining the company's valuation – it's worth £450m – the brokerage pointed to the lack of an obvious organic track record, an unimpressive acquisition record, a history of overbidding for contracts and limited growth opportunities in its largest markets in Benelux. KBC's summary read: "To buy the shares, investors need to give Shanks the benefit of the doubt."

Drury, who was hired from United Utilities as Shanks' chief three years' ago, is aware of the criticism. So is he working on these issues?

"Yes, along with a whole bunch of other things," he says with a half-smile. "If you take bids for the larger PFI deals – the margin on the larger contracts wasn't where it needed to be, at just a couple of percent. We're
on track to grow those to 7pc."

The key to all of this, Drury suggests, is convincing investors he will deliver.

"I think Churchill said: 'However beautiful the strategy, you should occasionally look at the results.' We're very focused on doing what we say we're going to do."

One obstacle will be the track record of Drury's major acquisition since taking charge – the 2008 takeover of Flemish wood processing group Foronex. So far the results have been underwhelming.

"It took place shortly after I arrived so I will take accountability for that. It has made lower returns then we expected because, number one, of the amount of work we needed to do to put our own processes into a family business and, number two, because the trading business has been effected by the economic downturn," he says. "We remain comfortable that, in the long term, it will prove to be a good acquisition. I have to hold my hand up and say to date we haven't seen the results."

But, he suggests, that could soon change. "We're beginning to see projects come to fruition and we're beginning to see returns. If you look at the investment case, the returns are not yet at a level where they come fully through to the bottom line. That is down the track."

Drury will hope such arguments can help drive a rerating of Shanks' shares. In recent times, such reratings have come from rather different sources – namely, takeover talk.

Last month, rumours escalated of would-be suitors circling – something Drury won't be drawn on – while last year the company was drawn into talks with Carlyle after the private-equity giant made a 135p a share approach.

In an unusual move, Shanks opened its books to the buyout firm but only after making it clear that it would only consider offers at 150p or more. After four months of bruising due diligence – Drury diplomatically calls them "intense" – Carlyle made an offer. At 120p.

Presumably, Drury, a rugby- loving real-ale drinker, needed something stronger than a beer when that offer came in?

"We were generally surprised," he says. "It was a distraction for four months that was unnecessary and unhelpful, but that's life."

So, given the result, was the board right to open the books? "We made an assumption with Carlyle that they wouldn't waste their time or money in a process that wouldn't lead to an area that we were looking for. The fact that it didn't lead there was their choice not ours and if we had our time again we'd do the same thing."

And, if the rumours are true, a new suitor is circling – would 150p still be the target price? Drury greets that one with silence, before giving a hint of the board's likely view. "We're not that much further forward in time then when that approach came six months ago."

Shanks' chief executive will be hoping that's not all investors want to talk about when they pay a visit tomorrow.

CV

Tom Drury

Chief executive, Shanks Group

Age 49

Family Married to a magistrate with two children

Lives Cheshire

Education Politics, philosophy and economics, Oxford University

Interests "I did my first sprint triathlon last year. When I'm 50 I'd like to go olympic."

[timbo003] 05/10/2010 07:43

Interesting acquisition from United Utilities announced today



It looks like it's not going to cost much (up front) either:

Other than a small initial payment any consideration will be contingent upon the successful financial closure of individual projects and payable from win fees.

[rabbrooks] 27/9/2010 11:50

It must be assumed that predators could look at Shanks again in the near future.Shanks's profits are made in Europe. The UK input is and has remained very disappointing for years.The UK businesses could be sacrificed easily. The value for the Euro/Pound is fluctuating which makes this bond issue attractive in Europe. It could well be that this will thwart a takeover bid from the likes of Carlyle who are not really interested in anything except the profit realisable in a future split of the businesses in the various countries operations.The price of the shares is still significantly lower than the high in recent years. Let's hope there will be an uplift .

[ted32] 27/9/2010 09:29

It was mentioned in one of last week's newspapers that SKS could be issuing a trading statement this week.