Interim Results
05 Novembro 2003 - 5:00AM
UK Regulatory
RNS Number:6726R
Shanks Group PLC
05 November 2003
5 November 2003
Company Announcement
Shanks Group plc - Interim Results
* Trading in line with July AGM statement
* Headline profit: #14.1m versus #19.1m last year
* Dividend per share maintained at 1.9p
* UK Waste Services showing some signs of improvement
* Better performance from the Group expected in second half
Financial highlights: 2003/04 2002/03
First Half First Half+
* Turnover #293m #275m
* Headline profit (before taxation,
exceptional items and goodwill
amortisation) #14.1m #19.1m
* Goodwill amortisation #(5.9)m #(5.1)m
--------------------
* Profit on ordinary activities before
taxation #8.2m #14.0m
* Adjusted basic earnings per share
(before exceptional items and
goodwill amortisation) 4.1p 5.5p
* Basic earnings per share 1.6p 3.3p
* Interim dividend per share 1.9p 1.9p
+restated
Announcing the Interim Results for 2002/03 Group Chairman Mr I M Clubb made the
following statement:
Performance continues in line with the trading update issued at the Annual
General Meeting in July with improved performances at UK Chemical Services and
Belgium being more than offset by the declines anticipated in UK Waste Services
and, to a lesser extent, the Netherlands.
Turnover increased by #18m (7%) to #293m (2002: #275m) of which #15m was due to
the strengthening of the euro on the continental revenues. The UK businesses
benefited for the first time from the East London Waste Authority (ELWA)
contract which contributed #13m and also from higher revenues in Power and
Chemical Services. This growth was offset by a reduction in both Landfill and
Collection.
Profit before taxation, exceptional items and goodwill amortisation (Headline
Profit) in the six months to 30 September 2003 reduced by #5.0m to #14.1m (2002:
#19.1m - restated). After goodwill amortisation of #5.9m (2002: #5.1m), profit
before taxation amounted to #8.2m (2002: #14.0m restated). Profit after tax was
#3.8m (2002: #7.8m - restated) reflecting a tax charge of 31% (2002: 32%).
Adjusted basic earnings per share (before exceptional items and goodwill
amortisation) were 4.1 pence per share (2002: 5.5 pence per share - restated).
Your Board has maintained the interim dividend at 1.9 pence per share.
Total debt grew by #12m to #309m since 31 March 2003. The seasonal working
capital phasing increased core debt by #8m to #286m, while the limited recourse
debt in the Private Finance Initiative (PFI) companies rose by #4m to #23m.
DIVISIONAL REVIEW
United Kingdom
The UK operations consist of two divisions - Waste Services, which collects and
manages municipal, commercial and industrial wastes and Chemical Services, which
specialises in the treatment of hazardous chemical waste and related services
including recovery.
Overall Waste Services trading profit (operating profit before exceptional items
and goodwill amortisation) decreased to #6.3m (2002: #12.6m) reflecting the
continuing difficulties in landfill, collection and recycling activities. Core
landfill volumes were lower with reduced commercial and industrial inputs and
the diversion of certain special waste as a result of the Landfill Directive in
July 2002. Landfill prices were raised but not sufficiently to recover increased
regulatory and other costs, which have in the short term eroded margins.
Competitive pressures in collections continue and there have also been
difficulties with certain contracts, particularly in the recycling area. The
recovery plan progresses with new management now installed in both England and
Scotland. Improvements are being made in both countries' operating performances
by such actions as streamlining collection rounds, focusing the sales force on
more profitable opportunities and withdrawing from certain poorly performing
contracts.
Profit accruing from the generation of electricity from landfill gas has
increased by #1.3m to #5.5m following the installation of 14MW of new capacity
in January 2003 and improved prices from the Renewables Order on 15MW of
existing capacity.
Whilst market conditions for hazardous waste remain challenging, UK Chemical
Services has eliminated its trading loss and is now at breakeven (2002: #0.9m
loss - restated). Better performance from the fluidised bed waste to energy
plant at Fawley which processes meat and bone meal (MBM) was the main
contributor to this improved performance.
Belgium
Belgian operations are similar to those in the UK but include specialist
demolition and soil cleaning at De Paepe and an industrial cleaning activity.
Trading profit increased by #1.2m to #8.2m (2002: #7.0m). This improvement was
due to higher prices for electricity from landfill gas, increased business in
the remediation of contaminated land and favourable currency translation.
Landfill volumes, although lower than last year, continued to exceed our
expectations. This underscores the urgency of repermitting additional void at
our Wallonian landfill site, which is expected in the second half.
Netherlands
Dutch operations are similar to those in Belgium but include a computer
refurbishment operation and exclude any landfill activity.
Despite the favourable currency translation, trading profits declined by #1.2m
to #11.6m (2002: #12.8m) due to the economic slow down particularly affecting
solid waste from the construction industry. The ATM hazardous waste unit has
improved with its thermal soil cleaning activity showing good growth. However
the computer refurbishment business suffered from the decline in new PC
equipment prices. Industrial cleaning activities performed well although not
quite at last year's exceptional level.
Developments
Planning permissions have been granted for the two mechanical biological
treatment (MBT) plants developed with our Italian partner Ecodeco for the ELWA
contract. This significant achievement demonstrates the attractiveness of this
technology as a deliverable alternative to incineration for local authorities.
Discussions continue with Dumfries & Galloway where the Group is preferred
bidder for a 25 year PFI contract, again using this technology. These contracts
and other similar opportunities which Shanks is pursuing will provide
predictable long term profit streams.
Success in major contaminated site remediation in Belgium reinforces the Group's
unique capability in this area. Further similar opportunities are expected to
arise both in Belgium and Northern France. The installation of 4MW new
electricity generating capacity is nearing completion at our landfill in
Wallonia.
In the Netherlands, the permit to restart the ATM pyrolysis plant was obtained
in late August and operations have now recommenced. The ATM soil cleaner is also
being expanded to take advantage of opportunities, now the national
specification for cleaned soil has been clarified. The enhanced capacity should
be commissioned in the fourth quarter of the current year. A waste wood
processing plant is also in the later stage of construction near Utrecht.
Outlook
The UK Waste Services performance, although unsatisfactory, is now showing some
signs of improvement in response to management action. The ELWA project is
progressing well and it is hoped that the Dumfries & Galloway project will
proceed to financial close in the second half. UK Chemical Services is expected
to improve despite the difficult market conditions. In Belgium the focus away
from dependence on landfill is delivering good results and profits from the new
electricity generating capacity should commence shortly. In the Netherlands the
solid waste business remains difficult, however ATM should benefit from higher
throughputs from both the pyrolysis plant and our soil cleaning activity. As a
result, barring unforeseen circumstances, the Group expects a better performance
in the second half of the year.
Notes:
1. This announcement is available at the company's website
(www.shanks.co.uk) as will the presentation being made today
to financial institutions.
2. Copies of the Interim Report will be posted to shareholders
by 24 November 2003, after which they will be available, on request,
from the company at Astor House, Station Road, Bourne End, Bucks, SL8 5YP,
or at the company website.
3. The interim dividend of 1.9 pence per share will be paid on
14 January 2003 to shareholders on the register at close of business
on 19 December 2003.
For further information contact:
Ian Clubb; Chairman, Shanks Group plc
Michael Averill; Group Chief Executive
David Downes; Group Finance Director
Or John Shaughnessy; Group Head of External Relations
On 5th November 2003, telephone: +44 (0)20 7678 8000
Thereafter, telephone: +44 (0)1628 524523
Consolidated Profit and Loss Account.
First Half ended 30 September 2003
2003/04 2002/03 2002/03
Note First First Full Year
Half Half
-------------------------------------------------------------------------------
Before
exceptional Exceptional
items items Total
restated* restated* restated*
#m #m #m #m #m
--------------------------------------------------------------------------------
Turnover: Group and
share of joint ventures 297.5 279.0 558.5 - 558.5
Less: share of turnover
of joint ventures (4.9) (4.4) (7.1) - (7.1)
--------------------------------------------------------------------------------
Group turnover 2 292.6 274.6 551.4 - 551.4
Cost of sales 1,3 (241.5) (223.2) (450.4) (3.2) (453.6)
--------------------------------------------------------------------------------
Gross profit 51.1 51.4 101.0 (3.2) 97.8
================================================================================
Group operating
profit before
goodwill amortisation 3 23.4 29.0 53.9 (4.4) 49.5
Goodwill amortisation (5.9) (5.1) (10.6) - (10.6)
--------------------------------------------------------------------------------
Group operating profit 17.5 23.9 43.3 (4.4) 38.9
Share of operating
profit of joint ventures 0.9 0.6 1.4 - 1.4
--------------------------------------------------------------------------------
Total operating profit 2 18.4 24.5 44.7 (4.4) 40.3
Non-operating
exceptional items:
- on disposal of
operations 3 - - - (0.6) (0.6)
--------------------------------------------------------------------------------
Profit before finance
charges and tax 18.4 24.5 44.7 (5.0) 39.7
Finance charges -
interest (8.9) (9.4) (18.7) - (18.7)
Finance charges - other 4 (1.3) (1.1) (2.3) (0.5) (2.8)
--------------------------------------------------------------------------------
Profit on ordinary
activities before tax 2 8.2 14.0 23.7 (5.5) 18.2
Tax 5 (4.4) (6.2) (10.6) 1.5 (9.1)
--------------------------------------------------------------------------------
Profit on ordinary
activities after tax
and profit for the
period 1 3.8 7.8 13.1 (4.0) 9.1
Equity dividends paid
and proposed 6 (4.4) (4.4) (13.3)
--------------------------------------------------------------------------------
Retained (loss) profit
transferred to reserves (0.6) 3.4 (4.2)
================================================================================
Earnings per share
- basic 7 1.6p 3.3p 3.9p
- adjusted basic before
exceptional items
and goodwill
amortisation 7 4.1p 5.5p 10.1p
- diluted basic 7 1.6p 3.3p 3.9p
Dividend per share 6 1.9p 1.9p 5.7p
================================================================================
All of the above relates to continuing operations.
*2002/03 figures have been restated following the change of accounting policy in
respect of capitalisation of interest. See Note 1 for details.
Consolidated Balance Sheet.
At 30 September 2003
At At At
30 September 30 September 31 March
2003 2002 2003
restated* restated*
Note #m #m #m #m #m #m
--------------------------------------------------------------------------------
Fixed assets
Intangible 194.4 181.9 198.0
assets
Tangible assets 1 328.5 303.3 325.2
Investments 1.2 1.1 1.1
Investments in
joint ventures:
Share of gross 12.1 11.6 13.6
assets
Share of gross (7.6) (7.2) (8.4)
liabilities ------- ------- ------
Share of net 4.5 4.4 5.2
assets
Loans to joint 3.9 2.6 2.9
ventures ------ ------ -------
Total
investment in 8.4 7.0 8.1
joint
ventures
--------------------------------------------------------------------------------
Total fixed 532.5 493.3 532.4
assets
Current assets
Stocks 7.5 6.8 7.0
Debtors 134.9 141.2 129.6
Cash at bank 16.1 12.8 20.5
and in hand
----- ------ -----
158.5 160.8 157.1
----- ------ -----
Creditors:
amounts falling
due within one
year
Borrowings (4.7) (35.4) (4.9)
Other creditors (152.9) (133.5) (159.1)
-------- -------- ---------
(157.6) (168.9) (164.0)
-------- -------- ---------
Net current
assets 0.9 (8.1) (6.9)
(liabilities)
--------------------------------------------------------------------------------
Total assets
less current 533.4 485.2 525.5
liabilities
Creditors:
amounts falling
due after more
than one year
Borrowings (320.8) (272.5) (313.1)
Other creditors (0.2) (0.3) (0.2)
-------- ------- -------
(321.0) (272.8) (313.3)
Provisions for
liabilities 8 (68.3) (66.8) (68.4)
and charges
--------------------------------------------------------------------------------
Net assets 144.1 145.6 143.8
================================================================================
Capital and
reserves
Called up share 23.4 23.4 23.4
capital
Share premium 93.1 93.1 93.1
account
Profit and loss 1 27.6 29.1 27.3
account
--------------------------------------------------------------------------------
Equity 9 144.1 145.6 143.8
shareholders'
funds
================================================================================
*2002/03 figures have been restated following the change of accounting policy in
respect of capitalisation of interest. See Note 1 for details.
Consolidated Cash Flow Statement.
First Half ended 30 September 2003
2003/04 2002/03 2002/03
First Half First Half Full Year
restated* restated*
Note #m #m #m #m #m #m
--------------------------------------------------------------------------------
Net cash flow from
operating 10 37.8 43.2 120.9
activities
Returns from
investments and
servicing of finance
Net interest paid (10.1) (9.6) (18.7)
Tax paid (3.2) (2.4) (11.6)
Capital expenditure
and financial
investment
Purchase of tangible
fixed (26.5) (26.0) (59.8)
assets
Sale of tangible 2.3 3.4 6.9
assets ------ ------ ------
(24.2) (22.6) (52.9)
Acquisitions and 0.2 0.1 (9.8)
disposals
Equity dividends paid (8.9) (8.9) (13.3)
--------------------------------------------------------------------------------
Net cash flow before
financing (8.4) (0.2) 14.6
Financing
Issue of ordinary
share - 0.1 0.1
capital
Debt financing 4.2 8.0 11.2
--------------------------------------------------------------------------------
(Decrease) increase in (4.2) 7.9 25.9
cash
================================================================================
Reconciliation of net
cash flow to movement
in net debt
(Decrease) increase in (4.2) 7.9 25.9
cash
Debt financing (4.2) (8.0) (11.2)
--------------------------------------------------------------------------------
Change in net debt
resulting (8.4) (0.1) 14.7
from cash flows
Amortisation of loan (0.4) (0.2) (0.5)
fees
Exchange rate loss on
net (3.1) (5.3) (22.2)
debt
--------------------------------------------------------------------------------
Movement in net debt in the
period (11.9) (5.6) (8.0)
Net debt at 31 March (297.5) (289.5) (289.5)
2003
--------------------------------------------------------------------------------
Net debt at 30
September (309.4) (295.1) (297.5)
2003
================================================================================
Net debt represents total borrowings less cash in hand.
*2002/03 figures have been restated following the change of accounting policy in
respect of capitalisation of interest. See Note 1 for details.
Analysis of Net Debt.
At 30 September 2003
At At At
30 September 30 September 31 March
2003 2002 2003
#m #m #m
--------------------------------------------------------------------------------
Principal Group net borrowings 286.3 291.1 278.4
Private Finance Initiative company
net borrowings 23.1 4.0 19.1
--------------------------------------------------------------------------------
309.4 295.1 297.5
================================================================================
Notes to the Interim Financial Statements.
1 Basis of preparation of financial statements and change in accounting policy
The interim financial statements have been prepared on the basis of the
accounting policies set out in the published accounts of the Group for the year
ended 31 March 2003 with the exception of capitalisation of interest on capital
projects.
Capitalisation of interest on capital projects has been adopted for the first
time in these interim financial statements. This change in accounting policy has
been dealt with as a prior year adjustment and previously reported figures have
been restated accordingly. The reported cost of sales and profit after tax for
the six months period ended 30 September 2002 have been reduced by #0.1m and for
the year ended 31 March 2003 have been reduced by #0.2m. Tangible fixed assets
have been increased by #1.0m and #0.9m, deferred tax provision by #0.3m and
#0.3m and equity shareholders' funds increased by #0.7m and #0.6m respectively.
2 Segmental analysis
2003/04 2002/03 2002/03
First Half First Half Full Year
restated restated
#m #m #m
--------------------------------------------------------------------------------
(a) Turnover by origin and destination of
service
United Kingdom:
- Waste Services 123.4 118.6 233.6
- Chemical Services 19.1 17.5 36.6
--------------------------------------------------------------------------------
United Kingdom 142.5 136.1 270.2
Belgium 51.3 47.3 95.2
The Netherlands 98.8 91.2 186.0
--------------------------------------------------------------------------------
Group turnover 292.6 274.6 551.4
================================================================================
Share of joint venture turnover 4.9 4.4 7.1
================================================================================
(b) Operating profits and profit on ordinary activities
before tax
Trading profits:
United Kingdom:
- Waste Services 6.3 12.6 19.7
- Chemical Services - (0.9) (1.4)
--------------------------------------------------------------------------------
United Kingdom 6.3 11.7 18.3
Belgium 8.2 7.0 14.5
The Netherlands 11.6 12.8 25.9
Central Services (1.8) (1.9) (3.4)
--------------------------------------------------------------------------------
Operating profit before exceptional
items and goodwill amortisation 24.3 29.6 55.3
Exceptional operating items - - (4.4)
Goodwill amortisation (5.9) (5.1) (10.6)
--------------------------------------------------------------------------------
Total operating profit 18.4 24.5 40.3
================================================================================
United Kingdom:
- Waste Services 4.9 11.5 13.1
- Chemical Services - (1.0) (1.8)
--------------------------------------------------------------------------------
United Kingdom 4.9 10.5 11.3
Belgium 7.8 6.8 13.9
The Netherlands 7.6 9.2 18.7
Central Services (1.9) (2.0) (3.6)
--------------------------------------------------------------------------------
Total operating profit 18.4 24.5 40.3
Non-operating exceptional items - - (0.6)
--------------------------------------------------------------------------------
Profit before finance charges 18.4 24.5 39.7
Finance charges - interest (8.9) (9.4) (18.7)
Finance charges - other (1.3) (1.1) (2.3)
Finance charges - exceptional - - (0.5)
--------------------------------------------------------------------------------
Profit on ordinary activities before tax 8.2 14.0 18.2
================================================================================
Notes to the Interim Financial Statements. continued
2 Segmental analysis continued
At At At
30 September 30 September 31 March
2003 2002 2003
restated restated
#m #m #m
--------------------------------------------------------------------------------
(c) Net assets
United Kingdom:
- Waste Services 173.7 167.3 158.3
- Chemical Services 30.9 37.3 33.6
-------------------------------------------------------------------------------
United Kingdom 204.6 204.6 191.9
Belgium 24.6 32.0 23.1
The Netherlands 240.7 220.9 237.9
------------------------------------------------------------------------------
Net operating assets 469.9 457.5 452.9
Unallocated net assets (liabilities):
Assets under the course of
construction 10.0 13.4 18.2
Net debt (309.4) (295.1) (297.5)
Other unallocated net liabilities (26.4) (30.2) (29.8)
--------------------------------------------------------------------------------
Net assets 144.1 145.6 143.8
================================================================================
Other unallocated net liabilities include debtors and creditors relating to
taxation and dividends, and an element of capitalised goodwill.
3 Exceptional items
The operating exceptional costs in the year to 31 March 2003 of #4.4m include
#3.2m in relation to the regulatory requirement to reduce historic leachate
levels at United Kingdom landfill sites and #1.2m in relation to United Kingdom
restructuring costs. The tax effect of these exceptional costs is to reduce the
current tax charge by #1.3m.
The non-operating exceptional loss in the year to 31 March 2003 of #0.6m arose
on the disposal of non-performing assets and surplus property. There is no tax
effect arising in respect of this loss.
4 Finance charges - other
Other finance charges relate to the unwinding of discount on long term landfill
liabilities of #0.9m (2002/03: #0.9m) and the amortisation of bank fees of #0.4m
(2002/03: #0.2m). An exceptional finance cost of #0.5m in the year to 31 March
2003 arose on the modification of the Group's banking covenants. The tax effect
of this exceptional cost is to reduce the current tax charge by an additional
#0.2m.
5 Taxation
2003/04 2002/03 2002/03
First Half First Half Full Year
#m #m #m
--------------------------------------------------------------------------------
UK corporation tax at 30%:
- Current year 3.9 (0.2) 3.7
- Prior year - - (1.8)
- Double tax relief (3.9) - (4.2)
Overseas tax 5.8 5.8 11.1
Deferred tax (1.6) 0.4 (0.1)
Joint ventures 0.2 0.2 0.4
--------------------------------------------------------------------------------
4.4 6.2 9.1
================================================================================
The taxation rate for the first half of the current year is based on the
estimated taxation charge for the full year.
6 Interim dividend
The interim dividend of 1.9p per share (2002/03: 1.9p per share) will be paid on
14 January 2004 to shareholders on the register at close of business on 19
December 2003.
7 Earnings per share
Basic earnings per share are calculated by dividing the profit for the period by
the average number of shares in issue during the period.
2003/04 2002/03 2002/03
First Half First Half Full Year
restated restated
--------------------------------------------------------------------------------
Calculation of basic and adjusted basic earnings
per share
Profit for the period (#m) 3.8 7.8 9.1
Exceptional items (net of tax) (#m) - - 4.0
Goodwill amortisation (#m) 5.9 5.1 10.6
--------------------------------------------------------------------------------
Earnings before exceptional items and
goodwill amortisation (#m) 9.7 12.9 23.7
================================================================================
Average number of shares in issue during
the period 234.0m 234.0m 234.0m
Basic earnings per share (pence) 1.6p 3.3p 3.9p
Adjusted basic earnings per share before
exceptional items and goodwill
amortisation (pence) 4.1p 5.5p 10.1p
================================================================================
Calculation of diluted basic earnings per share
Average number of shares in issue during
the period 234.0m 234.0m 234.0m
Effect of share options in issue - 0.8m 0.2m
--------------------------------------------------------------------------------
Total 234.0m 234.8m 234.2m
================================================================================
Diluted basic earnings per share (pence) 1.6p 3.3p 3.9p
================================================================================
The Directors believe that adjusting the earnings per share for the effect of
exceptional items and goodwill amortisation enables a comparison with historical
data calculated on the same basis.
8 Provisions for liabilities and charges
At At
31 March Provided in Utilised in 30 September
2003 period period Exchange 2003
restated*
#m #m #m #m #m
--------------------------------------------------------------------------------
Site
restoration 18.6 1.6 (1.0) 0.1 19.3
Aftercare 26.4 2.1 (0.4) 0.1 28.2
Leachate 3.2 - (0.8) - 2.4
Reorganisation 0.6 - (0.3) - 0.3
Onerous leases 0.4 - - - 0.4
Deferred
taxation -
restated* 19.2 (1.6) - 0.1 17.7
--------------------------------------------------------------------------------
68.4 2.1 (2.5) 0.3 68.3
================================================================================
*2002/03 figures have been restated following the change of accounting policy in
respect of capitalisation of interest. See Note 1 for details.
Notes to the Interim Financial Statements. continued
9 Reconciliation of movements in equity shareholders' funds
2003/04 2002/03 2002/03
First Half First Half Full Year
restated* restated*
#m #m #m
--------------------------------------------------------------------------------
Profit for the period 3.8 7.8 9.1
Equity dividends (4.4) (4.4) (13.3)
--------------------------------------------------------------------------------
Retained profit transferred to reserves (0.6) 3.4 (4.2)
Issue of share capital - 0.1 0.1
Currency translation gain (loss) 1.7 1.8 12.4
Tax attributable to currency translation - - (0.3)
Currency translation adjustment on
goodwill (0.8) (1.2) (5.7)
--------------------------------------------------------------------------------
Net movement in equity shareholders'
funds 0.3 4.1 2.3
--------------------------------------------------------------------------------
Opening equity shareholders' funds - as
previously reported 143.8 140.7 140.7
Prior year adjustment (see Note 1) - 0.8 0.8
--------------------------------------------------------------------------------
Opening equity shareholders' funds -
restated 143.8 141.5 141.5
--------------------------------------------------------------------------------
Closing equity shareholders' funds 144.1 145.6 143.8
================================================================================
*2002/03 figures have been restated following the change of accounting policy in
respect of capitalisation of interest. See Note 1 for details.
10 Net cash flow from operating activities
2003/04 2002/03 2002/03
First Half First Half Full Year
Before
exceptional Exceptional Total
items items restated
restated restated
#m #m #m #m #m
--------------------------------------------------------------------------------
Total
operating
profit 18.4 24.5 44.7 (4.4) 40.3
Amortisation
of intangible
assets 5.9 5.1 10.6 - 10.6
Depreciation
of fixed assets 23.3 21.9 42.3 - 42.3
Provision for
site restoration
and aftercare 2.8 1.2 2.8 - 2.8
--------------------------------------------------------------------------------
Earnings before
interest,
taxation,
depreciation
and
amortisation
(EBITDA) 50.4 52.7 100.4 (4.4) 96.0
Loss (profit)
on sale of
fixed assets (0.4) 0.1 0.1 - 0.1
Decrease
(increase) in
working capital (8.8) (4.9) 32.0 0.5 32.5
Exceptional
provision cost - - - 3.2 3.2
Utilisation of
provisions (2.5) (4.1) (9.5) - (9.5)
Share of
profits of
joint (0.9) (0.6) (1.4) - (1.4)
ventures
--------------------------------------------------------------------------------
Net cash
flow from
operating
activities 37.8 43.2 121.6 (0.7) 120.9
================================================================================
11 Contingent liabilities
The Group is subject to a number of claims including one for #25m in respect of
the use of minerals at the Group's Greengairs landfill site in Scotland. The
Directors' are strongly resisting these claims. At the present time the outcome
to the Group cannot be determined and the potential liabilities cannot be
quantified. However, it is the opinion of the Directors that the outcome of
these disputes is unlikely to have a material effect on the Group's financial
position.
12 Status of financial information
The interim financial information, which was approved by the Directors on 5
November 2003, is unaudited but has been reviewed by the auditors and their
report is set out on page 13.
The financial information for the year ended 31 March 2003 does not comprise
financial statements within the meaning of section 240 of the Companies Act
1985, and has been extracted from the Group's 2003 published financial
statements which have been filed with the Registrar of Companies. The auditors'
opinion on those financial statements was unqualified and did not include a
statement under section 237 (2) or (3) of the Companies Act 1985.
Independent Auditors' Review Report to Shanks Group plc.
Introduction
We have been instructed by Shanks Group plc ("the Group") to review the
financial information which comprises the profit & loss account, the balance
sheet, the cash flow statement, the statement of total recognised gains and
losses and the related notes. We have read the other information contained in
the interim report and considered whether it contains any apparent misstatements
or material inconsistencies with the financial information.
Directors' responsibilities
The interim report, including the financial information contained therein, is
the responsibility of, and has been approved by the directors. The directors are
responsible for preparing the interim report in accordance with the Listing
Rules of the Financial Services Authority which require that the accounting
policies and presentation applied to the interim figures should be consistent
with those applied in preparing the preceding annual accounts except where any
changes, and the reasons for them, are disclosed.
Review work performed
We conducted our review in accordance with guidance contained in Bulletin 1999/4
issued by the Auditing Practices Board for use in the United Kingdom. A review
consists principally of making enquiries of Group management and applying
analytical procedures to the financial information and underlying financial data
and, based thereon, assessing whether the accounting policies and presentation
have been consistently applied unless otherwise disclosed. A review excludes
audit procedures such as tests of controls and verification of assets,
liabilities and transactions. It is substantially less in scope than an audit
performed in accordance with United Kingdom Auditing Standards and therefore
provides a lower level of assurance than an audit. Accordingly we do not express
an audit opinion on the financial information. This report, including the
conclusion, has been prepared for and only for the company for the purpose of
the Listing Rules of the Financial Services Authority and for no other purpose.
We do not, in producing this report, accept or assume responsibility for any
other purpose or to any other person to whom this report is shown or into whose
hands it may come save where expressly agreed by our prior consent in writing.
Review conclusion
On the basis of our review we are not aware of any material modifications that
should be made to the financial information as presented for the six months
ended 30 September 2003.
PricewaterhouseCoopers LLP
Chartered Accountants
London
5 November 2003
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR USRNROVRARAA