Shanks : Interim Results



The new Vliko depot at Zoeterwoude opened at the end of the period

Shanks Group plc (LSE: SKS), a leading international waste-to-product business, today announces its interim results for the six months ended 30 September 2016.

Commenting on the results, Peter Dilnot, Group Chief Executive, said:

'We have delivered a good performance in the first half, with revenue and underlying profit growth at constant currency in line with our expectations. Our two Benelux Divisions have performed strongly, offsetting a reduced result in Municipal. We are making good progress with our transformational merger with Van Gansewinkel Groep to create a leading waste-to-product business in the Benelux.

'Our expectations for progress for the full year are unchanged at constant currency and our reported results will benefit materially from recent FX movements. We are therefore well positioned both as Shanks, and as an enlarged group post-merger, to deliver long-term sustainable growth and attractive returns.'

Business Overview

• Good Group trading performance, with revenue and underlying profit growth at constant currency in line with our expectations and ahead of our expectations at reported currency given weakness of sterling
• Commercial Waste Division performed strongly, with trading profit up 20%* to £11.1m. Both the Netherlands and Belgium performed well, with volume growth in the Dutch construction, commercial and organics market segments
• Hazardous Waste Division performed well, with trading profit up 38%* to £11.4m primarily due to improved soil processing and water volumes
• Ongoing market and operational challenges in the Municipal Division, as previously reported, resulted in a significant reduction in trading profit to £1.1m. Corrective action programmes being taken expected to deliver improved operational performance from the second half
• Commissioning of Derby PPP project delayed by six months, as previously reported, due to a contractor insolvency resulting in a £1.7m charge for liquidated damages
• Continued good progress with Group self-help initiatives to improve margins
• Pre-tax returns on investment portfolio increased to 21.1% (March 2016:19.5%)

Merger Overview

• Proposed merger with Van Gansewinkel Groep BV ('VGG') announced on 29 September 2016 to create a leading waste-to-product business in the Benelux
• Compelling strategic and commercial rationale from complementary technologies, services and geographies, together with €40m of cost synergies
• Shareholder approval received from both companies; awaiting anti-trust clearance in Belgium and the Netherlands, now expected in early 2017
• Integration planning well underway, including the creation of a new brand

variances at constant exchange rates

Financial Summary

• Revenue up 7% at constant currency to £348.4m (up 17% at reported rates)
• Underlying profit before tax up 23% at constant currency to £15.4m (up 44% at reported rates)
• Exceptional and non-trading items of £16.3m, £10.2m of which related to the proposed merger, resulting in a statutory loss before tax of £0.9m
• Underlying EPS1 up 23% at constant currency to 2.7p per share (up 43% at actual rates)
• Core net debt in line with management expectations at constant currency; reported core net debt of £244m reflects adverse currency movement
• Interim dividend maintained at 0.95p per share adjusting for the bonus factor within the recent rights issue

In accordance with IAS33 as the rights issue has been completed prior to this date the average number of shares used in the EPS calculation for both periods has been adjusted for the bonus factor.

#Revenue excludes the impact of non-trading and exceptional items of £nil (2015/16 £1.0m).
+The interim dividend for the current year has been adjusted for the bonus factor within the recent rights issue
*See page 33 for definition and full list of non-IFRS measures included in this interim financial report.

Outlook

The Board's expectations for the year ending 31 March 2017 remain unchanged at constant currency and the current weakness of sterling will benefit our reported results for the full year materially. Longer term, the growth drivers in our business remain attractive. We continue to focus actively in our existing business on driving margin expansion and completing existing infrastructure build programmes. Furthermore, the transformational merger with VGG will create a strong business with the scale, capability and expertise to deliver sustainable growth and attractive returns in our core Benelux market.

Notes:

1. The interim dividend of 0.95 pence per share will be paid on 6 January 2017 to shareholders on the register at close of business on 25 November 2016.
2. Management will be holding an analyst presentation at 9:30 a.m. today, 17 November in the Entrust Room on the fifth floor at etc Venues, Bishopsgate Court, 4-12 Norton Folgate, London E1 6DQ.
3. Webcast details for the presentation at 9.30 a.m.

4. - Webcast: www.shanksplc.com
   - Telephone conference:

   - Confirmation password: Shanks

5. A copy of this announcement is available on the Company's website, (www.shanksplc.com). A copy of the presentation being made today to financial institutions will also be available.

For further information contact:
Shanks Group plc

Brunswick Group

FORWARD-LOOKING STATEMENTS

Certain statements in this announcement constitute 'forward-looking statements'. Forward-looking statements may sometimes, but not always, be identified by words such as 'will', 'may', 'should', 'continue', 'believes', 'expects', 'intends' or similar expressions. These forward-looking statements are subject to risks, uncertainties and other factors which, as a result, could cause Shanks Group's actual future financial condition, performance and results to differ materially from the plans, goals and expectations set out in the forward-looking statements. Such statements are made only as at the date of this announcement and, except to the extent legally required, Shanks Group undertakes no obligation to revise or update such forward-looking statements.statements.

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