6 April 2004
PENNON GROUP EXPANDS ITS WASTE MANAGEMENT BUSINESS
Pennon Group Plc announces that its subsidiary, Viridor Waste Management Limited, has acquired Thames Waste Management Limited (a subsidiary of RWE Umwelt AG, Germany) the landfill, power generation and liquid waste treatment business, for a cash consideration of £30.5m (£28.4m net of cash in the company), from RWE Umwelt AG. Thames Waste made a profit before tax of £4.3m for the year ended 31 December 2003 and had net assets at that date of £12.5m. The acquisition is in line with Pennon Group's stated strategy of expanding its waste management activities, particularly in the areas of landfill, power generation and waste treatment.
Thames Waste is headquartered in Leatherhead and comprises: a landfill inside the M25 near Croydon with 4m cubic metres of consented capacity; two landfill gas power generation schemes totalling 5MW capacity; and four liquid waste treatment plants along with an associated tanker fleet. In addition, Thames Waste has the benefit of an ongoing contract with Thames Water Services Limited for the disposal of sewage sludge. As a result of the acquisition, Viridor's consented landfill capacity increases to approximately 83m cubic metres and its power generation capacity to around 45MW. The liquid waste treatment operations are similar to Viridor's existing operation in Sheffield and are expected to benefit as liquids are diverted from landfill under the requirements of the EU Landfill Directive. The acquisition will be integrated into Viridor Waste's southern division and is expected to be earnings enhancing before goodwill in the first year.
Commenting on the acquisition, Colin Drummond, Chief Executive of Viridor Waste said, "This acquisition fits very well with Viridor Waste's strategy of expanding its landfill, power generation and waste treatment activities".
For further information please contact:
Colin Drummond, Chief Executive, Viridor Waste Limited on 01823 721 435
Jo Finely, Investor Relations Manager, Pennon Group Plc on 01392 443401.
Faeth Birch, Finsbury on 020 7251 3801
Viridor Waste Management is a leading provider of essential waste and recycling services in the UK. It has core competences in waste disposal by landfill, the generation of electricity from landfill gas and the operation of materials recycling facilities. It also operates waste transfer stations, civic amenity sites and composting facilities in a number of regions of the UK and has a waste collection fleet of 240 vehicles, a liquid waste treatment plant and a clinical waste incinerator.
Viridor's stated strategy is to:
- capitalise on its leading position in waste disposal by landfill;
- exploit opportunities in renewable energy generation; and
- pursue profitable opportunities arising from the UK Government's developing waste strategy.
Following this acquisition, the company has total consented landfill capacity of approximately 83m cubic metres. This capacity is located particularly in the South, South West, North West and East of England and the East of Scotland.
Gas produced from landfill sites (landfill gas) is increasingly used to generate electricity. It is a form of renewable energy and now represents over 25 percent of the UK's total renewable energy generation. The UK Government's strategy is to increase the percentage of electricity generated from renewable sources from the current figure of around 3 percent to a target of 10 percent in 2010 and 15 percent in 2015, with an aspiration of 20 percent in 2020. To meet these targets, the UK Government has introduced premium pricing regimes, most recently Renewable Obligation Certificates ("ROCs"), to encourage all eligible forms of renewable energy including landfill gas. Following the acquisition, Viridor has approximately 45MW of capacity (or around 10 percent of the total landfill gas capacity in the UK), of which around 50 percent is eligible for ROCs.