All the old question marks remain. Rechem still has no idea what line European environment ministers will take on importing and exporting hazardous waste, and so whether or not its incinerators have a market to service. Profits were halved at pounds 4.9m and if the import tap is cut off, analysts believe that could swing to a similar-sized loss very quickly.
Increased regulatory costs and the end of profitable contracts continue to dog the waste services division and construction will still be loss-making this year having, amazingly, failed to get paid by some local authority clients.
Profits will bounce from this year's pounds 6m loss thanks to the elimination of last time's hefty pounds 20m provision. Smith New Court has pencilled in pounds 16m giving earnings per share of 5.8p and a prospective p/e to next March of 15 at the current 88p.
Given the uncertainties and the lack of credibility created by the shocks of the past two years, the shares cannot sustain a premium to the market, which is trading on less than 14 times expected earnings to the middle of next year.
Having slashed the final dividend to 1p from 3.44p the shares also receive precious little support from a yield of 4.6 per cent, barely above the market average, with scant scope for dividend growth given a target cover of twice. There are much better prospects elsewhere in the sector.
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