Shanks slashes dividend after plunging into red: The waste disposal group cuts its dividend after a pounds 6m loss

STRUGGLING waste disposal group Shanks & McEwan plunged into the red in the year to March and slashed its dividend. Gordon Waddell, the new chairman, described the figures as extremely disappointing, writes Tom Stevenson.

He added that a pounds 2m rise in operating profits to pounds 16m was misleading. It reflected reduced losses in the construction division but masked falls in profits elsewhere.

Environmental services fell pounds 5m as Rechem, the incineration business, suffered from lower volumes and technical problems. The waste services division was pounds 3m lower after some profitable contracts ended and central costs rose pounds 1m.

New management, which took over when the former chief executive Roger Hewitt was ousted in January, used the preliminary figures to push through exceptional losses of pounds 20m. These included pounds 11m of unpaid debts in the construction division, pounds 5m of reorganisation costs, and a pounds 3m write-down of property assets.

After the exceptional charge a pre-tax loss of pounds 6m compared with last year's pounds 10.2m profit. The loss per share of 5p compared with a 4.1p profit last time, and the final dividend was cut from 3.44p to 1p, giving a total 3.24p (5.68p).

After an initial fall from 86p to 79p, the shares recovered to end the day 2p higher at 88p. Three years ago they traded above 300p.

Bottom Line, page 36