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New report predicts heavy fines for the UK

The UK will not hit its 2010 and 2013 landfill diversion targets according to a newly published report.

The 2005 Caledonian Economics Financial Review of the UK Waste Management Industry states that as a consequence, the country faces the threat of heavy fines from Brussels.

The report suggests that the UK waste industry lacks the financial capacity to take on the additional commitments required to achieve the 2010 and 2013 targets.

It states that given the time required to tender and negotiate major waste treatment contracts, and to secure planning consent for them, it is difficult to see how any project whose procurement has yet to start can be commissioned by 2010.

The level of investment required in new waste treatment facilities is seen as very high in relation both to the industry’s current capitalisation and the investment levels achieved in recent years.

Caledonian Economics managing director Michael Nevin said: “In our view, the prices paid for many acquisitions have been far higher than can be justified by the trading fundamentals of the target companies, leaving the buyers with heavy debt burdens that they may find difficult to service.”

It also points to the fact that many of the leading industry players are heavily leveraged following the mergers and acquisitions boom that has occurred in the waste sector in recent years.

Nevin added: “Our conclusion is that, while the UK is undoubtedly making progress in increasing the amount of municipal waste that is recycled and diverted from landfill, it faces the threat of heavy fines from Brussels as a consequence of missing the 2010 and 2013 targets.”

The full findings and analysis leading to this conclusion are set out in the financial review that is available from Vivienne Cockburn on 01315528786.

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