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Pennon Group Plc Annual Report 2011

Viridor

At a glance

Viridor is one of the UK’s leading and fastest-growing recycling, waste management and renewable energy businesses. It won the National Recycling and Waste Management Business of the Year Award in 2010.

Operational highlights

Viridor achieved significant increases in revenues and profit in 2010/11 as it:

  • grew the contribution to profits of recovering the value in waste to 46% (as landfill fell to 23% from 69% in 2001)
  • had a successful first full year of operation at its Lakeside joint venture Energy from Waste plant
  • managed the second successful year of operations of its Greater Manchester PFI contract
  • increased its total renewable energy production capacity to 136MW.

2010/11 notable achievements

During the year Viridor:

  • acquired five high-quality recycling businesses, strategically sited to complement existing UK operations and international recyclate sales
  • achieved profit margins per tonne on its high-quality recyclate appreciably greater than landfill
  • by the year-end had completed 31 of the 42 new facilities for the Greater Manchester joint venture contract
  • commenced Phase II in the construction of the new combined heat and power EfW plant at Runcorn
  • achieved planning permission for four new EfW plants (one after the year-end and two subject to challenge)
  • was named the National Recycling and Waste Management Business of the Year at the National Recycling Awards.

Strategy and performance

Viridor is committed to leading the way in maximising the opportunities generated by the Government’s landfill diversion, recycling and renewable energy targets.

In this way it will grow and add value through:

  • developing new, and expanding existing, recycling operations to meet ambitious EU/UK targets
  • successfully exploiting the huge potential in waste-based renewable energy generation
  • capitalising on its strong position in landfill waste disposal.

Where we operate

Viridor has a fast-growing network of recycling, waste management and renewable energy operations across the UK, with current strengths in the South West; South East and North of England; East Anglia; South East Wales; and Scotland. The company sells its high-quality recyclate internationally, with established relationships across Europe and in emerging markets including China and India.

Strategy Performance KPI

Growth in recycling

Growing organically and through acquisition of businesses with a strategic and geographic fit

Viridor is the UK's largest operator of Materials Recycling Facilities (MRFs). We made five further acquisitions of recycling businesses during the year. The second full year of our joint venture recycling-led PFI contract at Greater Manchester contributed £4.9 million to profits, reflecting the major investment made

Recyclates traded m tonnes

2010/11 1.7
2009/10 1.4

Increasing power generation

Capitalising on waste-based energy generation (often via PPP and PFI) opportunities with profit potential throughout the UK

The first full year of operation of the Lakeside EfW plant near Heathrow delivered approaching £9 million in profits (including Viridor sub-contract profits). Construction of the combined heat and power EfW plant at Runcorn is underway. Viridor received planning permission to build four further EfW plants (two subject to challenge)

Renewable energy generation capacity MW
as at 31 March

2011 136
2010 128
2009 101
2008 84
2007 75