The UK arm of Veolia, which delivers waste services to local authorities, posted a 20% profits hike as revenue from its private finance initiative (PFI) portfolio surged.
Operating profits for Veolia Environmental Services were up to £121.3m as of 31 December 2011, compared to the £100.9m recorded for the year ending 31 December 2010, according to accounts lodged with Companies House.
The documents revealed £69.4m of the total £121.3m profit came from PFI contracts, which is a 37% increase on the £50.6m of PFI profits recorded by the company in 2010 (see box below for full profits breakdown).
Total turnover from PFI contracts rose from £336.3m in 2010 to £359.4m in 2011.
The directors’ report said the company had benefited from having the full-year effect of several integrated waste management contracts including those with West Berkshire Council and Southwark LBC.
It added that 2010 operating profits had been “adversely impacted by the need to provide for the accelerated closure of one of the landfill sites” and this had also played a part in the 2011 profits jump.
The directors also said they “believed the group will continue to deliver a strong financial performance in the coming year.”
“The group has significant exposure to [PFI] contracts at a number of locations. The contracts generally result in a municipal body passing the operating and financing risk of running significant waste management plan in return for guaranteed revenues subject to a long term profit.”
The company posted a modest 3.4% increase in group turnover which stood £1.25bn for 2011 and paid £56.2m in tax.
The news follows Veolia’s multinational parent company’s waste devision, Veolia Environnement, recording a fall in revenue for the first quarter of 2012 in May.
Veolia Environnement reported revenue of €7.8bn (£6.3bn) across its global divisions - up 3.4% from the same period last year.
However, the French firm said its Environmental Services waste division saw revenue decline by 0.9%. The company said Environmental Services had been hit by the “unfavourable impact of changes in recycled raw material prices and a slight decline in volumes”.
This story first appeared in our sister title MRW
Veolia by numbers
|Other waste management||£819m||£794.4m|
Group operating profits
|Other waste management||£46.6||£55.6m|
Source: Veolia Environmental Services (UK) plc Report and Financial Statements 31 December 2011