Se ha denunciado esta presentación.
Utilizamos tu perfil de LinkedIn y tus datos de actividad para personalizar los anuncios y mostrarte publicidad más relevante. Puedes cambiar tus preferencias de publicidad en cualquier momento.

Grant Thornton - Waste and environmental sector update

Waste and environmental sector update - covering key sector activity, deals and updates.

  • Inicia sesión para ver los comentarios

  • Sé el primero en recomendar esto

Grant Thornton - Waste and environmental sector update

  1. 1. SECTOR UPDATE AUTUMN 2012Waste and environmentalsector updateThis Autumn 2012 update includes: A review of mergers and acquisitions activity in the waste and environmental sector for Q1- Q3 of 2012 Trends and challenges in the Anaerobic Digestion (AD) sector How PPP/PFI schemes are transforming residual household waste processing in this country Contents 2 M&A update 4 Trends and challenges in the Anaerobic Digestion (AD) sector 5 Waste PPP/PFI schemes are transforming how residual household waste will be processed in this countryIf you would like to discuss the contentof this update, or any other sectorissues, please get in touch with us:Emma GriceT +44 (0)161 953 6315E
  2. 2. M&A updateQ3 2012 M&A volumes • Deal volumes in Q3 have seen a small level of growth after lower levels of activity in the first half of the year, bringing the total number of transactions up to 26 for 2012. IfRelatively steady levels of M&A activity continues the recent increase in the number of transactions continues into Q4, 2012Number of waste sector deals Q1 2008 to Q3 2012 will represent a reasonable overall yearFig 1: Deal volumes by Q1 2008 – Q3 2012 for M&A activity within the sector. • This slight increase in activity for 19 Q3 is a result of a marginally larger proportion of overseas acquisitions made compared to the first two quarters of 2012, as 20% of the deals 14 14 included a foreign acquiror. However, 13 this represents a much lower figure 11 11 11 when compared to Q3 of the previous 10 10 year when 8 out of 14 deals had 9 9 9 9 8 internatonal involvement. 7 6 6 • The quality of deals in Q3 has 4 continued the trend for 2012 of a 3 higher proportion of distressed deals in comparison to 2011. Two more distressed deals in the third quarter 2008 (39 deals) 2009 (33 deals) 2010 (37 deals) 2011 (48 deals) 2012 (26 deals) now contribute to 23% of deals in 2012 having a level of distress. Q1 Q2 Q3 Q4 • Recent companies acquired out of administration include CRTFig 2: Disclosed deal segmentation by value (£m) Recycling Limited and Loddon Waste Management limited. 2012 • Fig 2 highlights the deal values seen in 2011 2012 when compared to previous years. 2010 While 2012 has not seen any deals 2009 over £60m in enterprise value, a much 2008 higher proportion of deals ranged from 2007 £10 to £59m have been completed in 2006 comparison to 2011. 0% 20% 40% 60% 80% 100% Below 10 10 to 59 60+ • It should also be noted that the number of deals completed with a disclosedSoure: FactSet value has also increased significantly inPlease note that for comparison purposes the deal volumes charts above are for waste deals only. 2012 to 42% vs 23% in 2011.
  3. 3. Fig 3: Breakdown of deals by Fig 4: Breakdown of deals by sub-sector Q1-Q3 2012 sub-sector Q1-Q4 2011Sector trends• Recycling and consultancy deals represent the majority of transactions seen this year with 58% of deals being derived from these sub–sectors.• There has been a noticable increase in the significance of the consultancy sub-sector after the third quarter saw three more deals being completed Recycling 35% Recycling 50% making up nearly a quarter of all Consultancy 23% Energy efficiency 18% waste and environmental sector deals Waste management 12% Consultancy 10% in 2012. Energy from waste 7% Hazardous and industrial waste 7% Energy efficiency 7% Waste management 4%• Within recycling, the market can be further split by types of materials Hazardous and industrial waste 5% Waste equipment 4% recycled (Fig 5 and 6). We can see Compliance and technical 5% Medical waste 2% that recycling in 2012 so far has Other environmental services 2% Energy from waste 2% predominantly been focused on paper Medical waste 2% Other environmental services 2% and WEEE, with over 50% of deals Environmental offsets trading 2% Compliance and technical 2% in this sub-sector.• Electrical and electronic equipment recycling saw a noticeable jump in Q3 with three deals: Mercury Fig 5: Breakdown of recycling deals by Fig 6: Breakdown of recycling deals by Recycling Group plc, Loddon Waste sub-sector Q1-Q3 2012 sub-sector Q1-Q4 2011 Management Ltd and CRT Recycling Ltd.• 2012 has not yet seen any activity within the glass recycling sub sector, but has seen an increase in plastic recycling which has had a 10% increase on the first half of the year. Paper 27% General 26% WEEE 27% Paper 23% General 13% Organic 16% Plastic 13% Metal 13% Metal 7% WEEE 16% Organic 7% Plastic 3% Textile 7% Glass 3%
  4. 4. Trends and challenges in theanaerobic digestion (AD) sectorFunding and Incentives: (as can be the case with surplus food waste that was expected, and this is directly from schools). linked to the quality of the feedstock.The principle drivers that haveencouraged developers to take an interestin developing AD plants have been Technology: There are many different Consideration for funders: competing technologies available in aGovernment incentives in the form Three key elements need to be considered market that is still in the early stages ofof Renewable Obligation Certificates in order to ensure a fundable AD project: development. While there are currently(ROCs) for larger plants, Feed-in Tariffs circa 50 AD projects in the UK, these(FITs) for smaller plants and more recently 1) Feedstock: Where does the feedstock have been built by circa 40 developers,the Renewable Heat Incentive (RHI) come from? What is the composition? using up to 35 different technologies.scheme. All of these support mechanisms Is supply guaranteed for the life of This means the market is relatively fragileare complex and subject to constant the project? What are the implications with no market leader, and the operatorschange but without them it is unlikely for the business case if feedstock are relatively small companies that maythat the growth of AD schemes would composition were to change? not be around in a few years. This cancontinue. adversely affect any guarantees that may 2) Technology: Is the right technology have been given.Potential pitfalls - Why being applied to the type of feedstock at hand? Who is going to commission theprojects fail Land, planning and operations: It may plant and who is going to build it? WhoFeedstock: Considerations of which take longer than originally anticipated will the operator of the facility be?feedstock to use and how to secure its to secure planning permission and theavailability long term is paramount and connection to the transport network 3) Markets: Who is going to take theshould be the starting point for any is crucial. The digestate output is very products? What price are the productsproject. Unfortunately, we see many heavy due to its water content and likely to achieve? How will theprojects starting out with a decision on this can result in transport costs being products change with the feedstock?which technology to use with subsequent significantly higher than planned. Inattempts to match the feedstock to the addition, the operation of an AD plant istechnology. Problems arise when changes likely to require dedicated, specialist staff Our sector credentials:in feedstock occur and these may have to minimise downtime and breakages. Grant Thornton is currently involved in thefar-reaching implications: a change in Industry voices are warning farmers procurement, fundraising and due diligencefeedstock may not be allowed for in the that the running of an AD plant is not of AD projects across the country.original business case as the electricity something that can simply be tagged on to Grant Thornton’s National Advisoryoutput may be adversely affected by the day job of running a farm. practice has wide experience in helpinga change. Moreover, changing the emerging technology businesses raisecomposition of what is input can cause End markets: Finally, potential problems capital, offering clients commercial anddamage to the system, including the need lie ahead when considering the end market financial advice on how to structure clean out the digester completely and that has been envisioned for the project.start anew. Considerable damage can also Prices achieved for outputs may be less For further details contactbe caused by small stones or rocks not than anticipated, due to insufficient market research having been carried out. Ian Carr on 01223 225600being detected in the feedstock (mixed inwith potatoes for example) or pieces of Moreover, there is the risk that the plant or on being contained in the feedstock may not produce the quantity or quality
  5. 5. Waste PPP/PFI schemes aretransforming how residual householdwaste will be processed in this country • We are advising on a number of schemes that will begin construction over the next 12 months which will see waste increasingly diverted from landfill through greater recycling and recovery of energy. • These projects typically see a special purpose entity deliver the works through an Engineering, Procurement and Construction (EPC) subcontract covering the civil construction combined with provision of the waste technology. • Funding is either on a corporate loan from the sponsor or project finance from banks. These EPC contracts have not escaped the impact of the global financial credit crisis with an increasing focus on the financial standing of contractors and their guarantors. • As project finance is increasingly reliant upon non-UK banks to provide long term debt, these may inevitably have weaker relationships with UK based civil engineering contractors and therefore may seek stronger security packages to satisfy their credit committees. • It is also common for the waste processing technologies to be imported from the Eurozone and for Foreign Exchange swaps to be required. These can provide price certainty by hedging against foreign exchange risk, either directly where dates are firm or through use of options where timing is less certain, for example where construction can only occur once planning and permitting approvals are secured. • Given the on-going uncertainties in the Eurozone the FX hedging arrangements at the EPC level can be a key issue, particularly when considered alongside joint and several guarantees. Plenty to consider as such projects are rarely as easy as EPC!© 2012 Grant Thornton UK LLP. All rights reserved. ‘Grant Thornton’ means Grant Thornton UK LLP, a limited liability partnership. Grant Thornton is a member firm of Grant Thornton International Ltd (Grant Thornton International). References to‘Grant Thornton’ are to the brand under which the Grant Thornton member firms operate and refer to one or more member firms, as the context requires. Grant Thornton International and the member firms are not a worldwide partnership. Services aredelivered independently by member firms, which are not responsible for the services or activities of one another. Grant Thornton International does not provide services to V22419