Renewi PLC (LON:RWI) shares fell 5% on Friday after the waste-to-product business said it will take a £73mln hit for impairments and provisions following a review of contracts in its UK Municipal division.
The FTSE 250-listed company had said on 12 February that it was undertaking an annual review of onerous contracts in the Municipal division and that it was expecting increased exceptional charges to manage the portfolio.
The group - created in February 2017 by the merger of Shanks Group PLC and Dutch firm Van Gansewinkel Groep BV - said it has increased onerous contract provisions to £27mln for Barnsley, Doncaster and Rotherham, and Wakefield PFI (private finance initiative) operating contracts, reflecting ‘prudent recognition of expected future losses.”
Renewi said it will also exit a loss-making contract at Dumfried & Galloway, simplifying and de-risking the UK Municipal portfolio.
The company said, however, that there will be no material impact from provisions on the company’s cash flow, and the outlook for the year ending 31 March 2018 remains unchanged.
It added that underlying trading for the Municipal division in its current year is in line, and the action taken will boost performance in its next year, with no further exceptional charges expected related to Municipal division assets.
In late morning trading, Renewi shares shed 5.1% at 84.8p.