Reporting visibility and the potential for “a race to the cheapest cost option” by companies to the detriment of the environment are among concerns that the Environment Agency (EA) has over a sludge market open to competition. The latest meeting of Ofwat’s sludge working group heard that the agency currently has good visibility of where sludge comes from and goes to because there are only a small number of players in the market. The EA is concerned that this could change with the opening up of markets, and reporting become more difficult. It also made it clear that it does “not want to see” a race to the cheapest cost option by companies to the detriment of the environment. Opening up the markets for sludge treatment, transportation, recycling and disposal are among Ofwat’s Water 2020 proposals. The environmental regulations surrounding this market, which are outside of Ofwat’s control, were the purpose of the working group meeting. The regulation itself derives from two primary sources, European and domestic legislation, this is pre any impact from Brexit. Under consideration is whether water and sewerage companies’ (WASCs) regulatory dispensation, under the Controlled Waste Regulations 2012, will distort the market going forward. Opening up the market is likely to place pressure on the following words used in the Controlled Waste Regulations 2012 ‘…within the curtilage of a sewage treatment works as an integral part of the operation of those work’. WASCs, Under the Industrial Emissions Directive (IED), have significantly lower regulatory obligations and costs compared to other organic waste companies who would require a permit to treat sludge. No decision has yet been made as to whether this will continue to be the case. The current rules apply to sites exceeding 75 wet tonnes per day (on any one day). One delegate asked why WASCs receive exemptions, the response being mainly as a result of past successful lobbying and history. Ofwat’s proposal is to try and address these issues and make it a more level playing field for everyone. There was a general comment that if the water industry was aligned more to the rest of the industry then this could have a significant impact on water customer bills with possibly no additional benefit to the environment. Other emerging concerns at the meeting included: Some operators are sweating their assets, which could lead to poor quality outputs. Commercial decisions are driving this behaviour but the EA does not want to see this increasing Concern over the split between sludge and network plus, in that the level of the quality of the sludge produced could impact later processes. Where does the responsibility over the quality of the sludge reside? Contaminants in sludge: where do they go? What are the future challenges? Can it still be used on land? An EA internal audit project found some wastes not suitable for composting going to other waste treatment sites which could include anaerobic digestion. Further investigation is required. The meeting also looked at whether Brexit provides the opportunity to consolidate waste regulations, or whether this was too big a task. The response was that was no reason to change the environmental standards but it may be an opportunity to revisit the administrative processes and to reduce red tape. It was also commented that EPR is a modern recently developed platform, but may still be improved upon. This article fist appeared on wwtonline Source link

Barclays has reported that it will raise its rental coverage ratio by 10% to 145%. According to the press release, it will continue to carry out income and expenditure assessments, allowing customers put disposable income and bonuses towards any shortfall in rental cover. Barclays also announced that it is reducing its stress test from 5.79% to 5.5%, explaining: “These changes are being introduced as a result of the reduction in landlord tax relief available from next April (phased in over four tax years). As a responsible lender we want to ensure that your clients can afford their repayments plus, other costs associated with the property where the borrower is responsible for payment such as, council tax and management/letting fees.” Earlier this week, Foundation Home Loans announced that it is changing the basis of its rental calculation for individual applications from 125% to 145%. Despite concerns, the industrty has said that increases in buy-to-let stress test levels should not be viewed as an ‘Armageddon moment’ for the sector. Speaking at FSE Manchester yesterday, David Whittaker, Managing Director of Mortgages for Business, suggested that when making a historical comparison the maximum leverage available to borrowers was not being significantly impacted. Commenting on TMW’s recent move from 125% to 145% Whittaker said: “[Given] this is supposed to be a ‘seismic shift’ that we’re all worried about, with 145% [on an average yield] of 5.8% the maximum leverage available is still 73% LTV. Since January the yield has not changed and the maximum leverage is down from 84%, but the product limit was 80% anyway. This is not an Armageddon moment.” Source link

High sales to the UK, check. Exposure to construction, check. High-ish debt, check. These facets of Polypipe’s business appear chosen to brew the perfect Brexit short sale target. Yet the maker of plastic piping systems should not suffer from the EU referendum result. Tuesday’s half-year results were met by a small pop in the shares, returning them to pre-vote levels, after a 25 per cent fall in the aftermath. Some of this stems from good recent trading performance. Revenues grew organically at 8 per cent (helped by two extra working days in the half). The acquisition of Nuaire, a provider of ventilation kit, promises synergies on the sales side; the same environmental rules that drive demand for Polypipe’s pipes affect ventilation, and customers prefer one provider to two. The Nuaire purchase is why net debt to earnings before interest, tax, depreciation and amortisation hit 2.5 last year, but that is already down to 2.3, with a target of 2.0 by December. Polypipe enjoys some idiosyncratic protection from a Brexit-induced construction slowdown. Less than a quarter of sales are related to new build, and repair and maintenance (which is slightly larger) should not be affected by Brexit-fright. Those environmental rules drive upgrades less vulnerable to the cycle. Polypipe’s range of 20,000 parts are built to UK specifications, which (like Britain’s three-pin electric plugs) don’t match EU standards, so the threatened loss of single market access amounts to little. The recovery casts light on a too-indiscriminate reaction against construction. Unlike in 2008, ongoing projects are not being cancelled. Lower land prices only hit those with land banks, not the providers of building materials. The government, realising how hard it is to fire up an export-based recovery, is making encouraging noises about house building and infrastructure. Polypipe is trading at less than 13 times estimated earnings for 2016, according to Deutsche. Not bad value for a growing business. Email the Lex team at lex@ft.com Copyright The Financial Times Limited 2016. You may share using our article tools. Please don’t cut articles from FT.com and redistribute by email or post to the web. Source link