Waste not, want not - a truly sound maxim that should drive the market valuation of Shanks & McEwan forward.
Five years ago, the company was having a dreadful time as the roof fell in - no thanks to the horrific losses from its civil engineering interests and problems at the Rechem high temperature waste disposal subsidiary.
However, Shanks has emerged as a strategic opportunity for any major utility-orientated company.
Holes in the ground such as those owned by Shanks in South-east England, in Scotland and in Belgium, have great potential if they have planning consents for waste disposal and in that respect Shanks is probably the most gifted.
It follows that market estimates of net asset value are well in excess of 200p per share.
The Belgian acquisition from Sita was an opportunistic move. The company was informally approached by the authorities to make a deal which gives Shanks a good base for expansion deeper into Europe.
The former Sita businesses are highly cash generative and offer a learning experience for the tighter environmental controls that will come across the Channel thanks to regulation from the European Union.
Shanks is one of those companies which can extract benefits from very tough legislation and will walk hand-in-hand with Brussels bureaucracy.
The reduction of 25% in UK landfill usage by 2010 is probably too far away to interest most investors although there is increasing pressure to reclaim value from waste.
The Rechem operations are still not earning their keep. Improvements should be demanded from a return on capital of just 7% compared with 30% on the waste operations - that is boosted by landfill gases generating electricity.
With hazardous waste imports now restricted, Rechem looks likely to remain a low earner. The BSE contracts are pitched at low margins, even if they seem set to be extended beyond their three-year term and into the year 2000.
Taking over the company would require muscle in excess of #500m. Shanks chairman Gordon Waddell will be able to argue for a high price both because of the asset position and because of the profits potential.
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