NORTH LONDON WASTE AUTHORITY
REPORT TITLE
ANNUAL REPORT OF DIRECTORS OF LONDONWASTE LTD
REPORT OF
MANAGING DIRECTOR
FOR SUBMISSION TO
DATE:
THE NORTH LONDON WASTE AUTHORITY
25 JUNE 2015
SUMMARY OF REPORT
This report is the annual report of the Directors of LondonWaste Limited and sets out the
performance and activities of the Company in the Authority’s financial year 2014/15.
RECOMMENDATION
That the Authority notes the report.
Signed by: Managing Director:
Date: 16 June 2015
ANNUAL REPORT OF THE DIRECTORS OF LONDONWASTE LIMITED
1.
Introduction
1.1 This report is an annual report from the directors of LondonWaste Limited to the
Authority summarising the performance and activities of LondonWaste Limited
over the Authority’s financial year 2014/15.
2.
Background to NLWA's Interest In LondonWaste Limited
2.1 Section 32 of the Environmental Protection Act 1990 required waste disposal
authorities to divest themselves of their waste disposal operations and submit their
waste disposal needs to competitive tender. In 1992 a tendering process took place
leading to the formation of a Local Authority Waste Disposal Company.
Subsequently LondonWaste Limited, was formed as a joint venture company, and
NLWA and SITA (UK) Ltd each took a 50% interest in the Company. LondonWaste
successfully tendered for a 20-year waste disposal contract which was awarded to
the Company in December 1994.
2.2 The requirement for local authorities to contract out waste disposal functions was
effectively repealed by section 47 of the Clean Neighbourhoods and Environment
Act 2005. This meant that the NLWA could again own waste disposal facilities and
on 22 December 2009 NLWA bought the 50% of the share capital which was owned
by SITA. Since that date LondonWaste Limited has been owned 100% by NLWA.
2.3 The Company entered a new 10-year contract with the NLWA which commenced
on 16 December, 2014 on the expiry of the previous 20-year contract.
3.
Directors and Board Meetings
3.1 The following non-executive directors, appointed by NLWA, served throughout the
Authority year:
Mr. John Boast (Chairman)
Dr. Chris Elliot
Mr. Ray Georgeson
Mr. Mike Dunn
The current service contracts for the non-executive directors were due to expire in
June 2014. The Authority agreed at its April 2014 meeting to renew the service
contracts of the Non-Executive Directors until 30 June 2017 with the exception of
Dr Elliot who will leave in June 2015 to pursue other commitments.
3.2 The following executive directors, who are responsible for the day-to-day activities
of the Company, served throughout the Authority year:
Mr. David Sargent (Managing Director)
Mr. Matt McGeehan (Finance Director)
Mrs. Nazneem Grogan (Technical Director)
Mr Sargent is scheduled to retire on 31st July 2015. The recruitment process to
appoint a new managing director has been completed.
3.3 Directors attend LondonWaste board meetings which are usually monthly. Signed
copies of confidential board minutes are submitted to each NLWA meeting for
information. These appear on the exempt part of the agenda (the Part II section).
The NLWA as shareholder is also advised of the Company's progress through
updates to the Shareholder Group (consisting of the Chair and Vice Chairs of the
Authority).
3.4 The audited statutory accounts were adopted at the Company’s Annual General
Meeting on 21 May, 2015.
4.
Finance and Operations
4.1 In the year ended 31 December 2014 LondonWaste made a profit before tax of
£6.2 million. Excellent waste throughput and boiler availability contributed to the
Company’s above-budget performance. This profit was lower than in 2013
reflecting the fact that the Company ceased to process commercial waste in order
to focus on processing municipal waste for the NLWA.
4.2 In the year ended 31 December the Energy Centre exported 251,000 MwH of
electricity or enough electricity to power 72,000 homes. The Company recycled
106,000 tonnes of material and our tonnes landfilled fell from 208,000 tonnes in
2013 to 129,000 tonnes in 2014.
4.3 Articulated lorries are used to transport large loads of waste either to the EcoPark
or to landfill and hooklift vehicles provide bin exchanges to the Re-use and
Recycling Centres. The following statistics summarise the transport activity
undertaken by the Company’s fleet of vehicles. Some statistics for 2014 are
estimated as these key performance indicators were developed during the year.
2014
2015
Articulated Vehicles
Full Year
January
February
March
Actual Mileage (KMs)
591,088
40,054
50,437
44,732
5.16
4.46
5.75
5.65
104.48
87.66
93.28
91.95
1600 (est)
39
29
40
Average MPG
Average Fuel Price
Vehicle Off Road Days - Spare
Vehicle Off Road Days - Maintenance
62
65
45
Vehicle Off Road Days (%)
31.08%
23.54%
21.91%
19.81%
Number of Loads Completed
18,752
1570
1115
1483
Outsourced Loads
1,414
58
111
143
2014
Hooklift Vehicles
Actual Mileage (KMs)
Average MPG
Average Fuel Price
Vehicle Off Road Days - Spare
Vehicle Off Road Days - Maintenance
VOR Days (%)
Number of Loads Completed
2015
Full
Year
January
February
March
170,850
10,665
10,326
14,532
3.94
3.75
3.85
3.75
104.48
87.66
93.28
91.95
419
(est)
12
9
6
6
15
12
16.44%
8.48%
11.30%
8.48%
9000
(est)
614
654
806
Dividends totalling £5.0 million were paid to the Authority in the year ended 31
December 2014. The directors are confident that the results for the year ended 31
December 2015 will achieve or exceed budget targets.
4.4
The Company remained debt-free throughout the year.
4.5 Electricity prices have been contracted forward to September 2015 through an
agreement signed on 16 September, 2014. This provides a degree of budget
certainty by fixing revenue at prices which meet or exceed the targets set in the
budget.
5.
Business Review
5.1 LondonWaste has continued to provide a high level of sevice to NLWA under the
new contract which commenced on 16 December, 2014. The Company manages
all the waste delivered by the boroughs to its centres in Hornsey Street, Hendon
and the Edmonton EcoPark. This waste is either recycled, turned into electricity in
the Energy Centre, or landfilled. Ash from the Energy Centre is used in
roadbuilding and other construction projects. Green and kitchen waste from the
boroughs is turned into compost at the Compost Centre and returned to parks,
garden, residents and allotments, as well as a number of farms and horticultural
users.
5.2 The Company supports the NLWA in developing the North London Heat and
Power Project. LondonWaste is reviewing its operational and maintenance
regimes to ensure that the Energy Centre can continue to operate safely and
efficiently until its potential replacement in 2025.
5.3 LondonWaste has taken over operational responsibility for running the Hendon rail
transfer facility from FCC. It has also commenced transferring by road some of the
waste from Hendon to the EcoPark Energy Centre and this will have the combined
effect of reducing landfill and increase NLWA’s utilisation of capacity at the Energy
Centre following the ending of commercial waste activity.
5.4 The Bulky Waste Recycling Facility at the EcoPark continued to maximise the
amount of recyclable material the Company can extract from this type of waste. In
addition the residual waste shredder continued to maximise the amount of waste
which can be processed through the Energy Centre and reduce the amount of
waste going to landfill. The Company remains committed to exploring technologies
to improve its waste management infrastructure in a manner consistent with the
requirements of the NLWA waste strategy.
5.5 Increased recycling percentages were achieved across all of the Re-use and
Recycling Centres during the year. Rates range from 67% to 75% and the sites
handle a combined volume of over 2,000 tonnes per month. The South Access
Road site was shortlisted as a finalist for Civic Amenity Site of the Year at the
Excellence in Recycling and Waste Management Awards 2015.
5.6 The compost produced at the Company’s Compost Centre is accredited to the
British Standards Institute's Standard No. 100 (PAS100). The majority of the
product is used in agriculture but significant amounts are returned to North London
boroughs and local allotments. The local community is given the opportunity to
learn about composting through the Company’s communication programme.
6.
Health & Safety
6.1 RIDDOR stands for the Reporting of Injuries, Diseases and Dangerous
Occurrences Regulations. A RIDDOR accident is one which results in an absence
of at least seven days and which is reportable to HSE under these regulations.
There were three RIDDOR reportable accidents in 2014 compared to two in 2013.
6.2 The Company investigates all incidents, reviews its practices and procedures, and
gives appropriate and regular training to employees.
7.
Human Resources
7.1 The Company remains committed to the development of its employees and
invested heavily in training and development during the year. Sickness absence
rates compare favourably with waste industry benchmarks and are actively
managed through the application of formal absence management systems. The
Company employs over 250 permanent and temporary employees. About a third
of these operate and maintain the Energy Centre which is a 24 hour per day, 7 day
per week operation. Half of the employees are engaged in handling or transporting
waste at the various transfer stations and Re-use and Recycling Centres. The
remainder are engaged in corporate functions such as health & safety, IT,
corporate commumications etc.
7.2 The last triennial valuation of the pension scheme as at 1 January 2012 showed
that the pension scheme deficit had increased to £6.6m from £5.6m in the previous
triennial valuation. However the last summary funding update as at 31 December
2013 showed that the scheme was fully funded on a technical provisions basis due
to the effect of stock market recovery on equity values. The latest triennial
valuation as at 1 January 2015 is in progress.
7.3 The Company’s Equal Opportunities Policy prohibits unfair discrimination in the
recruitment, training, continuing employment, career development and promotion
of staff.
8.
Community Awareness
8.1 The Company continues to use local newspapers and borough communications in
the North London area to raise community awareness of its waste management
and recycling activities.
8.2 The Company holds an annual Compost Awareness Week featuring workshops,
tours and discussions. Visitors are encouraged to take home EcoPark compost.
8.3 LondonWaste continued links with local community groups including secondary
schools, local colleges, community groups, the Edmonton Sea Cadets as well as
many local residents and allotment groups. There were over 450 visitors to the
EcoPark. The Company is involved in initiatives to offer work experience to local
schools and colleges and provides apprenticeships in engineering. The Company
sponsors gardens at Capel Manor College which uses compost from the EcoPark
for horticultural purposes.
9.
Comments of the Legal Adviser
9.1 The Legal Adviser has no comments on this report.
10. Comments of the Financial Adviser
10.1 The contract that commenced in December 2014 has reduced the cost incurred by
the Authority for waste services. This will reduce LondonWaste’s profits and, as a
wholly owned subsidiary of the Authority, the dividend that is returned will also be
lower.
REPORT ENDS