Agenda item

This report considers reports from Yorwaste providing a trading update for the 2025/26 financial year as well as a general update on the business.

The Managing Director, Yorwaste Ltd provided the committee with a financial performance update:

It was noted that:

·       Being owned by two authorities (City of York Council and North Yorkshire Council) as sole stakeholders, there was a risk of a “wooden dollars” argument about the value of the report in terms of where costs or profits resided.

·       It had been a good year for the business, despite continuing pressures bringing profits down from £1.65 million to £0.95 million. The key reason for the fall was the loss of some third-party recycling business halfway through the year and a conscious decision to absorb costs arising from National Insurance and living wage increases to avoid passing on inflationary rate increases to the authorities.

·       Members asked for further details on the loss of the third party arrangements, The Managing Director, Yorwaste Ltd discussed that Yorwaste had been bringing in significant cashflow for managing a commercial customer’s aluminium and cans, but that this customer had moved elsewhere for commercial reasons. This was a price sensitive market, and the customer could not have been retained since this was not put to tender. Yorwaste could not have retained the customer unless it went outside margins, due to price competitiveness.

·       There had been a couple of Reports of Diseases and Dangerous Occurrences Regulations (RIDDORs). Members asked about the type of incidents incurring the RIDDORs: The Managing Director, Yorwaste Ltd clarified that these were not severe occurances, comprising a twisted ankle and time off for back pain due to lifting.

·       A Fiber Optic Sensing (FOS) system had been fitted to the heavy plant operating area, which further mitigated one of the single biggest areas of risk to pedestrians in the working area on key sites. The business had been awarded the RoSPA Gold award for the third year in a row, as well as an investors in people silver award.

·       Members asked about the reduction in landfill aftercare provision and amortisation detailed in the report – the Managing Director, Yorwaste advised that the business had certain obligations over 20-30 years maintaining landfill sites, and the higher the gilt rate (or cost of government borrowing) the lower the amortisation rate (or cost needed on the balance sheet) to meet long term expectations.If government borrowing were to drop significantly this could result in the business having an additional cost via this mechanism; it was not to do with the actual cost of maintaining the landfill, it was the discount or reverse interest rate.

·       The business was at breakeven budget, with both authorities being under significant cost pressure. Nevertheless, they wouldn’t have to go into any borrowing. There was potential they may just dip into loss in the coming year, depending on the direction of the fuel crisis.

·       Members discussed the reduced profits of the business and the Managing Director, Yorwaste Ltd responded that he recognised the authorities were struggling, and it was not beneficial for company to go up in profit now. Members asked whether he felt without action on the part of authorities the business would become loss making. The Managing Director, Yorwaste responded that he did not believe either authority intended to allow this and he predicted £0.5 million to £1 million profit in the next 3-5 years.

·       The Head of Service Finance, CYC asked how much authorities charge Yorwaste to put their own commercial waste into Allerton Park, since £200k-300k additional revenue was coming to CYC here, which if Yorwaste was to keep would show more profitability for the business. The Managing Director, Yorwaste Ltd answered that they needed to find the right level for this but it was not as simple as it could be.

·       Options were discussed on various Deposit Return Schemes (DRS). All presented options would happen over next few years but had not yet come to fruition. If DRSs were a success, the income currently produced by dealing with this waste would disappear from council revenue stream. This would be coupled with the risk of the council choosing to commit £12-16 million on a new Materials Recovery Facility.

·       Members asked if the cited 2/3 value was lost via DRS, how much this would amount to. The Managing Director, Yorwaste Ltd stated that based on figures from Ireland where this was currently in place, we could be looking at a reduction of 60% in recycle rates. Even if a significant number of houses didn’t want to bother taking their recyclables to the bins to collect a deposit, there would likely be enterprising members of the community who would be more than happy to claim the deposit on their behalf. Members expressed concern that market conditions in the UK may differ significantly from the Republic of Ireland where they pay directly for waste to be collected (not via council tax) but the Managing Director of Yorwaste said he could not comment on that at this stage.

·       Members clarified that these schemes would just be for plastic and cans, and not glass. The Managing Director, Yorwaste clarified that nobody wants glass, or cardboard which significantly loses value if it gets wet.

[The Managing Director, Yorwaste Ltd left the meeting at 4:48pm]

Resolved:   To note the reports from Yorwaste Ltd.

Reason:     To ensure the Council is updated on the financial performance of Yorwaste Ltd