Part of the local authority-owned Norse Group, NEWS sells recyclable material on behalf of the seven councils in the Norfolk Waste Partnership.
Results for the 2021/22 financial year were published by the Norfolk county council-owned company last week, 4 January. They showed that NEWS recorded a profit of £573,110 for the period, up from a £1.4 million loss the same period last year.
This comes despite the wider Norse Group, the UK’s largest LATCO, posting a £13.7 million loss for 2021/22, down from a £1.1 million profit the previous year.
This was put down to the “impairment of property and goodwill mostly within the Norse Consulting Group”.
The wider Norse Group runs a number of “jointly owned operating companies”, which it says replace traditional client/contractor relationships.
This includes companies in Barnsley, Enfield, Newport and Devon, according to the Norse website.
The environmental services division, which includes waste collections, is carried out through Norse Commercial Services, which recorded a £3.1 million profit.
Norse has been contacted for comment.
Last year, the company had predicted that the high prices for recyclable materials would boost results (see letsrecycle.com story).
‘Challenging environment’
More than 87,000 tonnes of residential residual waste in Norfolk is processed by NEWS, with around 71,000 tonnes of recyclable residential waste and around 10,000 tonnes of mixed trade waste every year also included.
Despite the welcome return to profit, the financial document warned that NEWS “continues to face a challenging operating environment, particularly with regard to fluctuating commodity prices for recycled materials”.
The document added that “there are no long term guarantees of this strong performance due to the rapidly changing nature of the markets”. In terms of risk mitigation, the company said that it is seeking additional contracts to offset any drops in prices that might occur.
NEWS also said that the overall outlook is “considered stable” as the bulk of the company’s work is through long-term arrangements. The report explained that the waste management industry is “highly cyclical” and that with long-term agreements in place, “the company is well placed to see out any potential dips in the market”.
“In order to offset falls in the market and fully utilise staff and equipment,” the document continued, “any additional tonnage over and above the core contract is separately agreed and secured without commodity risk at higher margins.”
Revenue
NEWS noted that its revenue has increased from £18,343,501 in 2020/21 to £20,466,450 in 2021/22. The document explained that the increase is due to a new variable gate fee arrangement with local district councils, which has resulted in an increased fee and therefore increased revenues from 1 October 2021.
The report stated that “this new arrangement has had a direct impact on both gross and net margins as the increased revenue does not have any additional costs related to it.” And, average employee numbers have dropped as the company is using agency workers to deal with variable demand, NEWS added.
Previous years
Prior to 2021/22, NEWS reported a loss for three years in a row. As well as the £1.4 million loss recorded in 2020/21, the company also faced a loss in both 2019/20 (£429,198) and 2018/19 (£2.8 million).
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