Sunday 21 April 2019

Secret finances of Irish waste firms

Most big waste management firms are registered as private unlimited companies, which allows them to keep their accounts secret

The total value of the Irish waste sector runs well into the hundreds, and probably billions of euro. Photo: Collins
The total value of the Irish waste sector runs well into the hundreds, and probably billions of euro. Photo: Collins

Dan White

With pay-by-weight bin charges rapidly becoming the new water charges, Housing, Planning and Local Government Minister Simon Coveney had no choice but to move fast to defuse the crisis.

Last week Coveney hammered out a deal with the Irish Waste Management Association (IWMA), which represents most (but not all) of the major industry players - a deal that will see the introduction of pay-by-weight postponed for a year and bin charges frozen for the same period.

Will the new deal succeed in doing the trick? So far the signals are mixed. Two of the biggest players in the industry, Greyhound and City Bin, are not IWMA members. There have already been rumblings of a possible legal challenge to last week's price freeze deal.

However, even if last week's deal sticks, the bin controversy has focused attention on the hitherto low-profile waste management sector.

The waste management industry has its origins in the efforts of the country's local authorities to introduce household bin charges in the 1980s. Faced with fierce local political opposition, often from the same people who later opposed the introduction of water charges, the local authorities found it extremely difficult to collect bin charges from households.

With unpaid bills mounting, one by one the local authorities contracted out refuse collection to private companies. In 2011, the Dublin local authorities finally bowed to the inevitable and privatised their refuse collection services.

Companies collecting household waste must hold a permit from the National Waste Collection Permit Office (NWCPO). There are currently 72 permit holders (Greyhound, one of the largest players in the Dublin waste collection market, holds two permits).

In practice the market is dominated by fewer than 10 large companies. Greyhound, Panda and Oxigen operate mainly in the Dublin market, Greenstar in Dublin and the south-east, Thorntons in Meath and Wicklow, Country Clean in Cork and Waterford, Mr Binman in Limerick and the City Bin Company in Dublin and Galway.

Trying to get precise figures on the size of the market and the relative size of the different players is extremely difficult. Panda claims to collect refuse from 150,000 households and 15,000 businesses. Thorntons claims to have 60,000 customers, Greenstar to have 85,000, while Mr Binman claims to have 37,000 household and 3,500 business customers.

After that, concrete information starts to get very thin on the ground.

Of the seven main players, no fewer than five - Greyhound, Panda, Oxigen, Mr Binman and the City Bin Company - are registered as private unlimited companies at the Companies Registration Office (CRO). By registering as unlimited companies, the waste collection firms are able to, perfectly legally, avoid filing their financial accounts with the CRO. This lack of transparency is, to say the least, unfortunate.

At the time the local authorities privatised their refuse collection services, the market was opened up to competition between different private operators. This was supposed to allow householders to shop around for the best price for their bin collection.

Unfortunately, the reality hasn't matched the expectation, with little variation in prices between companies operating in each area.

While allegations by Independents 4 Change TD Joan Collins that "waste disposal is a cartel in which there is no competition" remain just that - unproven allegations - it would surely do the waste management companies' cause no harm if they were all to lodge their financial accounts with the CRO.

Will the mooted legal challenge to the price freeze by some of the companies result in greater disclosure?

Following the conclusion of the agreement with Coveney, IWMA secretary Conor Walsh was quoted as saying: "It will be a lot of pain on our members… the companies will lose a lot of money on this."

How can such claims be verified when most of his members weren't filing their financial accounts with the CRO?

Unfortunately, Walsh hadn't returned our calls by the time this article went to press.

We also tried to contact Coveney for his opinion on the appropriateness of companies licensed to provide a vital public service using unlimited company status to avoid disclosing their accounts. He hadn't got back to us by the time we went to press.

So what can we learn from the accounts of the two major players (Greenstar and Thorntons) who did file their accounts with the CRO?

Greenstar's parent company Starrus Eco Holdings had total sales of €98.9m for the 13 months to the end of March 2015. More than 90pc of Greenstar's sales - €94.5m - came from waste management services.

That works out at annualised waste management sales of about €87m.

According to its most recent accounts, Greenstar is loss-making, recording a loss of €7.2m before exceptional items. However, this figure was arrived at after a €3.4m depreciation charge and a further €1.7m charge for the amortisation of intangible assets.

The picture was further clouded by a major corporate restructuring - which saw Greenstar being acquired by US investment fund Cerberus - and an acquisition. Clearly Cerberus (which also bought Nama's €5.6bn Northern Ireland loan portfolio for just €1.6bn in extremely controversial circumstances) reckons that it can turn a handy buck from the Irish waste management business.

The Thorntons accounts were less clouded by such once-off factors. They show a gross profit of €8.8m and an operating (pre-interest) profit of €1.9m in calendar 2014. As in the case of Greenstar, Thorntons had a hefty depreciation charge, almost €3.5m.

As they say in Yorkshire: "Where there's muck, there's brass."

Even on the basis of the limited information in the public domain, Greenstar and Thorntons' combined €140m turnover indicates that the total value of the waste management sector certainly runs well into the hundreds of millions of euro - and probably into the billions.

Will this change following last week's deal?

Apart from the need to get a permit from the NWCPO, the sector has been very lightly regulated, with little disclosure required.

This 'light touch' regulation was in spite of the furore generated by the botched introduction of water charges. Apart from some fly-tipping, most of us continued to pay our bin charges even as the water charges controversy threatened to rip the previous government apart.

The low profile of the waste management companies has clearly been good for business, but can it survive the pay-by-weight controversy?

For the first time, the waste management companies have been thrust into the spotlight. Now that they have drawn such public and political attention upon themselves, they may find it hard to retreat back into the shadows to which they have been accustomed.

Various groups, scenting blood following their success in campaigning against water charges, already have the waste management companies and bin charges in their sights.

Are we about to witness a revival of the anti-bin charge campaigns of the 1980s and 1990s?

Maybe, maybe not.

Unlike water, the privatisation of household waste collection is a fait accompli. No government will want to return bin collection - and all of the hassle that goes with it - to the local authorities.

A renewed anti-bin charge campaign would also find waste management companies a much tougher nut to crack than Irish Water. Unlike Irish Water, which folded as soon as its political masters lost their nerve, the waste management companies are owned and managed by hard men, and some hard women too, who have succeeded in a hard business.

Seconds out!

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