Councillors in Bristol concerned at the business affairs of contractor May Gurney are to seek assurances about the company’s new seven-year contract for waste collection and street cleansing.
After a recent profit warning, the infrastructure and outsourcing firm said it was addressing its financial problems, blamed in part on problems with its loss-making kerbside sort collection contracts in Bristol and Chester.
In September the firm’s shares fell after it said it would “significantly under-perform its original expectations”, with chief executive Philip Fellowes-Prynne leaving immediately.
The senior Conservative councillor in Bristol, Peter Abraham, said that the city’s £96m deal was the single largest contract awarded by the council.
Now, he plans to question Gary Hopkins, Lib Dem cabinet member for environment & community safety, who is responsible for the May Gurney tender, at Thursday’s meeting of the cabinet:
“I was very concerned to learn of this company’s difficulties. Private companies do not tend to bear such losses for long. There are some obvious health risks and implications should May Gurney prove unable to fulfil all of their contractual obligations.
“I want to know what contingencies are in place to cover such an eventuality, as well as seeking a guarantee from Cllr Hopkins that there will be no disruption of service over the duration of the current seven-year deal.”
As of 30 September, the group had gross cash of £20m and borrowings of £23m, with total borrowing facilities of £48m, comprising a £15m overdraft facility and a revolving facility of £33m. The group had obligations under contract-backed finance leases of £74m.
A statement from May Gurney said: “As we announced on 6 September, we have faced operational issues on two of our long-term environmental services contracts where our targeted margins have not been achieved. Plans are in place to address these issues and we will provide a fuller update at the year-end. These contracts represent 3% of historic revenues p.a. and all of our other environmental services contracts are performing in line with expectations.
“Our focus remains on maintaining our long-term client and community relationships and delivering service excellence. We are totally committed to ensuring that this contract (Bristol) is effectively managed and it is already evident that it is achieving recycling rates.
“With robust operational improvements and efficiencies being driven forward, May Gurney is focused on delivering a solid future performance.”
- On 10 October, the new May Gurney operation with Cheshire West and Chester Council, including a new weekly food waste recycling service, was rolled out across the borough (photo above).