Renewi has written off €64m (£56.5m) on its ill-fated gasification project in Derby with Interserve, its annual results for 2018-19 have shown.
The company – formed by a 2017 merger of the UK’s Shanks and Dutch firm Van Gansewinkel – reported in its results statement that revenue was up by 1% to €1.8bn and underlying profit before tax by 9% to €63.8m.
Chief executive Otto de Bont, who took office last month, said: “Last year was a challenging one for the group, with the progress in our commercial division overshadowed by difficulties elsewhere.
“We have acted to address the group’s short-term challenges and are confident that these will be resolved during the year.”
Among Renewi’s problems was the €64m write-off of its investment in the Derby gasification facility, which it said was “due to the failure of our partner, Interserve, to commission the facility”.
Renewi signed a contract in 2014 to become the long-term operator of the facility in a joint venture named Resource Recovery Solutions (Derbyshire) with construction firm Interserve, along with Derby city and Derbyshire county councils.
The results statement said: “As previously reported, the facility is two years late in commissioning. We have supported our customer and insisted on not accepting the facility until it has properly passed acceptance tests such that it can be safely and profitably operated.”
Renewi had therefore written off its €40m investment, taken a €7.6m provision for ongoing losses and assumed termination costs, and provided €11.6m “against delay damages which we believe are owed to us by Interserve but which remain outstanding”.
Elsewhere in its UK municipal business, Renewi reported an underlying profit of €800,000 against a €6.6m loss the previous year.
The company said the improvement reflected reporting of losses on its PFI deal at Wakefield as an onerous contract, having sold the Westcott Park anaerobic digestion facility and extricated itself from a loss-making contract with Dumfries and Galloway Council at a cost of €12m.
But the company had taken an impairment charge of €4m on its deal with East London Waste Authority (ELWA), which it no longer considered recoverable.
“As previously announced, the only significant direct impact of Brexit on Renewi is at ELWA, from where around 200,000 tonnes of refuse-derived fuel (RDF) is exported to the Netherlands each year,” the statement said.
In January 2018 Renewi signed a deal to supply Dutch firm AEB with up to one million tonnes of RDF over 10 years, mainly from its ELWA contract.
Renewi dropped a heavy hint that it will concentrate on its operations in the Netherlands, Belgium and Luxembourg.
It said: “Our current core markets are in the Benelux where we can see significant opportunity from the market trends. We will therefore be focusing increasingly on investments and innovation to exploit these growth opportunities in commercial waste treatment.”