AES hires Davys to deal with approaches

One of the larger waste management businesses in the State has appointed Davys to deal with approaches from would-be investors.

However, the managing director of Advanced Environmental Solutions (AES), Mr Patrick Alley, said it was not the case that the group was looking for a buyer. "We have to take our business to its next stage and we will require a significant level of investment," he said.

He said this could occur in a number of ways. "Tens of millions of euros" would be needed for investment over the coming two to three years as the waste industry was going through a period of change.

AES recently announced that it had secured €6 million in new funds from its shareholders by way of a convertible loan note.

Mr Alley said the funding project had been "oversubscribed" and there were a number of "very interested people" who had wanted to become involved.

The group has grown significantly by way of acquisition since it was established in July 2001. Mr Alley said it had spent close to €15 million on maximising recycling activities in recent years and would now be looking at investment in biological treatment.

The latest filed accounts for the group, for the period to the end of June 2003, showed a loss of €4.6 million on a turnover of €31.5 million.

The company made a smaller, loss of €139,453 the previous year, on a turnover of €13 million. The significant rise in turnover during 2003 was more than matched by a sharp rise in costs, which went from €8 million to €20 million during the year.

"The group results for 2002/ 2003 were disappointing, with turnover... falling short of budget, and a sizeable increase in landfill charges," the directors said in the notes accompanying the accounts.

They expected the company to return to profitability in 2003/ 2004, "with the introduction of recycling facilities, thereby reducing landfill charges".

Mr Alley said the results were affected by the timing of the acquisitions during the period and the true cash loss was approximately €2 million. He said the company had "turned the corner" in more recent times.

The directors in their notes said the group "faces challenges to consolidate and manage the businesses acquired and to return the company to profitability in a market disrupted by competitors who are environmentally non-compliant".

Mr Alley is one of the group's largest shareholders, holding 247,484 of the 2.5 million issued shares at the time of its annual return for the year to end December 2003.

The group has its headquarters in Naas, Co Kildare, and the majority of its shareholders are from the Laois, Tipperary, Kildare, Kilkenny and Offaly region. It had 49 shareholders listed in the 2003 annual return, most of them individuals.

During the year to the end of June 2003, the company spent €22 million on acquisitions. Companies acquired were: Midland Waste Disposal Company Ltd, Navan, Co Meath; Alina Plant Hire Ltd, Tullamore, Co Offaly; Athlone Waste Disposal Ltd; and Yellow Bins Waste Disposal Ltd, Kildare.

AES spent €7.4 million upgrading its treatment sites in Navan, Portlaoise, and Tullamore, and on buying new transport vehicles.

Apart from the companies above, the group also includes: Midland Refuse Services Laois Ltd; Landfeeds Environmental Ltd; and Glideon Transport Ltd.

Earlier this year it was announced that an investment fund headed by Mr Bill McCabe, the entrepreneur who made 65 million from selling his stake in technology company SmartForce, had entered into a €10 million joint venture with AES.