Biffa Signs Covanta EfW Deal As It Reports Statutory Loss

Biffa has signalled an exclusive energy from waste (EfW) deal with Covanta as it reports a rise in revenues but a statutory loss after tax due to the cost of its stock market floatation.

Biffa has published its results for the 52 weeks ended 24 March 2017. Revenues of £990.4m were 6.8% ahead of the prior year and Net Revenues rose 8.3% to £898.8m, driven by growth in its industrial & commercial, municipal and resource recovery and treatment divisions, Biffa says.

Underlying operating profit rose 18.1% to £73.8m with the underlying operating profit margin increasing to 7.5% from 6.7%, reflecting what it has called its “ongoing focus on the optimisation of operations as well as growth”.

However, as Steve Marshall, chairman, stated: “The Group’s financial reporting for the past year is made more complex by the refinancing and exceptional costs associated with the IPO. These and certain other items resulted in the Group reporting a statutory loss after tax of £10.9m (prior year £5.1m)”.

“The Group’s financial reporting for the past year is made more complex by the refinancing and exceptional costs associated with the IPO. These and certain other items resulted in the Group reporting a statutory loss after tax of £10.9m (prior year £5.1m)”

Biffa rejoined the stock market on October 17 at 180p a share, giving it a market capitalisation of £450m. On Wednesday (14 June), Biffa’s shares remained stable at about 195p.

According to the Financial Times, the company was hurt by £29m of “exceptional costs” as a result of its initial public offering, which it says “struggled to get off the ground in the wake of Britain’s decision to leave the EU”.

The company stated the results were fully in line with the Board’s expectations at the time of the IPO.

Ian Wakelin, chief executive of Biffa, said: “Biffa delivered a strong performance in the year that also saw our successful listing on the main market of the London Stock Exchange.

“As a fully integrated, market-leading waste management services provider, we have the scale and the network to act as a consolidator in a highly fragmented market place. In the year we completed five acquisitions and have a strong pipeline of acquisition opportunities.

“At the same time, we have continued to take actions to improve the efficiency of our operations, get closer to our customers and leverage new opportunities for investment.”

“Exclusive” EfW Deal

The company also revealed an agreement has been signed with leading EfW developer and operator, Covanta, to “jointly explore two potential EfW projects on an exclusive basis”.

Mr Wakelin said the deal would explore the potential development of two large-scale energy recovery facilities in Leicestershire and Cheshire. He says the UK has a “significant shortage” of energy from waste treatment capacity.

“Our expectations for the year ahead remain unchanged and we look forward with confidence,” he said.

The company also announced that key safety performance measures, including statutory RIDDOR and Lost Time Injury (LTI), continued a “long-term trend of improvement”, equating to a three-fold reduction in accident rates over the past five years.

The Board said it anticipates that the next 12 months will bring more opportunity and see further progress for Biffa.

Mr Marshall stated: “We have a strong management team in place and I am confident that together we will create further value by continuing to deliver against the Group’s strategic priorities. I look forward to the next stage of our journey.”

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