Biffa posts record statutory revenue as trading recovers

The FTSE 250 company said that was driven by organic recovery back to pre-pandemic levels, together with the contributions of Simply Waste, Company Shop Group (CSG), Viridor and the Biffa Polymers investments.

Organic growth and acquisition growth contributed a respective 22% and 17%.

Group adjusted EBITDA rose to £195m for the 52 weeks ended 25 March - up 41% on 2021, and up 12% on 2020.

Group operating profit improved to a loss of £8.3m, narrowing from a loss of £37.6m last year, and adjusted operating profit more than doubled to £96.6m from £44.2m year-on-year.

The board noted a number of adjusting items excluded from adjusted operating profit, including acquisition-related costs of £9.4m, strategy-related and restructuring costs of £4.8m, the impairment of goodwill on CSG of £25m, the unwinding of EVP balances of £20.8m, provision relating to the HMRC landfill tax enquiry of £17m, and the amortisation of acquisition intangibles of £29.6m.

Group leverage improved slightly during the year, with covenant basis net debt-to-EBITDA falling to 2.9x from 3.0x year-on-year, enabled by net cash flow of £10m despite the increased level of growth investment.

All covenants were now measured on a post-IFRS 16 basis.

The directors reinstated and proposed a final dividend of 4.69p per share, bringing the total dividend for the year to 6.89p per share.

Looking at the landfill tax dispute, Biffa said it had been refused leave to appeal to the Supreme Court on the EVP-fluff dispute.

It said that the outcome did not have a material impact on cash or leverage, with the impacts on accounts included in adjusting items.

As it announced on 7 June, Biffa was currently the subject of an enquiry by HMRC around certain aspects of its landfill tax compliance, as part of an industry-wide review of the sector.

A provision of £20m was recognised, with a current year charge of £17m in adjusting items, representing Biffa's “best estimate” of the potential liabilities, although there was a range of potential outcomes which was expected to continue for some time.

“I am delighted with the progress we have made in the face of another eventful and challenging year,” said chief executive officer Michael Topham.

“Not only have we demonstrated the resilience of our business model, resulting in record adjusted operating profits and the reinstatement of the dividend, but we have continued to invest in the infrastructure and services that are essential to the delivery of a circular economy.

“As we look forward, whilst being mindful of the near term challenges the UK economy is facing, we are increasingly well positioned to play a key role in the transition that our sector is embarking upon, supported by an ambitious policy agenda.”

At 0917 BST, shares in Biffa were up 6.49% at 384.2p.

Reporting by Josh White at Sharecast.com.