Waste management firm Biffa has posted its half-year financial results for 2016/17 – revealing a “strong performance” based on its recent acquisition of Cory’s municipal contracts in the summer.
The business recorded £71 million in underlying earnings before tax, a boost of 14.9% on the previous 12 months, while net revenue rose 8.6% to £446.7 million.
Biffa has recorded ‘strong’ first half results for the year
Underlying operating profit for the company was up 22.9% to £39.7 million – an increase of 8% in the overall margin.
The half-year results – posted for the 26 weeks ended 23 September 2016 – covers the period immediately prior to Biffa’s recent public flotation on the London Stock Exchange in October, which opened at 180 pence per share (see letsrecycle.com story).
Biffa meanwhile recorded a period end net debt of £270 million, based on its post initial public offering (IPO) capital structure.
Acquisitions
Biffa has explained its revenue increase on its commercial and industrial (C&I) and municipal waste activities, which included a number of business and contract acquisitions in the first half of the year.
Biffa’s work with Manchester city council has supported municipal revenue
Biffa’s municipal division accounted for revenue growth of 16.5% – or £12.7 million – driven by its acquisition of Cory Environmental’s municipal collection contracts across the UK for £13.5 million in June.
Municipal work involved includes contracts to provide household waste and recycling services for Cornwall, Rutland, Tunbridge Wells and Lincoln local authorities.
In addition, the company continues to benefit from its eight-year collections contract with Manchester city council, which began in March 2015.
Customer wins in C&I delivered ‘organic revenue growth’ of 5.8% while acquisitions in this sector added 3.1% to revenues for the half. This included contract wins with the John Lewis Partnership, KFC, Next and AB Inbev.
Infrastructure
The half-year results saw a decline in energy revenue in line with expectations by 3.2% to £42 million, due to ‘reducing landfill gas yields’ and a 19.1% reduction in the power export price compared to the previous 12 months.
But, Biffa has partially offset this decline by its West Sussex MBT contract moving to full service in 2015. In addition, there was a 5.1% increase in revenue across its resource, recovery and treatment division driven by ‘improved gate fees and commodity prices in its material recovery facilities’.
In addition, the firm acquired revenue growth of 9.2% as a result of two hazardous waste acquisitions which has offset a decline in organic revenue.
“Looking ahead, we will continue to develop our infrastructure and services, taking advantage of the significant amount of waste we control.”
Ian Wakelin, chief executive
Biffa
Performance
Commenting on the results for the first half of the year, Biffa chief executive Ian Wakelin said the company’s full year expectations remain “unchanged”.
He said: “Biffa has the scope to continue to grow organically, leveraging our brand, operational know-how and national scale. Moreover, we are well positioned to capitalise on increasing consolidation in a fragmented marketplace, with the structural growth drivers in the industry favouring our business model.”
He added: “Looking ahead, we will continue to develop our infrastructure and services, taking advantage of the significant amount of waste we control. Within our existing operations we see further opportunities to optimise our systems and processes to deliver additional growth in revenue and expansion of margins. Building on our successful track record of in-fill acquisitions, we have a pipeline of opportunities which we are actively exploring, particularly in our I&C division.”
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Source: letsrecycle.com Waste Managment
