TIDMBIFF
RNS Number : 9348Q
Biffa plc
03 March 2021
This announcement contains inside information
Biffa plc
Robust performance in third lockdown
Full year expectations increased
Further investment in plastics recycling announced
3 March 2021
Biffa plc ('Biffa', 'the Group' or 'the Company') (LSE: BIFF) ,
the UK's leading sustainable waste management business, today
issues a trading update ahead of its full year results for the 52
weeks ending 26 March 2021, which are scheduled to be announced on
26 May 2021.
Trading update
Group performance in the second half has continued to be ahead
of the Group's base case expectations, with the impact of the third
lockdown on earnings less severe than originally anticipated.
Group Net Revenues in the third quarter out turned at 97% of the
levels achieved in the same prior year period and for the final
quarter are now expected to be circa 92% of those for the
respective prior year period. I&C volumes have stabilised at
circa 80% of prior year levels for the fourth quarter, higher than
the predicted 70-75% range reported in January. All other areas of
the Group have performed in line with expectations.
Strong management of receivables and cash collection has
materially reduced the need for provision for doubtful debts,
resulting in a provision release in the final quarter. As a result,
underlying EBIT for FY21, whilst still materially impacted by the
pandemic, is now expected to be well ahead of the Board's previous
expectations, in the range of GBP42-44m*.
Acquisition of Company Shop Group
As announced last week, the Group has completed the acquisition
of Company Shop Group ('CSG') , the UK's leading and largest
redistributor of surplus food and household products for an initial
enterprise value of GBP82.5m, with a deferred consideration of up
to GBP5m based on trading performance from April to September
2021.
The acquisition of CSG is in line with Biffa's growth strategy
to leverage its position as the UK's leading sustainable waste
management company, further improving its capability to support its
customers' waste reduction and recycling targets. Biffa's leading
expertise in waste management and recycling, coupled with CSG's
unrivalled capabilities in redistributing surplus produce, will
deliver a unique circular economy proposition for the food
manufacturing, FMCG e-commerce and retail sectors. Further detail
can be found in the associated RNS, presentation and webcast
materials which are available on Biffa's website:
https://www.biffa.co.uk/investors .
The Group will be exiting FY21 with Net Debt of GBP440-460m
(FY20 GBP426m), well within its covenant headroom. As a result,
there is still significant balance sheet capacity for the Group to
continue to pursue its pre-existing investment goals.
Additional Plastics recycling investment
The Group continues to consolidate its leadership position in
food grade, closed loop plastic recycling. Phase two of the Seaham
rPET plant and the previously announced projects at Washington and
Aldridge are progressing to plan, and the Group expects all three
to come on-line in the early part of FY22. Agreements for the sale
of the output of the Seaham facility on de-risked commercial terms
are in the final stages of negotiation with a select number of
long-term strategic partners. The Group has recently agreed an
agreement with Alpla UK Ltd, a long-standing partner alongside the
previously announced partnership with Nestlé UK.
With the development projects at Seaham and Washington now
nearing completion, the Group has decided to further expand its
capacity in post-consumer HDPE recycling, with an additional
investment of GBP13m to be made at its Washington facility.
Over the last decade Biffa has pioneered closed loop recycling
technology for HDPE post-consumer milk bottles through its
operations at Redcar with 85% of milk bottles in the UK now
containing Biffa material. This additional investment at Washington
will increase the Group's HDPE milk bottle recycling capacity by a
further 50% to 39,000 tonnes of input per annum (equivalent to 1.6
billion bottles a year), and will grow Biffa Polymers' business to
an annual capacity of 155,000 tonnes and revenue of c.GBP85m.
Predominantly, the output from this facility will be used in the
manufacture of new HDPE milk bottles in the UK. The investment will
create a further 50 jobs and is expected to come on-line during H2
FY22.
Other Strategic Updates
Negotiations on several potential I&C acquisitions continue
and the pipeline of opportunities remains strong.
The Protos and Newhurst energy from waste developments are both
progressing well, in line with their construction milestones.
Outlook
The Group is increasingly well placed with leadership positions
across waste reduction, recycling, collections and energy recovery.
Biffa's performance over the last year demonstrates the resilience
of its model as a provider of essential services, whilst the
delivery of its strategic investment programme, including the
earnings enhancing acquisition of CSG, enhances Biffa's unique
position at the heart of the circular economy. The Group is excited
by the growth opportunities it sees, and will continue to invest to
build a resilient, more sustainable business, well-positioned for a
strong post pandemic future.
Notes
* FY21 Underlying EBIT Consensus is GBP33.8m (high: GBP41.0m,
low: GBP28.5m). Further consensus detail can be found on the
Company's website:
https://www.biffa.co.uk/investors/shareholder-information/analyst-consensus
Investors
Michael Topham, Chief Executive Officer
Richard Pike, Chief Financial Officer
ir@biffa.co.uk
Media & Analysts
Houston
T: +44 (0) 204 529 0549
biffa@houston.co.uk
Cautionary statement regarding forward-looking statements
This announcement contains certain forward-looking statements
that are subject to the usual risk factors and uncertainties
associated with the Company's business. Whilst the Company believes
the expectations reflected herein to be reasonable in light of the
information available to them at this time, the actual outcome may
be materially different owing to factors beyond the Company's
control or within the Company's control where, for example, the
Company decides on a change of plan or strategy. Accordingly, no
reliance may be placed on the figures contained in such
forward-looking statements.
The forward-looking statements contained in this document speak
only as of the date of this announcement, and Biffa does not
undertake to update any forward-looking statement to reflect events
or circumstances after the date hereof or to reflect the occurrence
of unanticipated events.
About Biffa
Biffa has been at the forefront of the UK's waste industry for
over a hundred years, with operations that span the entire breadth
of the waste management process including collection, recycling,
treatment, disposal and energy generation. Our purpose is to change
the way people think about waste. We help people see the
opportunities that exist when we manage our waste in the right way.
We understand the vital role we have to play in helping the UK to
address the climate emergency and deliver sustainable growth. This
involves an ambitious investment programme in green economy
infrastructure and low carbon collections, alongside an ongoing
commitment to sector leadership in the health, safety and wellbeing
of our people. Biffa is a Great British company. It has been listed
on the London Stock Exchange since October 2016 under the ticker
"BIFF". In March 2020, Biffa entered the FTSE-250.
For more information visit www.biffa.co.uk/investors
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END
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