“In a period in which the Group has implemented substantial changes in preparation for the pre-treatment regulations which came into effect at the end of October, we are pleased to report good growth in revenues, operating profit, adjusted earnings and free cash flow in the first half of this year”
Martin Bettington, Chief Executive Officer of Biffa Plc
High Wycombe, Bucks, England: Waste management group, Biffa has continued to deliver good growth during a period of significant change as the UK waste management industry has been preparing for the new pre-treatment regulations, the company said today in its interim report for the 26 weeks ending 28 September 2007.
Biffa confirmed on Monday, that it had rejected an approach from a grouping of private equity companies.
The interim situation shows that revenues for the Group are up 4.9% at £395m (2006-07 £376.5m) and operating profit is up 7.2% at £52.4m (2006-07 £48.9m).
Biffa says that it has benefited from strong operational performances in both its Resource Recovery and Landfill and Power Generation divisions.
The company considers that the pre-treatment regulations, effective from October, have been “one of the most significant legislative changes to affect the UK waste industry over the last ten years, encouraging our industry to make an important step from waste disposal to resources management”.
In response to the new regulations, Biffa has expanded its recycling collection services to offer national coverage for card and extensive coverage for paper and glass.
Biffa is also extending its Material Recycling Facilities (MRFs) capacity through further development of existing facilities and by establishing new ones.
Resource Recovery and Landfill
The company’s strategy has been to achieve the best balance between capacity and demand which has resulted in a growth of 5% in average unit revenues before landfill tax. There has also been a 10% volume increase which is essentially due to the opening of a new landfill site at Cottonmount in Northern Ireland in November of last year, according to the company, exceeding Biffa’s expectations at this stage.
Biffa’s second soil remediation clinic was opened in October at the Colnbrook site, near Heathrow. This followed a pilot study last year at the company’s Risley site, near Warrington.
The company has successfully negotiated the termination of less profitable NFFO (Non-fossil fuel obligation) contracts at Roxby and Trecatti sites early, with the released capacity qualifying for ROCs (Renewable Obligation Certificates).
Output that qualifies for ROCs attracts a substantially higher revenue package than the revenues earned under NFFO contracts.
The Power Generation Division wholly owns 66.6 MW of installed capacity, of which 66.7% now qualifies for ROCs compared to 31% in 2006/07.
Biffa says that it also has interests in a further 40.6 MW, primarily held through joint venture and royalty arrangements.