TIDMBIFF
RNS Number : 1606Q
Biffa plc
17 June 2020
Biffa plc
(the 'Company')
Publication of Annual Report and Accounts 2020 and
Notice of Annual General Meeting
The Company's Annual Report and Accounts for the year ended 27
March 2020(1) (the 'Annual Report') and Notice of Annual General
Meeting 2020 (the 'Notice of Meeting') have been published on the
Company's website and are available to view at
www.biffa.co.uk/investors , a hard copy version of the Annual
Report and Notice of Meeting will be sent to those shareholders who
have elected to receive paper communications.
In compliance with Listing Rule 9.6.1, the Annual Report, Notice
of Meeting and Proxy Form for the 2020 Annual General Meeting, to
be held on Thursday 16 July 2020, will be available for inspection
at the National Storage Mechanism at data.fca.org.uk.
The final results for the year ended 27 March 2020, released by
the Company on 5 June 2020 include the information required
pursuant to Rule 6.3.5 of the UK Disclosure Guidance and
Transparency Rules, excepting publication of the responsibility
statement of the Directors in respect of the Annual Report, a
description of the principal risks and uncertainties facing the
Company, and the related party transactions carried out by the
Company and its subsidiaries during the year, which are detailed
below. Page and note references in the text below refer to page
numbers in the Annual Report and notes to the financial
statements.
Sarah Parsons
Company Secretary
17 June 2020
Enquiries:
Investors
Michael Topham, Chief Executive Officer
Richard Pike, Chief Financial Officer
ir@biffa.co.uk
Media & Analysts
Houston PR
biffa@houstonpr.co.uk
Registered in England and Wales:
10336040
Registered office at:
Coronation Road,
Cressex,
High Wycombe,
Buckinghamshire
HP12 3TZ
(1) With respect to the table on page 86 of the Annual Report
regarding Substantial Shareholdings, in addition to the 8.58% held
directly by Avenue Europe International Management LP, Avenue also
held 7.33% indirectly as at 4 June 2020, as disclosed in RNS number
8016O.
Appendix
Statement of Directors' Responsibility under the Disclosure and
Transparency Rules
Pursuant to Rule 4.1.12 of the Disclosure and Transparency Rules
(DTRs) each of the Directors, the names and functions of whom are
set out on pages 42-43 of the Annual Report, confirm that to the
best of their knowledge:
-- the Financial Statements, prepared in accordance with the
applicable set of accounting standards, give a true and fair view
of the assets, liabilities, financial position and profit of the
Group and the Company;
-- the Strategic Report and the Directors' Report include a fair
review of the development and performance of the business and the
position of the Group and the Company, together with a description
of the principal risks and uncertainties that they face; and
-- the Annual Report and Financial Statements, taken as a whole,
are fair, balanced and understandable and provide the information
necessary for shareholders to assess the Group's performance,
business model and strategy.
Related Party Transactions
There have been no material related party transactions in the 52
weeks ended 27 March 2020 (2019: nil) except for key management
compensation as set out in the Directors' Remuneration Report.
Details of the Directors' remuneration are set out in the
Directors' Remuneration Report on pages 62-83. There have been no
related party transactions with any directors in the year or in the
subsequent period.
During the year to 27 March 2020, the Group invested GBP5m in
Newhurst ERF Limited a joint venture that the Group holds 50% share
in through Newhurst ERF Holding Limited. This is therefore a
related party of Biffa Plc. On financial close the Group received
from the joint venture reimbursement for development costs
incurred. There was one other related party transaction in the
year. The Group issued loan notes of GBP2.2m to Newhurst ERF
Holding Limited, the parent company of Newhurst ERF Limited. Both
parties can redeem the notes at any time. Annual rate of interest
on the notes is eight per cent. This whole balance remained
outstanding at year end. None of the amount is deemed to be
uncollectable and no expenses have been recognised during the
period in respect of bad or doubtful debts in this regard.
No Directors held any material interest in any contract with the
Company or the Group in the year or subsequent period to 27 March
2020.
The Group has made GBP10.2m (2019: GBP9.2m) contributions to the
pension schemes.
Principal Risks and Uncertainties Key: No change: - Reduced: â
Increased: á New: <<
Risk title/description Risk Mitigating actions Changes in year Strategic
movement objective
and
Impact
Changes in Government - Experienced and Published reports Optimise
policy and legal * Operational qualified (Reality Check series)
and regulatory environmental support on Recycling Collections
compliance experts working across Guide and on Managing
The Group operates * Financial all operating Waste Plastics.
in a highly divisions. 10-year Sustainability
regulated industry Representation on the Strategy "Resourceful,
and any changes * Reputational Environmental Services Responsible" developed
to Government Association and other and launched in March
policy, standards external bodies; 2O2O, which helps
or regulatory * Regulatory liaison link the commercial
compliance requirements with policy makers and strategy with sustainability/ESG
could have an Regulators at national strategy and targets.
adverse impact and local levels; These are in line
on the Group's responses with UK Government
operations and to environmental policy
results. Government/regulatory and objectives, as
consultations and well as the United
sustainability Nations Sustainable
reporting. Development Goals.
Environmental
compliance
strategy in place
including
annually reviewed
targets
and actions at local,
divisional and Group
levels.
Established compliance
processes in place to
manage other
regulatory
compliance risks, such
as anti-bribery and
corruption, GDPR,
modern
slavery, competition
and vehicle operating
licences.
Founding member of the
Slave Free Alliance
and has implemented
several initiatives,
including a manager's
guide to modern
slavery,
to raise awareness
across
the business.
Training for senior
leaders on modern
slavery,
anti-bribery and
corruption,
GDPR and competition.
------------------ ---------------------- --------------------------------------------------------- ---------
Health & Safety - Group H&S function New H&S Programme Optimise
(H&S) * Reputational reports - Safer Together
Biffa's operations to the CEO. launched.
present inherent Active and regular Existing H&S standards
H&S risks to * Regulatory engagement updated and incorporated
our employees, by senior management into a new Group
our customers including weekly Integrated Management
and the wider * Financial reporting System.
public. and calls with the New driver training
Violations of Group Executive Team. programme - Streetwise
H&S laws/ regulations Inclusion of H&S developed which focuses
could have a targets on defensive driving
material adverse and objectives within behaviours.
effect on Biffa's Group Balanced Wellbeing programme
business and Business delivered supporting
reputation. Plans (BBP) with one key topics such as
of the five pillars mental health.
being 'Safe and
Sustainable'.
Embedded policies,
standards
and procedures in
place
across Biffa for the
systematic control of
significant H&S risks.
Primary Authority
relationship
with Hampshire Fire
and Rescue Service
enables
access to advice and
counsel on fire risk
issues.
Management system
transitioned
to ISO 14001 and ISO
9001:2015.
------------------ ---------------------- --------------------------------------------------------- ---------
Mergers & Acquisitions â Group delegated During the year we Grow
(M&A) strategy * Financial authorities have continued our Develop
and delivery for the M&A strategy to support
Biffa faces review/approval growth and completed
risks arising of all transactions five small acquisitions.
from its acquisition by senior management, We have also worked
strategy, such Investment Committee to integrate the
as increased and the Board. previous year's acquisitions
competition Dedicated corporate including the internalisation
for acquisition finance expertise in of SWR customer collections
targets or a place together with previously outsourced.
lack of suitable experienced Biffa This activity will
targets. Additionally, subject complete next year.
acquisition matter experts as Post COVID-19 we
integration senior anticipate returning
risks and issues stakeholders for the to a strong pipeline
could arise, acquisition process. of opportunities.
impacting the Board and executive
delivery of level review and
expected benefits, update
either within included in monthly
expected timeframes Board report
or to the extent summarising
anticipated. pipeline of identified
potential targets.
Due diligence
undertaken
for all M&A
transactions,
including use of
external
advisers depending on
target value and
complexity.
A standardised
approach
using an established
valuation model is in
place with all
transactions
reviewed/approved by
the Investment
Committee
and (where
appropriate)
the Board.
Project team kept in
place until
integration
phase completed.
Post-acquisition
reviews to track
benefit
delivery with
financial
benefits embedded
within
financial planning
processes
(e.g. forecasts and
budgets).
------------------ ---------------------- --------------------------------------------------------- ---------
Long-term contracts â Group delegated Continued focus on Grow
and tendering * Financial authorities the sales governance
The Group is for the process including:
exposed to risks review/approval * The development of the contract risk framework to
inherent in * Reputational of bids by senior formalise the governance approach to key
long-term fixed-price management, commercial/legal risks, which has been approved by
contracts, in the Investment the Board.
particular in Committee
its Municipal and the Board
division and (depending * Improved capacity and capability across our project
related operations. on bid size). management and mobilisation team facilitating a
Risks include Material bids are culture of continuous improvement.
inaccurate long-term compiled
cost estimates by dedicated
due to changes development * Restructure of the commercial/ sales function,
in the external teams with significant integrating leadership under the new Municipal
operating environment expertise and Commercial Director, but also adding additional
and market dynamics experience. support in both the commercial and business
that lead to They are supported by development teams.
material deviations subject matter experts
from initial as appropriate.
underlying assumptions. Protection from change
of law or force
majeure
for unforeseen
circumstances
is designed into
contracts.
A contract risk
framework
is in place to
identify
key commercial/legal
risks and confirm
through
the governance process
that these have been
considered and
mitigated.
------------------ ---------------------- --------------------------------------------------------- ---------
COVID-19 << The Group has See pages 6 to 7 Grow
A signification * Financial introduced of the Annual Report Optimise
reduction in measures to reduce and Accounts for
demand for I&C costs, more information.
Collection services, * Operational including furloughing
as many customers over 1,500 employees;
are forced to pay reductions being
cease or drastically * Reputational taking by the Board,
reduce trading, the Group Leadership
may have an Team and the broader
adverse impact leadership group; and
on Biffa's operating suspension of bonuses
performance, and pay increases.
revenues and All M&A has been
results of operations. suspended
In addition, and non-essential
the Group expects capital
reductions in expenditure that has
volumes into not already been
some processing committed
facilities in for FY21 has been put
the R&E division on hold. In addition,
and impacts payment deferrals have
to all business been negotiated where
operations from appropriate and
workforce illness meaningful
or enforced in areas such as
absence. indirect
taxes, pensions, lease
liabilities and
material
supplies.
Covenant amendments
and additional
liquidity
headroom have been
agreed
with the Group's
banks.
An internal response
team has been set up
to ensure we support
the health and
wellbeing
of our colleagues,
manage
business continuity,
provide clear and
timely
communications and
minimise
service disruption.
All staff who are able
to have been advised
to work from home and
social distancing
applied
across our workplaces.
Internal
communications
and engagement have
been key with CEO
vlogs,
internal appreciation
campaigns and our
employee
App, Biffa Beat all
contributing.
------------------ ---------------------- --------------------------------------------------------- ---------
Business continuity, - Crisis management and Continued testing Optimise
cyber security * Financial emergency response and improvement of
and IT resilience plans Biffa Business Continuity
A significant in place for key sites arrangements throughout
disruption to * Reputational and operations. the year.
Biffa's infrastructure, Server infrastructure Business continuity
including IT supporting key IT capability demonstrated
systems, could * Operational services during COVID-19 crisis
potentially hosted in Microsoft whereby the majority
have an impact Azure Cloud providing of contact centre
on the activity resilience, failover and head office functions
of the Group's and backup services. enabled to work from.
customers, such ISO 27001
as increased certification
billing times, (Information Security)
interruptions in place.
to collection Externally hosted
operations and business
processing logistics, continuity recovery
and additional sites in place for key
costs. administrative and
Additionally, support
the theft, loss, functions with a
destruction, tri-annual
misappropriation testing programme in
or release of place.
sensitive and/or Intrusion detection
confidential in place and a
information cloud-based
could result 'always on' security
in business service provided by
disruption, Microsoft protecting
negative publicity against key cyber
or brand damage. threats.
Cyber security
education
initiatives taken
place.
------------------ ---------------------- --------------------------------------------------------- ---------
Economic - Biffa has revenues and Whilst we continue Grow
environment/Brexit * Financial costs that are either to monitor this risk, Optimise
Economic conditions directly or indirectly we are confident
in the UK may impacted by the value that our existing
have an adverse of Sterling relative mitigations will
impact on Biffa's to key currencies such enable the Group
operating performance, as the US Dollar or to minimise the impact
revenues and the Euro. This of any weakening
results of operations. provides in economic conditions.
The Group is some degree of offset
exposed to political, and natural hedge.
social and We enter into forward
macroeconomic contracts for the sale
risks relating of electricity and to
to the UK's mitigate short-term
exit from the currency exposures,
EU. improving earnings
Any economic visibility
weakness that in the short term.
leads to reduced Biffa provides
volumes of waste services
and recyclate across the breadth of
will adversely the UK economy and to
impact the Group's customers in the
business. Furthermore, public
a deterioration and private sectors.
in macroeconomic The breadth of
conditions may customers
also result offers a degree of
in increased protection
competitive against economic
pricing pressure pressures
and increased that may affect
customer turnover. specific
areas of the economy.
The Group has assessed
the potential impact
of certain Brexit
scenarios
on its activities and
the Board is satisfied
that there is unlikely
to be a net material
impact on the Group.
------------------ ---------------------- --------------------------------------------------------- ---------
People - attraction, á Reward framework for COVID-19 response Grow
succession, * Operational employees and managers team set up to ensure Develop
retention competitively aligned we support the health Optimise
The loss of to the market, and wellbeing of
the services * Financial including our colleagues, manage
of a number Performance Share Plan business continuity,
of Executive for senior personnel provide clear and
Directors, senior and Sharesave scheme timely communications
management or available to all and minimise service
key employees, employees. disruption.
or if the Group Talent and management Introduced an Advanced
encountered development programmes Leadership Programme.
labour shortages deployed at senior
or was unable levels
to attract people and progressively to
for core business other levels going
roles, could forward.
have a material Ongoing review of the
adverse effect recruitment and
on Biffa's business retention
results, operations, of drivers.
financial condition Established
and prospects. apprenticeship
programme.
------------------ ---------------------- --------------------------------------------------------- ---------
Strategic project - Board and Group Fusion transformation Develop
implementation * Operational Executive project has made Optimise
Failure to deliver Team engagement and sound progress throughout
strategic projects, leadership. the year but has
such as Energy * Financial Selected software is been slowed down
from Waste (EfW) a proven 'off the during COVID-19 crisis.
and Project shelf' The project will
Fusion. EfW product. resume following
increases Biffa's Independent programme the resolution of
residual waste assurance. the crisis.
treatment capabilities Change network in Newhurst EfW has
providing a place achieved financial
secure and to ensure line close, securing a
cost-effective management fixed programme and
disposal solution ownership of Fusion. fixed price contract.
for the I&C Proven EfW technology,
business. Fusion substantial UK and
is focused on worldwide
our products reference plants with
and services, > 30 operational in
how they are the UK treating in
sold and delivered, excess
the technology of 10m tonnes per
used and the annum.
online services EfW joint venture
offered to customers. providing
As with any complementary skill
such projects, sets and experience
there are risks to minimise risk.
that the project Limited recourse
fails to deliver project
the anticipated structure.
improvements
and/or benefits
for the budgeted
investment,
adversely impacting
reputation and
operating results.
------------------ ---------------------- --------------------------------------------------------- ---------
Finance - Significant and Covenant amendments Grow
availability/investment * Financial flexible and additional liquidity Develop
If the Group bank funding facility headroom have been Optimise
were to fail with substantial agreed with the Group's
to comply with headroom banks in response
any of the financial to enable the Group to the COVID-19 crisis.
or non-financial to progress strategic
covenants in priorities and
its credit facilities accommodate
(due, for example, any downside
to deterioration performance
in financial risk.
performance), GBP350m unsecured
it could result revolving
in an event credit facility,
of default and expiring
the acceleration in March 2025 but with
of the Group's an option to extend
obligations for a further year.
to repay those As at the end of the
borrowings, year, GBP98m of the
increased borrowing facility was undrawn.
costs or cancellation In addition to the
of certain credit bank
facilities. funding facility, the
Group has over GBP150m
of lease liabilities,
with undrawn funding
of over GBP70m at the
end of the year.
Ongoing monitoring of
financial and
non-financial
covenants with summary
updates to the Board.
------------------ ---------------------- --------------------------------------------------------- ---------
Commodities â Ongoing monitoring and Investment in sorting Develop
market * Financial improvements to technology and process Optimise
and pricing product improvements to ensure
volatility quality within we can continue to
Biffa produces * Operational recycling supply overseas markets.
significant processes. Supply agreements
volumes of recycled Off-taker strategy now in place with
commodities review domestic processors
for re-sale. to limit dependency, to enable a proportion
Commodities where able, on the of the material to
produced include Chinese remain in the UK.
various paper market. Biffa's investment
grades, card, Commodity price risk in plastic recycling
plastics, and sharing within has significantly
ferrous and long-term reduced reliance
non-ferrous commercial contracts. on exports, with
metals. Working with key the majority of recovered
In addition, customers plastics being processed
Biffa generates (e.g. Local to end destination
power from renewable Government) internally.
sources and to agree gate fees to Continued focus on
changes to electricity reflect any increased minimising exposure
export prices costs and also dual to recycle commodity
impact revenues collection methods. price fluctuations
and profits Power price hedging by risk sharing with
achieved. policy in place, which our local authority
Markets for is regularly reviewed. customers. In FY
these recyclate Route to market Power 2019/20, we mitigated
products have Purchase Agreement 58% of commodity
individual supply with price risk through
and demand dynamics top tier off-taker this approach.
impacting both gives
price and availability off-take certainty and
of off-take. credit worthiness.
Following China's
decision to
ban mixed paper
imports in 2018,
other Far East
markets have
tightened quality
standards, and
in some instances
also banned
imports. This
has put further
downward pressure
on prices with
an oversupply
of material
in the market
and made it
more challenging
to place lower
quality material.
------------------ ---------------------- --------------------------------------------------------- ---------
Strategic/competitive - Internal business Several innovative Grow
threat to business * Financial innovation concepts have been Develop
model group focuses on developed as potential Optimise
Market disruption market projects and evaluated
from * Operational developments and to by the executive
the application act as an incubator team.
of new technology for ideas and new
and the advent business
of new business models.
models could Continual competitor
change the waste analysis to consider
supply chain threats and changes
and adversely to the landscape.
impact Biffa's Annual strategy review
established to ensure that Biffa
operating asset business model remains
base of a traditional current and
collection network competitive.
and processing Customer surveys to
facilities. ensure that the Biffa
offer remains relevant
and compelling.
Ongoing investment in
and improvement of the
customer experience
through digitisation,
improved processes and
management
information.
------------------ ---------------------- --------------------------------------------------------- ---------
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END
ACSDQLFFBQLEBBL
(END) Dow Jones Newswires
June 17, 2020 02:00 ET (06:00 GMT)
Biffa (LSE:BIFF)
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