Biffa's (BIFF) maiden half-year results cover the period prior to the waste management group's highly anticipated listing in October, so the pro-forma figures can only tell us so much. Biffa's admission came more than three years after financial problems prompted a takeover by its senior lenders. The money raised has helped to sort out the rather worrying looking balance sheet, with net debt post-IPO halving from the period-end figure of £534m.
Top-line numbers are decent. Sales in the industrial and commercial division - which contributes 59 per cent of net revenue - rose 9 per cent as organic growth was boosted by contributions from acquisitions. This division makes money from waste disposal for large corporations, including John Lewis, KFC and Next. Margins here are low as the disposal of this waste is very costly, but Biffa is starting to benefit from producing fuel from its refuse, which reduces those disposal costs. Accordingly, operating margins rose from 6 per cent to 8.2 per cent in the period. Net revenue in the municipal division - which deals with household waste - increased 17 per cent, thanks to the rollout of a new contract with Manchester City Council.
Broker Peel Hunt expects adjusted pre-tax profits of £43.5m in the year to March 2017, up from £21.2m in FY2016. It forecasts EPS of 13.9p.
BIFFA (BIFF) | ||||
|---|---|---|---|---|
| ORD PRICE: | 173p | MARKET VALUE: | £433m | |
| TOUCH: | 173-173.5p | 12-MONTH HIGH / LOW: | 187p | 166p |
| DIVIDEND YIELD: | NIL | PE RATIO: | NA | |
| NET ASSET VALUE: | * | NET DEBT: | £534m | |
| Half-year to 25 Sep | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2015** | 464 | 8.6 | -6.0 | nil |
| 2016** | 488 | -3.6 | -50.0 | nil |
| % change | +5 | - | - | - |
Ex-div: na Payment: na *Negative shareholder equity **Pre-IPO figures | ||||
