Waste management company Biffa (BIFF) put up good growth numbers in the reported period. Reduced customer churn and improved pricing discipline at the major industrial and commercial division delivered 3.5 per cent organic revenue growth, complemented by acquisitions. At group level, adjusted cash profits were up 7.3 per cent to £76.3m, with the resource recovery and treatment division also performing well. The municipal segment, however, suffered competitive pressures and the energy division paled in comparison to a large one-off project in the prior period.
The group’s tax problems with HMRC look to be deepening, though. The company was notified in the period that the taxman disagrees with the assessment of Biffa and other waste operators that soil containing low-levels of asbestos was subject to a lower rate of tax. The dispute covers a period from 2012-15 and, should HMRC demand and be paid the higher rate of tax, would mean an additional payment of £9.2m. The group intends to appeal the assessment.
On a more positive note, interest is not due on a separate pre-existing landfill tax liability, which means an £8.7m near-term cash benefit for the group, although 90 per cent of the figure will ultimately be repaid to pre-IPO shareholders.
Analysts at Numis continue to forecast pre-tax profit of £58.7m, giving EPS of 18.8p for the year to March 2018 (from £45.1m and 14.3p in FY2017).
| BIFFA (BIFF) | ||||
| ORD PRICE: | 253p | MARKET VALUE: | £633m | |
| TOUCH: | 252-253p | 12-MONTH HIGH: | 265p | LOW: 169p |
| DIVIDEND YIELD: | 1.8% | PE RATIO: | 5 | |
| NET ASSET VALUE: | 125p* | NET DEBT: | 87% | |
| Half-year to 22 Sep | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2016 | 498 | -3.6 | -50.0 | nil |
| 2017 | 535 | 29.2 | 9.5 | 2.17 |
| % change | +7 | - | - | - |
| Ex-div: | 07 Dec | |||
| Payment: | 05 Jan | |||
| *Includes intangible assets of £317m, or 127p a share | ||||
