Biffa plc (BIFF) describes itself as “the UK's leading sustainable waste management business”. This FTSE 250 company has, like many, suffered from the lockdown restrictions but previously not as significantly as it feared and there looks further recovery and growth potential ahead...
The company has operations spanning right across the waste management sector including collection, recycling, treatment, disposal and energy generation. It is specifically targeting further growing its significant Industrial & Commercial Collections operation, its Polymers plastics recycling business and its partnerships to develop Energy from Waste infrastructure. CEO Michael Topham was appointed to the role in 2018, having been CFO from 2013. He trained as a Chartered Accountant with PwC and his salary last year was £0.495 million, with a £0.49 million bonus and holding 805,371 shares. CFO Richard Pike was also appointed in 2018 and also trained as a Chartered Accountant with Price Waterhouse before experience in a number of financial and management positions. His salary last year was £0.41 million, with also a £0.41 million bonus and holding 367,401 shares.
An update in January on the company’s third quarter included that net revenue was circa 95% of levels achieved in the same period in the prior year and, as a result, underlying profits showed further recovery. At the 25th September 2020 half-year, after particularly a net £97.7 million equity raise, there was net debt reduced by £115.2 million over the half-year to £310.3 million. Net revenue was down 17.3% on the corresponding prior year period to £458.8 million, with current receivables, at £170 million, £4.7 million higher than six months earlier and payables £7.6 million higher at £294.8 million. Risks include regulatory, contractual and competition risks as to be expected, as well as the noted net debt and current lockdown environment. However, previous trading offers encouragement and, longer term, as does the increasing 'green economy' macro focus and demand.
Looking ahead it is “positive on the group's outlook for FY22 after the impacts of the pandemic are over”. That includes with “active negotiations” on several potential acquisitions and the pipeline of opportunities remaining strong and with phase two of the Seaham rPET plant and plastic recycling projects at Washington and Aldridge “progressing to plan”, and expected to come online in the early part of FY22. For its year ended 27th March 2020, the company delivered an adjusted pre-tax profit of £71.7 million on net revenue up 7% to £1.10 billion, generating underlying earnings per share of 23.1p – up 12.1%. The COVID-19 situation saw the full-year dividend cancelled, though the prior year dividend per share was 7.2p. With we consider the business recovery potential from its next year to take it to those numbers and beyond and the shares still down from even above 250p recovered to in January, we target around 300p.
This first appeared on the N50 website which Tom Winnifrith runs with Steve Moore & Lucian Miers. To access the website for a new share tip from Tom & Steve JUST OUT THIS AFTERNOON and a new shorting piece this week click HERE
Filed under: Biffa, Umuthi, Eurasia Mining, Burberry, Hammerson, N50 website
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