Biffa is key to 8bn environmental market, says Severn Trent chairman

Mr Arculus was speaking following publication today of Severn Trent’s interim results for the half year ended 30 September 2000, which saw turnover up 5.7% to 790.8 million (1999: 748.3 million) but profit before interest down 40 million to 186.0 million (1999: 226 million).

Mr Arculus said: “This has been a good first half performance by Severn Trent. Severn Trent Water has produced a good result, faced as it is with the challenges set by OFWAT’s tough review. Biffa is growing strongly in the UK and, following the acquisition of UK Waste, is well placed to benefit from future changes in the waste market.”

Biffa’s financial performance was knocked by poorer results for its Belgian operations where profits fell from 2.3 million to 1.5 million as a result of lower landfill volumes. However, the UK performance was much brighter with turnover of 132.9 million up 8.8% (up 6.4% excluding landfill tax). Profit before interest and tax increased by 19.2% to 14.3 million. The results do not include any trading for UK Waste which the company bought this autumn for 375 million.

Mr Arculus commented: “This excellent result reflected another very strong performance by the collection division, and a reversal of the decline in profits from the landfill division which we experienced last year. Special waste division also achieved a good increase in profits.”

And, he added that industrial and commercial collection volumes were up 5%, which, “combined with good cost controls, were the main factors behind a 12% increase in profit from this division. Landfill volumes were up 6% and average unit revenues stabilised with a modest 1% increase. Overall profit from the landfill division was up 23% on the corresponding period, aided by the cost reduction measures taken last year.”

UK Waste

The chairman reported that the integration of UK Waste is now underway. Following the required 90 day consultation process with employee unions and staff, the merging of depots has now commenced. In total 14 depots out of the combined collection network will be closed as operations are merged. The company has already been integrated into Biffa's divisional structure and the two management boards have been combined.

Mr Arculus singled out the successful implementation of Biffa's IT systems at the UK Waste operations as a critical element of the process, and reported that thorough testing had confirmed “Biffa's readiness for this additional workload”. The merger is expected to be fully completed in about 18 months time.

Overall, Severn Trent sees the acquisition of UK Waste as reinforcing Biffa's “market leadership position, particularly in commercial and industrial waste collection”. It has also considerably expanded Biffa's recycling activities which now include the management under contract of SCA Recycling UK's fleet and their recycling activities at Bury, enhancing the already strong relationship which exists between the two companies.

And, Biffa appears to the be a favoured business by the chairman who noted: “These developments have positioned Biffa extremely well to meet the challenges to the waste industry which the implementation of the government's waste strategy will pose, and the growth opportunities that this will bring.”