And, in a separate document, the waste management company also announced that the deadline for Energy Capital Partners to submit a firm takeover bid has been pushed back from today to 30 August.
The £20 million provision means Biffa has set aside and accounted for the money before hearing back from HMRC, a process which “is expected to continue for some time”.
This will be more appealing to groups circling Biffa, who know they could be somewhat shielded from any future enquiry results.
Whilst Biffa “believes it has a strong defence”, the company said it made the provision as there “remains significant uncertainty in the ultimate outcome”.
Biffa added: “Given the level of risk and uncertainty, and the time it will take for the enquiry to reach a conclusion, this represents Biffa’s best estimate of the potential liabilities, adopting a cautious position based on the information available to date.”
Takeover
The latest delay is the second time a decision on a firm takeover bid from Energy Capital Partners has been pushed back, after a similar decision was made last month (see letsrecycle.com story).
In the original announcement, Biffa set a ‘put up or shut up’ (PUSU) deadline of 5 July as stipulated by the UK Takeover Panel regulations. This gave ECP around a month to announce whether or not it will be making a firm offer for the company.
After delaying this twice, the new PUSU deadline has now been set for 30 August.
Results
While Bifa posted an £8 million loss, including the provision, revenues have grown to record levels, standing at £1.44 billion. This is a 39% increase on the previous year and “driven by organic recovery back to pre-pandemic levels, together with the contributions of Simply Waste, Company Shop Group, Viridor and the Biffa Polymers investments.”
Biffa has also reinstated the final dividend at 4.69 pence per share, bringing the total dividend for the year to 6.89 pence per share.
This was helped by increasing revenues in its commercial division, which has bounced back from the pandemic with revenues up 29%.
Its municipal revenues also grew by 3% to £181 million despite disruption and its specialist services division revenues grew by 88% to £174 million.
Landfill tax
The results also gave more details about the landfill tax enquiry the company is facing.
It explained that HMRC’s concerns are “primarily relating to the interpretation of the qualifying fines regime set out in Landfill Tax1”.
HMRC also raised concerns, Biffa said, “over the potential conduct of Biffa and specific customers, which may have led to the incorrect rate of Landfill Tax being paid”.
EfW
In more positive news, the company said its two energy from waste portfolios are on track to be delivered on time.
Biffa is partnering with US energy recovery operator, Covanta to develop two facilities, Newhurst in Leicestershire and Protos in Cheshire. Both facilities have been in construction during the year and are on track for delivery in 2023 and 2024 respectively.
‘Well positioned’
Biffa also pointed to its “well defined and ambitious investment plan that will see us continue to grow Biffa over the next few years”.
“We are encouraged by the secular trends affecting our industry and how they will open up opportunities for Biffa,” Biffa said.
The company added: “The UK Government, and those of the devolved nations, have ambitious plans for delivering a circular economy, including improved and more consistent collections, deposit return schemes, restrictions on exports and taxes to incentivise adoption of recycled content. After a period of extensive consultations, the direction of travel announced by the UK Government in our view balances ambition with pragmatism and, provided it is legislated well, should provide opportunities for Biffa to invest.”
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