Sir John Egan, chairman of Severn Trent plc, said the investigation was requested by the Flemish Waste Agency in connection with the payment of environmental taxes.
” The Flemish Waste Agency 'OVAM' has caused an investigation by the Antwerp Examining Magistrate into Biffa Belgium's waste recycling operations.“
– Sir John Egan, Severn Trent
He suggested that the outcome of the investigation could cost Biffa 4 million in additional taxes and penalties.
The investigation also disrupted Biffa's business operations in Belgium earlier this year, he said, with a “good performance” in the UK pulled down by a loss incurred by Biffa Belgium.
Sir John explained: “The Flemish Waste Agency “OVAM” has caused an investigation by the Antwerp Examining Magistrate into Biffa Belgium's waste recycling operations in connection with the payment of environmental taxes. A provision of 4.0m, the amount currently assessed by OVAM, has been made for potential additional environmental taxes, related penalties and interest for prior periods.”
The revelation was made as Severn Trent revealed its interim results for the six months up to September 30, 2005. Overall, the results disclosed that Biffa's turnover increased by 9.6% to 386.9 million – but turnover fell by 6.1% in Biffa's Belgian arm to 30.9 million. The Belgian operations also experienced a loss during the period, of 2.6 million before interest.
UK
In the UK, the company said Biffa had achieved a “good performance in a flat UK market”. Biffa's profits before tax in the UK increased by 8.2% to 46.1 million. This was attributed to increased collection revenues.
The company noted that industrial and commercial collection remains the most lucrative part of its operations, absorbing additional costs from new European restrictions on transport workers' hours as well as increased disposal costs and rising fuel prices.
Biffa's landfill turnover in the UK was up 6.3% to 101.4m, with profits before tax up 3.4% to 21.5m. The company said landfill volumes were down by about 11%, although this was partly due to increased volumes during the same period in 2004. Biffa's operational landfill void decreased from 78 million cubic metres to 75m cubic metres, it said, “reflecting void usage in the period”.
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Biffa's UK special waste division, which includes power generation activities, delivered a 2.1% increase in turnover to 28.9m and achieved a profit before tax of 4.3m – assisted by the Renewable Obligation Certificate scheme that promotes renewable energy generation.
Severn Trent group chief executive Colin Matthews said: “Biffa UK has had a good result, with 8% growth in an otherwise flat market. We are implementing the strategies to orient the business for better operational performance in the coming year. It is disappointing to report that Biffa Belgium, while a small part of the overall picture, requires a provision for environmental taxes and penalties.”
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