Bia plc Annual Report and Accounts 2022
Biffa plc Annual Report and Accounts 2022
A year of resilience and growth
20
REDUCE
We are Biffa
We’ve been at the forefront of the UK sustainable waste
management industry for over 100 years.
Our strategy for growth means that our waste reduction,
recycling, energy recovery and collection services all have a
positive impact across the UK. We have a strong track record
of growing our profits and returns to shareholders, whilst
reinvesting to grow our business.
Today, Biffa is an established enabler of the UK circular economy
and our team of more than 10,000 colleagues carry out essential
services every day in line with our purpose ‘to change the way
people think about waste’. Sustainability has been at the heart
of our business strategy for many years. Our areas of investment
essentially reflect the waste hierarchy – to Reduce, Recycle and
Recover, all supported by the need to Collect.
We have already taken huge strides in our sustainability
journey by investing in surplus redistribution, plastic recycling,
energy recovery infrastructure and low carbon collections,
leading to a 70% reduction in our carbon emissions since 2002.
Our sustainability strategy, ‘Resourceful, Responsible’, will
see us unlock £1.25bn of investment in vital green economy
infrastructure by 2030, of which c.£1bn has already been
committed to, while further reducing our carbon emissions by
50% by 2030. Our aim is to reach net zero emissions by no later
than 2050.
Our people care about doing the right thing and, in turn, we
strive to do right by them by prioritising their health, safety
and wellbeing. We are proud to have been awarded a 5-star
rating by the British Safety Council. We have also made strong
progress in making sure Biffa is an inclusive place to work where
diversity is championed and our employees feel valued and
understand the positive contribution they make to enabling the
UK circular economy.
Our longstanding Biffa Award programme supports sustainable
projects across the UK which deliver environmental benefits,
while making a valuable contribution to local communities.
Through our proud partnership with WasteAid, we are helping
to share practical and low-cost waste management knowledge
with communities in developing countries.
As we look forward, whilst being mindful of the near-term
challenges the UK economy is facing, we are increasingly well
positioned to play a key role in the transition that our sector is
embarking on, supported by an ambitious policy agenda.
Biffa is listed on the London Stock Exchange and
a member of the FTSE 250. That’s just a bit about us.
To find out more, visit: www.biffa.co.uk/investors
Contents
24
RECOVER
26
COLLECT
22
RECYCLE
Overview
Financial & Sustainability Highlights 1
Bia At A Glance 2
Investment Case 4
Market Overview 6
Corporate Governance
Chairman’s Introduction 91
Board of Directors 92
Group Executive Team 94
Nomination Committee Report 113
Sustainability Committee Report 116
Audit Committee Report 118
Remuneration Committee Report 126
Directors’ Report 141
Statement of Directors’ Responsibilities 144
Strategic Report
Our Sustainable Business Model 8
Chairman’s Statement 10
Stakeholder Engagement 12
Chief Executive Ocer’s Review 16
Investment Areas 20
Sustainability 28
Chief Financial Ocer’s Review 58
Key Performance Indicators 64
Operating Review 66
Managing our Risks 76
Non-Financial Information Statement 84
Viability Statement and Going Concern 89
Financial Statements
Independent Auditor’s Report 145
Consolidated Financial Statements 157
Notes to the Consolidated Financial
Statements 161
Parent Company
Financial Statements 211
Additional Information
Glossary 227
Corporate Information 229
Additional
Information
Financial highlights
Sustainability highlights
Statutory Revenue (£m)
£1,443.2m
2022 £1,443.2m
2021 £1,042.0m
2020 £1,163.1m
Statutory Profit/(Loss) after Tax
(£m)
£(17.6)m
£(40.5)m 2021
2020 £45.6m
Cash Generated from Operations
2
(£m)
£144.6m
2022 £144.6m
2021 £123.5m
2020 £179.8m
Lost Time Injury Rate
0.39
2022 0.39
2021 0.41
2020 0.23
Total Plastics Recycling Capacity
(kt)
151kt
2022 151kt
2021 120kt
2020 120kt
Net Revenue
1
(£m)
£1,363.9m
2022 £1,363.9m
2021 £988.1m
2020 £1,102.8m
Adjusted Basic Earnings per Share
5
(pence)
19.7p
2022 19.7p
2021 7.7p
2020 23.1p
Group Net Debt
(£m)
£595.8m
2022 £595.8m
2021 £456.8m
2020 £425.5m
Employee Engagement (%)
59%
2022 59%
2021 59%
2020 58%
Adjusted Operating Profit
4
(£m)
£96.6m
2022 £96.6m
2021 £44.2m
2020 £90.5m
Statutory Earnings/ (Loss) per Share
(pence)
(5.8)p
(13.7) 2021
2020 18.3
(5.8) 2022
Leverage Ratio
(Covenant Basis)
3
2.9x
2022 2.9x
2021 3.0x
2020 2.4x
COe emissions (Scope 1 & 2) (kt)
538kt
2022 538kt
2021 533kt
2020 647kt
For technical terms and abbreviations please refer to the glossary / page 227
1. Net revenue excludes Landfill Tax charges of £79.3m
2. Prior year cash generated from operations has been restated because adjusting items have been allocated to their respective line items,
soasto remove adjusting items for the statutory cash flow statement.
3. Leverage ratio is the ratio of Covenant Basis Net Debt to Covenant Basis EBITDA.
4. Profit before tax, net interest charges and adjusting items.
5. Profit for the year excluding adjusting items, divided by the weighted average number of shares in issue during the year.
6. Lost Time Injury (LTI) rate refers to the number of lost time injuries relative to the number of employees calculated over a specified time
period. Our LTI rate decreased in the year as a result of the actions we took to re-engage our workforce on our Safer Together pact.
Seepage48.
7. Our employee engagement score was maintained at 59%, which is 3% above the UK average. See page 52.
8. CO
2
e emissions have reduced by 28% from our 2019 sustainability strategy benchmark. See page 45.
9. Our plastics recycling capacity has more than doubled from our 2019 sustainability strategy benchmark. See page 31.
£(17.6)m 2022
01
Biffa plc / Annual Report and Accounts 2022
Strategic Report
Financial
Statements
Corporate
Governance ReportOverview
Biffa At A Glance
Growing our business
to change the way
people think about
waste
Our brilliant Biffa team provides essential waste services to over 96,000 UK business customers and 1.9 million households handling
around eight million tonnes of resources every year.
Our vision is simple – to lead the way in UK sustainable waste
management. Since September 2019, our strategy for growth has led
us to commit more than £400m in discretionary capital across our
four key investment areas of Reduce, Recycle, Recover and Collect,
building and strengthening our business to invest in infrastructure
and services that enable a circular economy.
This year, we increased our plastics recycling capacity to 151,000
tonnes and prevented 98 million products, totalling c.35,000 tonnes,
from going to waste through Company Shop Group (CSG). Since
our IPO in 2016, we’ve also improved the efficiency of our waste
collection services by removing 92 vehicles, which has saved 5,055
tonnes of CO
2
e emissions and supports the excellent progress we
have made to date in reducing our carbon footprint.
Our market
Waste matters – for our employees, customers, suppliers, communities, Government and of course the environment. We know we have a
vital part to play in helping the UK to achieve its Net Zero objective and we are ready to take on the challenge.
100+
years of
heritage
No.1
for I&C business
waste collections
151,000
tonnes of plastics
recycling capacity
c.35,000
tonnes of surplus produce
redistributed through CSG
3,100
collection
vehicles
c.230
locations
10,000+
employees
70%
reduction in CO
2
e emissions
since 2002
Biffa plc / Annual Report and Accounts 2022
02
Additional
Information
Our Divisions
We operate across three divisions, each providing distinct services to our customers both large and small.
Collections
Our goal: To provide the most efficient, low
carbon waste and recycling collections and
related services to Industrial & Commercial
(I&C), Municipal and household customers.
Specialist Services
Our goal: To help customers fulfil their
sustainability ambitions by providing bespoke
solutions including surplus redistribution,
integrated resource management and
hazardous waste services.
Resources & Energy
Our goal: To maximise the recovery
of resources and energy through our
leading waste treatment and processing
capabilities.
£690.9m
I&C Revenue
(2021 : £495.5m)
£183.0m
Municipal Revenue
(2021 : £182.1m)
£103.4m
Industrial Services Revenue
(2021 : £86.6m)
£70.7m
Company Shop Group Revenue
(2021 : £5.8m)
£140.8m
Recycling Revenue
(2021 : £80.6m)
£78.0m
Organics Revenue
(2021 : £53.6m)
£136.0m
Inerts Revenue
(2021 : £98.4m)
£40.4m
Landfill Gas Revenue
(2021 : £39.4m)
Energy Recovery see / pages 24–25
For more information on how our divisions performed this year,
read our Operating Review on / pages 66–75
£873.9m
Total Revenue
(2021 : £677.6m)
£174.1m
Total Revenue
(2021 : £92.4m)
£395.2m
Total Revenue
(2021 : £272.0m)
03
Biffa plc / Annual Report and Accounts 2022
Strategic Report
Financial
Statements
Corporate
Governance Report
Overview
Investment Case
Why invest in
Biffa?
1. A leading enabler of the
UK circular economy
We are a leading sustainable waste
management company and have
been at the forefront of the UK’s waste
industry for more than 100 years. Today
Biffa is an established enabler of the
UK circular economy, with operations
that span the entire breadth of the
waste hierarchy.
In February 2021, we acquired Company
Shop Group, the UK’s leading and
largest redistributor of surplus food and
household products, strengthening our
leadership position by broadening our
offering to customers and operating
right at the top of the waste hierarchy.
We have invested c.£50m in plastics
recycling infrastructure since September
2019 and now have the capacity to
recycle 151,000 tonnes of plastics each
year, with plans to increase this to
240,000 tonnes by 2030.
4. Resilient business
model and financially
robust
We have made a strong recovery
from the pandemic, delivering a
record adjusted operating profit, with
underlying I&C collections volumes ahead
of pre-pandemic levels, and a good
cash performance and leverage position
supporting our restored dividend.
Our business model is resilient by
design. Our services are essential,
non-discretionary and predictable in
demand. Commercial terms either
offer good levels of pricing flexibility
or contractual structures designed
to protect against commodity and
inflationary exposures.
2. Sustainability at
our core
We have an ambitious approach to
sustainability. Our sustainability strategy
‘Resourceful, Responsible’, which aligns
to the UN’s Sustainable Development
Goals, includes big ambitions for
unlocking £1.25bn of green economy
infrastructure investment, of which
c.£1bn has already been unlocked along
with a further significant reduction in our
carbon emissions.
The great progress we have made in
delivering our business strategy, such
as our entry into redistribution and
waste reduction, expanding our plastic
recycling operations, investing in energy
recovery infrastructure and building a
low carbon collections business through
acquisitions, will ensure we deliver this
plan and enable us to reduce our carbon
emissions by a further 50% by 2030. Our
aim is to reach net zero emissions by no
later than 2050, in line with Government
targets.
5. Attractive market
dynamics
Our markets are underpinned by long-
term growth drivers such as a national
move to increase recycling, reduce
waste going to landfill and prevent the
export of waste. We are well placed
to benefit from the Environment Act,
which was passed into UK law in 2021,
as well as the Deposit Returns Schemes
in Scotland and in the Devolved Nations
over the next few years.
The UK Government’s ambitions and
emerging policies for our sector require
the private sector to invest significantly
in green economy services and
infrastructure. Biffa’s capabilities position
us ideally to play a leading role in this
transition in the years ahead.
3. Strategy for organic
and inorganic growth
We have continued to deliver on our
plan to consolidate the fragmented I&C
collections market. Acquisitions are key
to us delivering our long-term ambition
to be the leading collector of business
waste in the UK, enjoying sector-leading
margins and returns on capital. We have
invested over £270m in I&C acquisitions
since our IPO in 2016, including £130.8m
for the Viridor acquisition, which
completed on 31 August 2021.
This acquisition expands our business
waste collections and recycling
capabilities, while solidifying our
leading position in UK sustainable waste
management. We are also continuing
to invest heavily in our customer
experience, helping us to both attract
new customers and give them the best
experience once with us.
6. Strong national brand
and service delivery
We have a deep and unrivalled
understanding of the UK waste market,
which comes with over a century of
experience. Our strong heritage, brand
and reputation, along with our scale,
route densities and lower operating
costs gives us a competitive edge.
TI
Biffa plc / Annual Report and Accounts 2022
04
Additional
Information
Key investment areas
The last two years have seen a significant period of investment for Biffa, as we have repositioned the strategy around four themes of Reduce,
Recycle, Recover and Collect. In doing so, we have established a business model and service proposition that helps to enable a circular
economy for our customers and aligns our positioning to the objectives of our customers, regulators and society.
C
O
L
L
E
C
T
R
E
C
O
V
E
R
R
E
C
Y
C
L
E
R
E
D
U
C
E
Just under
£420m
of discretionary capital
committed between
September 2019 and
March 2022
COLLECT
To build the UK’s largest,
most efficient, low carbon
waste and recycling
collections operation.
See / pages 26–27
RECOVER
To invest in energy
recovery infrastructure as
a low carbon alternative
to landfill for our
customers’ waste that
can’t be recycled.
See / pages 24–25
REDUCE
To pioneer and operate the UK’s
leading waste reduction and
redistribution services.
See / pages 20–21
RECYCLE
To develop and
operate the UK’s leading
recycling solutions.
See / pages 22–23
£180.8m
COLLECT
investment
£75.0m
RECOVER
investment
£71.7m
RECYCLE
investment
£91.5m
REDUCE
investment
05
Biffa plc / Annual Report and Accounts 2022
Strategic Report
Financial
Statements
Corporate
Governance Report
Overview
From Waste Hierarchy to
Carbon Hierarchy: Biffa’s
Blueprint for Waste Net Zero
Market Overview
Here are our specific policy requests:
• Embrace the move from Waste
Hierarchy to Carbon Hierarchy –
acknowledging the carbon intensity
of energy recovery will be a painful
but necessary step. It needs to be
accompanied by support for novel
recycling technologies and the
implementation of carbon capture and
requires intelligent reform of landfill
tax to ensure no more unintended
consequences.
• More action to phase out waste
export – starting with an outright
ban (not just an ex-OECD ban) on the
export of plastic waste, we should then
consider extending the ban to other
materials over time, based on which
pose the biggest risk of harm if not
recycled properly. This will stimulate
huge investment in the growing
reprocessing sector and ensure vital
recovered raw materials are available
in the UK.
• Drive more adoption of recycled
plastics – the introduction of the UK
Plastics Packaging Tax is a good start;
we now need forward guidance that it
will be more ambitious and progressive
over time to ensure investment
momentum is maintained.
• Consider a moratorium on more
Energy Recovery Facilities - the
development of the UK’s energy
recovery facilities is almost complete.
After the latest facilities that are being
built or shortly to start construction
are complete, we should allow the
time for policies to be implemented
and deliver their goals before deciding
if we need any more. Sponsors of
projects with consents that are not yet
in construction should think carefully
about whether they are needed and
where the waste will come from to
feed them.
• Accept that landfill will continue
to play a role – landfill is essential
for certain types of waste, and as a
disposal point of last resort. We need to
address this elephant in the room at a
national infrastructure level and ensure
planning authorities grant permissions
where needed. If we don’t act now,
we will have a landfill capacity crisis
very soon.
• Support the transition to a zero-
emissions, competitive collections
market – the transition to zero-
emissions collections will need both
carrot as well as stick. Introducing
zero-emissions zones in urban areas
will be needed to accelerate the
transition, with funding support for
local authorities to help them foot
the bill. In pushing for more efficient
collections, governments must resist
the temptation to interfere in what is
a dynamic, competitive market that
responds well to customers’ ever-
changing needs.
Biffa’s business model is uniquely present
across the entire waste hierarchy. Our
efficient, low-carbon collections network
supports capabilities in waste reduction,
recycling, energy recovery and disposal
to landfill. Our positioning aligns us with
the ambitions of our customers, regulators
and society at large. We work to move
waste up the hierarchy, improving
environmental outcomes while saving
our customers money.
The good news is that this can be achieved
using existing, proven technologies and
processes, and that there is a vibrant,
competitive, skilled sector with the access to
the capital to make this happen.
The even better news is that society supports
this drive and the UK’s governments are
committed to implementing policies to help
make this happen. All that is needed now
is for sensible policies that provide long-
term certainty to be implemented without
delay. This will create the right incentives
and provide the certainty the sector needs
toinvest.
We have contributed extensively to the
development of the emerging waste
policy framework and are for the most part
supportive of it.
The Government’s ambitions
and emerging policies
provide a significant
opportunity tounlock circa
£18bn
of investment in the UK
circular economy that will
create more than
16,000
jobs and
43m tonnes
of circular raw materials
annually, while contributing
to a reduction of up to
7.1m
tonnes of CO
2
e a year
06
Biffa plc / Annual Report and Accounts 2022
We believe this positioning across the hierarchy
qualifies us to speak up on what is needed to help
deliver Waste Net Zero…
1. https://www.zerowastescotland.org.uk/download/carbon-metric-factors-2011-2020
2. https://wrap.org.uk/sites/default/files/2021-10/WRAP-Plastics-Market-Situation-Report-2021.pdf
3. Eunomia: 2020, https://www.eunomia.co.uk/electric-refuse-trucks-cut-carbon-costs/
Carbon benefits Policy asks and changes needed
Switching the UK eet of
refuse vehicles to electric
would save 290 Kt of CO
2
each year.
1 tonne of surplus food
redistributed rather than
landlled saves 0.989
tonnes CO
2
e.
1
1 tonne recycled plastic
saves 2.3 tonnes of CO
2
e
compared to energy
recovery.
2
Every tonne of residual
household waste diverted
from landll avoids 0.452
tonnes of CO
2
e emissions.
1
Average net carbon
emission 0.34t CO
2
e per
tonne of input generating
584kWh of net electricity
export.
3
• Support a transition to low / zero carbon fuels for waste
– subsidies or/and ban fossil fuel vehicles from cities.
• Maintain competition to ensure a dynamic competitive market
enabling businesses to maximise recycling.
• Introduction of food waste reporting.
• Incentivise businesses to redistribute surplus produce.
• Introduce carbon pricing to reduce waste and ensure the
carbon cost of incinerating material which cannot be recycled
or reused is realised.
• End plastic waste export and consider other materials based
on the risk.
• Introduce a progressive plastics tax to stimulate further
investment and adoption.
• Implement a consistent UK wide deposit return scheme.
• Bring energy recovery into Emissions Trading Scheme from
2028 to stimulate innovation.
• Review energy recovery development to ensure lower carbon
waste reduction and recycling is prioritised and ensure no over-
capacity market distortion.
• Ensure 2028 ban on biodegradable waste is workable.
• Reform landll tax to ensure it doesn’t work against Net
Zeroambitions.
COLLECT
REDUCE
RECYCLE
RECOVER
DISPOSE
07
Biffa plc / Annual Report and Accounts 2022
Strategic Report
Financial
Statements
Corporate
Governance Report
Overview
Additional
Information
COLLECT
Our Sustainable Business Model
Combining purpose
with profit
What we do
Our business model focuses on four strategic areas – Reduce,
Recycle, Recover and Collect. Concentrating on these four areas
enables us to deliver efficient and sustainable waste management
in line with the waste hierarchy and enables us to deliver the most
value from our operational capabilities.
Our business model is resilient by design, demonstrated by how
we have navigated economic uncertainty and market challenges
during the year (see page 08). Our services are generally essential,
non-discretionary and predictable in demand. Commercial terms
either offer good levels of pricing flexibility or contractual structures
designed to protect against commodity and inflationary exposures.
See our operating review / pages 66-75
Why we do what we do
Our business model combines purpose with profit, helping to
enable the circular economy, generate profit for our shareholders
and deliver our core purpose – to change the way people think
about waste.
Where we focus: our objectives
Our Balanced Business Plan (‘BBP’) is aligned to five key pillars –
Safer Together, Value People, Customer First, Grow Sustainably and
Protect our Planet. The actions and targets within our annual BBP
help to guide activity around our business model.
RECOVERREDUCE RECYCLE
To pioneer and operate
the UK’s leading waste
reduction and redistribution
services.
Sources of revenue:
• Sale of surplus produce to
Company Shop Group’s
members.
To develop and operate
the UK’s leading recycling
solutions.
Sources of revenue:
• Gate fees for processing and
treating waste.
• Sale of commodity products.
To invest in energy recovery
infrastructure as a lower
carbon alternative to landll
for our customers’ waste that
cannot be recycled.
Sources of revenue:
• Gate fees for processing and
treating waste.
• Sale of renewable energy.
To build the UK’s largest, most
ecient, low carbon waste
and recycling collections
operation.
Sources of revenue:
• Service fees for collection and
disposal of commercial waste.
• Fees for outsourced provision
of household collection
services.
OUR
PURPOSE
To change
the way
people think
about waste
management
RECOVER
COLLECT
REDUCE
RECYCLE
Manufacture
Consume
REDISTRIBUTE
Biffa plc / Annual Report and Accounts 2022
08
Additional
Information
Our Vision
Our Purpose
Our Values
Our Sustainability
Goals
To lead the
way in UK
sustainable
waste
management
To change
the way
people
think about
waste
How we do it: our values
Our values demonstrate how we act every day and how we make
decisions. They set us apart from the competition and show that
how we do things is just as important as what we do. They are the
guiding principles for how we do business.
Underpinning all of this is our powerful sustainability story,
basedaround three key pillars:
BUILDING A CIRCULAR
ECONOMY
TACKLING CLIMATE
CHANGE
CARING FOR OUR PEOPLE,
SUPPORTING OUR
COMMUNITIES
The strategy pages in this report /
pages 28-57
demonstrate how we unite purpose with profit through our sustainable business model.
They also demonstrate how capital is allocated between our four investment areas and how these align to our sustainability strategic pillars, divisions and risks.
09
Biffa plc / Annual Report and Accounts 2022
Strategic Report
Financial
Statements
Corporate
Governance Report
Overview
Chairman’s Statement
Strong foundations
to grow the business
Business and markets
Our business and markets have largely
returned to normal levels. There have been
benefits from the strength of commodity
prices, however these have been offset by
the impact of growing cost pressures in the
business due to shortages of key resources,
supply chain challenges and a shortfall in
performance at Company Shop Group. As
previously reported, due to the short term
underperformance of CSG we booked a
goodwill impairment charge of £25m at the
half year. Overall, the financial performance
of the Group was in line with the Board’s
expectations.
Stakeholder engagement and
sustainability
We have continued to focus on our
purpose “to change the way people think
about waste” and our drive to ensure that
appropriate balance is achieved between
overall sustainability and the delivery of
value to our shareholders.
We have had ownership of CSG for a year
now. The business has provided us with the
opportunity to reduce surplus products
going to waste, particularly in the food
sector, whilst at the same time fulfilling
an extremely valuable contribution to the
community. At a time when energy cost
pressures are putting a strain on household
budgets, CSG continues to make an
increasingly valuable contribution to the
communities in which it is located.
The health, safety and wellbeing of our
colleagues and our communities continues
to be of paramount importance, despite
It was only a year ago that we were all left
wondering how the Covid-19 pandemic
would continue to develop and what
further impact it might have. As it has
turned out, our financial year to 25 March
2022 has proven to be a year of recovery,
with the business largely returning activity
to pre-pandemic levels and in some cases
even better. A combination of the benefits
from lessons learned during the Covid-19
pandemic and the resilience of the business,
has contributed to a strong financial
performance and the ongoing fulfilment
of our Strategy.
the reducing impact of Covid-19, which
impacted our safety performance last year.
During the year, we have continued to
actively support the communities in which
we operate through various community
projects, including our proud partnership
with the charity, WasteAid.
Employee engagement
There was much talk as we exited the
pandemic of the ‘new normal’. Well, it has
been a delight to see, as the impact of the
pandemic has subsided, a return to many
aspects of the old normal. There has been
a steady return of people to our offices,
increasing physical presence of people
in meetings and the re-establishment
of personal relationships, which are so
important to the success of the business. Of
course, our frontline operational teams have
continued delivering our essential services
for customers throughout the pandemic.
It has been rewarding to be able to bring
sections of the workforce together at various
conferences, employee forums and award
events, to share their thoughts and ideas
and to celebrate their successes. Of course,
aspects of remote working have been
retained, where it is efficient and effective
to do so.
We were delighted to achieve a consistent
overall employee engagement score of 59%,
which is 3% above the UK average (see page
52). Our Senior Independent Director, David
Martin, has continued to fulfil his workforce
engagement role and has had many more
opportunities to spend time in the business
to assess levels of engagement and pride in
working at Biffa. More on this can be found
on page 52.
The year has brought about its own
employee related challenges in terms
of absence from the workplace due
6.89p
Dividend Per Share FY22
10
Biffa plc / Annual Report and Accounts 2022
Additional
Information
to Covid-19, as well as the shortage of
personnel for key roles. Our colleagues
from across the Group have responded well
to these challenges and on behalf of the
Board, I want to thank all our people for their
ongoing commitment and dedication.
Strategy and capital allocation
The Board has actively engaged with
management to discuss the continuing
strategy of the business. We remain
committed to further investing in
sector consolidation in the collections
business, investing in plastics recycling
and progressing the development of our
energy recovery facilities. A lot of effort has
been devoted to the integration of the
Viridor business, which has been a huge
undertaking. The investments in our facilities
at Seaham, Washington and Redcar remain
on track to deliver further capacity for
closed-loop, food-grade plastic recycling
and the energy recovery investments are
also on track. Management has a very clear
focus on the areas of greatest potential
return and capital allocation has been very
disciplined in this respect.
Corporate governance
The growing focus on corporate governance
has continued and the increasing interest
of the investment community in ‘ESG’ has
added to this momentum. At Biffa, we
take corporate governance very seriously,
focusing on the areas that create the most
value for the business. Further details can be
found on pages 90-143.
Shareholder returns
During the financial year, we have
seen a return to dividend payments to
shareholders. The dividend has been
re-established at an appropriate level
to ensure the right balance between
investing for growth and providing returns
to shareholders. The share price has
been trading higher recently as a result
of the possible offer from Energy Capital
Partners. The FTSE 250 index continues
to underperform compared with other
developed world stock market indices and
so like many companies on the UK stock
market, the underlying intrinsic value of
our business fails to be reflected in the
equity value.
Board updates
It has been rewarding to see the shape of
our Board develop over recent times. Claire
Miles, our Non-Executive Director, has been
with us for a year now. Claire has made a
great contribution latterly as Chair of the
Remuneration Committee and has made a
significant contribution to the work of the
Board overall. On 1 December 2021, Linda
Morant joined the Board as a Non-Executive
Director. Linda has considerable expertise in
technology and is currently the Chief Digital
Officer for The Crown Estate. She also has
a wealth of experience in customer-facing
roles and sustainability, which stands her in
great stead as Chair of Biffa’s Sustainability
Committee. At the end of December 2021,
we saw the retirement of Michael Averill
who had been involved with Biffa for
eight years. Michael made an enormous
contribution to the Board through
his experience, business acumen and
knowledge of the waste sector. On behalf
of the Board, I thank him for his enormous
contribution.
Possible oer
On 7 June 2022, Biffa released an
announcement to the London Stock
Exchange confirming that it has received a
series of unsolicited and indicative proposals
from a US based private equity company
called Energy Capital Partners and its
affiliates to acquire the entire issued, and to
be issued, share capital of Biffa.
A full copy of the announcement can be
found on the Company’s website here:
www.biffa.co.uk/investors/possible-offer
Looking to the future
We remain confident that we have a very
strong business capable of meeting the
needs of our key stakeholders. The
foundations are in place to continue to
grow the business, whilst retaining the
balance between changing the way people
think about waste, sustainability and
delivering attractive financial returns to
our shareholders.
Ken Lever
Chairman
The Board visiting our energy recovery facility at Newhurst, Leicestershire, which is currently under construction and due to become operational in FY23.
Section 172 statement
The Directors continue to have
regard to the duty they have under
Section 172(1) of the Companies
Act 2006 (s172) to promote the
long-term success of the Company
for the benefit of its members. In
doing so, the Directors have regard
to the interests of our employees,
thebusiness relationships with
our suppliers and customers, the
impact of our operations on the
community and the environment
and thedesirability of the Company
maintaining areputation for high
standards of business conduct.
See the full statement / page 108
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Financial
Statements
Corporate
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Stakeholder Engagement
Changing the way our
Employees think
about waste
Green Little Acts
The UK hosted COP26 in Glasgow at the end of 2021, where world leaders came together to discuss how
they will prevent rising temperatures and the devastating effects of climate change.
“Green Little Acts was
a great way to get our
employees involved in
this really important
topic. I came up with
the idea of reusing
plastic bottles to
collect rainwater to
water my plants at
home. I’m pleased to
do my bit to prevent
climate change – every
little act counts!”
Anthony
a Loader at Biffa
We used this opportunity to engage our
employees in our sustainability strategy, as
our second pillar, tackling climate change,
closely aligns with the objectives of COP26.
We also wanted to engage employees in our
purpose as we believe we have a big part to
play in helping the UK deliver on its Net Zero
objective.
Over the two weeks that COP26 was in
summit, we ran an internal competition,
#GreenLittleActs, which was all about the
little acts our employees can do to reduce
their impact on the environment. Employees
were asked to post their ideas on our
employee app, Biffa Beat, which gave others
the opportunity to like and share their posts.
We had some great ideas, with some
employees choosing to try a plant-based
diet, to others trialling metal instead of
plastic straws. We even had one employee
design a rainwater capture device at home
to water their plants.
The positive momentum around the campaign showed how our employees really are the driving
force in helping to make our sustainability ambitions become a reality. #LittleActsBigImpact
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Additional
Information
“The support of the Biffa team in
helping WasteAid achieve its mission
has been nothing short of amazing.
Thanks to support from all levels of
Biffa, including fantastic employee
fundraising and valuable technical
advice from Biffa experts, we have
been able to deliver our global
programmes to the highest standards.
“This proud partnership has raised
the profile of waste management on
both the sustainable development
and climate action agendas.
WasteAid continues to support and
facilitate waste management and
recycling across Africa and Asia, as
well as promoting circular economy
approaches.
“WasteAid connects key players to
support innovation at grassroots
level keeping waste materials out of
the environment and ‘in the loop’.
I am incredibly proud of what we
have achieved and believe that there
is much more we can accomplish
together.”
Ceris Turner-Bailes
CEO, WasteAid
Biffa and WasteAid –
a common purpose
Waste management is often taken for granted in the
developed world; however this is not the case in developing
countries where one in three people globally do not have
access to a basic waste management service.
WasteAid is an independent UK charity, set
up by waste management professionals
to share practical and low-cost waste
management knowledge with communities
in developing countries.
The team at WasteAid works tirelessly
to educate, train and equip some of the
most disadvantaged communities in the
developing world so that they can start to
meaningfully tackle the waste challenges
they face. Plastic pollution is at crisis point
in these countries and WasteAid’s work is
crucial in tackling this.
We’ve been proud partners of WasteAid
for the last three years. There is a natural
affiliation between Biffa and WasteAid’s work.
While different in so many ways, we share
a common purpose: to change the way
people think about waste.
We support them through our sponsorship,
employee fundraising and with their
projects in the Gambia, Kenya and currently
in Cameroon.
We run periodic all employee updates
with the WasteAid team, to show where
our funds are being spent and how we are
helping to make a difference to the lives of
people in developing nations.
In FY23, we hosted a WasteAid gala dinner,
where customers, suppliers and industry
partners joined us and helped us raise over
£100k for their important work.
c.£180k
raised for WasteAid through
our fundraising activities
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Stakeholder Engagement continued
Changing the way
our Customers
think about waste
Greggs: sustainable packaging solutions
As pioneers of a fully closed-loop recycling model, at Biffa we have in-house experts with the
knowledge and expertise to support customers with improving the recyclability of their packaging.
Our packaging surgeries include data analysis and insight as well as providing simpler sustainable
alternatives to ensure packaging is widely recyclable.
UK bakery chain Greggs is one of our
corporate customers that is really driving
their sustainability agenda forward, having
made a commitment to net zero emissions
by 2040.
As part of the ‘Greggs Pledge’, they have a
commitment that by 2025 they will use 25%
less packaging by weight than in 2019, and
any remaining packaging will be made from
material that is widely recycled
1
.
We are working with Greggs to help make
this commitment a reality. Here are just
some of things we’ve been doing to support
them on their journey:
• Sourcing an alternative baking
paper – which is cheaper, lighter and
more recyclable. Following a successful
trial at one of our Material Recycling
Facilities, the new baking paper is now
being trialled at a number of Greggs’
stores.
• Supporting in their preparation
for the UK plastics tax – which came
into effect 1 April 2022 and introducing
them to Biffpack, which is now their
compliance partner for Packaging
Recovery Notes.
• Advising to change to natural-
coloured PET transit trays – which
are much easier to recycle. We are also
helping to source alternative PET flake
through Biffa Polymers, to make these
trays even more closed-loop.
We will also help Greggs to build a data
system and introduce a new performance
specification document, to simplify
requirements for Greggs’ suppliers and
help to future proof them for upcoming
Extended Producer Responsibility
2
legislation.
“Packaging is a key part
of our sustainability
ambition, so it is
extremely useful to
work alongside Biffa
on their ‘packaging
surgery’ concept. We’ve
already identified
opportunities and
options for further
development by
combining our internal
knowledge and the
recycling infrastructure
experience of the Biffa
team, and we see this
developing into a key
part of our innovation
approach in the future.”
Paul Rhodes
Head of Sustainability and
SHE, Greggs
1. https://corporate.greggs.co.uk/the-greggs-pledge/
2. Extended Producer Responsibility gives producers an incentive to make better, more sustainable decisions at the product design stage including decisions that make it easier for products to be re-used
or recycled at their end of life. It also places the financial cost of managing products once they reach end of life on producers. https://consult.defra.gov.uk/extended-producer-responsibility/extended-
producer-responsibility-for-packaging/
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Changing the way
our Suppliers
think about waste
Donating surplus stock
A key part of the Company Shop Group model is Community Shop – a growing social enterprise that
sells surplus produce, donated by supplier partners, at deeply discounted prices, alongside the
provision of a number of community services through Community Hub and Community Kitchen.
Surplus donations from our partners ensure
that we can support thousands of families
every week.
Each Community Shop member saves
an average of £212 each month on their
shopping bill and together members have
saved over £7.5m in 2021 alone. This makes
an immediate and concrete difference.
In tough times, this difference is often a
life saver.
All of this is made possible by partners who
share our vision and who care passionately
about communities. For many of our
partners the relationship is about more than
just reducing food waste. They support store
openings, volunteer in projects and help us
to develop new models of impact so we can
do even more good in our communities.
We received a 34% increase in
donations from industry partners
over the year, enabling Community
Shop to provide the equivalent of over
2,950,000 meals for individuals and
families most in need.
“It’s an honour for Ocado to be able to support the opening of a
second Community Shop this year. We recognise that they are an
essential lifeline to many, particularly during this challenging time.
Together with Ocado customers, we look forward to being able to
help future Community Shops open and reach even more people in
2022.”
Jonathan Wiseman
General Counsel and Chief People Officer, Ocado Retail
“Our partnership with Community Shop has helped us serve
communities throughout the UK in new and impactful ways. A great
example is how we teamed up in 2021 to serve over a thousand
Christmas dinners to community groups that support people who
would otherwise be alone at Christmas.”
Francine Hammond
Sustainability Manager - Food Waste, Tesco
“As a business rooted in the heart of our communities, we care
passionately about the wellbeing of people and the planet. Over the
last year we have worked in partnership with Community Shop to
deliver a range of projects to support families in our communities.
This relationship is about so much more than stock. It is about
people working together in new and innovative ways to bring
positive solutions for those who need them most. We look forward to
continuing to develop this partnership in 2022.”
Adam King
Community Director, Samworth Brothers
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Chief Executive Officer’s Review
A strong recovery
Biffa delivered a strong performance in the
year, reporting record adjusted operating
profits. Group Operating Profit improved
to a loss of £8.3m (FY21: loss of £37.6m);
(FY20: profit of £74.1m) and Adjusted
Operating Profit more than doubled to
£96.6m (FY21: £44.2m, FY20: £90.5m).
We emerged well from the pandemic and
have since tackled, and continue to actively
manage, a number of external challenges.
Our commercial terms ensure good levels
of pricing flexibility designed to protect
against inflationary exposures. Whilst the
evolving macro-economic and geo-political
circumstances meant that it certainly
wasn’t the year we had expected, I am
proud of our strong performance which
is testament to our resilient business
model, positioning in the market and our
capabilities and teamwork.
With the economic recovery that followed
the easing of lockdown restrictions in the
early part of the year came a strong rebound
in demand for the essential services that we
provide, with volumes and profitability across
most of our business recovering to levels at,
or slightly above, pre-pandemic levels.
Overall, the financial performance of
the business was in line with the Board’s
expectations.
We have benefited from the investments
we have made over the last three years. We
have seen a strong contribution from both
the Viridor and Simply Waste acquisitions.
We expect an increasing contribution from
these, as well as from our investments in
CSG and our Seaham PET recycling plant in
the year ahead.
A resilient business able to manage
external challenges
The business has benefited from the
strength of commodity prices, but this has
been offset by the impact of growing cost
pressures due to shortages of key resources,
supply chain challenges and a shortfall
in performance at CSG. The supply chain
challenges affected our ability to source
A strong recovery
with record operating
profits
items such as new vehicles, fuel and waste
containers in addition to the impact of
the well-publicised national shortages of
qualified HGV drivers.
Through our scale, reputation and supply
chain relationships we have dealt with these
challenges well, although they continue to
be areas that require careful management.
We have engaged constructively with trade
unions and have agreed meaningful pay
increases to ensure that we retain our position
in our sector as an employer of choice.
Managing inflation continues to be a key
priority for the business. Our business
generally benefits from a level of pricing
flexibility that enables us to protect our
profitability. Over the course of the year, we
have taken appropriate action to ensure our
profitability is preserved and will continue to
do so as the situation evolves.
From a business perspective, the last few
years have been a testing time and have
shown us how unpredictable world events
can be. We have faced the challenges of
Brexit, the pandemic, post-pandemic supply
chain challenges, inflationary pressure
and now the impact of the war in Ukraine.
Through this period we have demonstrated
our resilience and differentiation from our
competition. Whilst certainly not immune
from these events, Biffa has performed
very well, demonstrating a strong rebound
in demand for our services, all time low
levels of customer churn and an ability to
protect margins.
Climate change remains a global
emergency that requires immediate action
from governments and businesses alike.
We deliver carbon reductions for waste
producers by wholeheartedly embracing
the waste hierarchy, prioritising waste
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Additional
Information
prevention, closed loop recycling and
energy recovery, all supported by one of
the largest, most efficient business waste
collection networks in the UK. In the year,
we continued to make good progress with
our sustainability strategy target to reduce
carbon emissions by 50% from 2020 to 2030.
We have been refused leave to appeal to the
Supreme Court on the previously reported
EVP/fluff landfill tax disputes, and therefore
the disputes are now concluded. We are
also the subject of an enquiry by HMRC for
certain aspects of landfill tax compliance, as
part of concerns HMRC has regarding the
potential misclassification of waste across
the industry. The enquiry is ongoing and a
provision of £20m has been recognised but
there are a range of possible outcomes and
it is therefore difficult to accurately ascertain
the quantum of any potential liability with
any certainty or precision. Further detail on
both landfill tax matters can be found in the
Chief Financial Officer’s Review on page 63.
Strategic execution
The last two years have seen a significant
period of investment for Biffa, as we have
repositioned the Group around four themes
of Reduce, Recycle, Recover and Collect. In
doing so, we have established a business
model and service proposition that helps to
enable a circular economy for our customers
and aligns our positioning to the objectives
of our customers, regulators and society. We
committed just under £420m of investment
into these four areas between September
2019 and March 2022, of which £361m
had been invested by March 2022. Since
then we have committed a further £80m
to support Scotland’s implementation of a
deposit return scheme, bringing our total
commitment since September 2019 to
c.£500m.
REDUCE RECYCLE
. Find out more / pages 20–21
Find out more / pages 22–23
We acquired CSG in February 2021 which
added a meaningful offering in waste
reduction to Biffa’s portfolio. CSG provides
a unique offering to manufacturers and
distributors of household produce, enabling
surplus products that would otherwise
go to waste to be redistributed through
a membership-restricted outlet network.
Through its activities 98 million products,
totalling c.35,000 tonnes, was prevented
from going to waste in the year.
Since the acquisition, we have grown the
business through opening three new
outlets, enabling the business to grow
the amount of surplus products it can
redistribute. Business performance has been
challenging as shopping habits took time
to normalise following the last lockdown
and as previously reported, due to the short
term underperformance of the business,
we booked a goodwill impairment charge
of £25m at the half year. However, since
the final quarter of the year we have seen
encouraging progress in membership,
footfall and margins as a result of the recent
strategic changes we have put in place,
and we are confident of an improved
performance in the coming year.
In addition to CSG, we made a seed
investment in ‘Love Junk’, an online
marketplace that connects upcyclers,
refurbishers and reactive waste providers
to people who need to dispose of waste or
items they no longer need.
Biffa is a UK leader in closed-loop, food-
grade plastic recycling. Our Biffa Polymers
business provides solutions for the majority
of post-consumer rigid plastic packaging,
helping to reduce the UK’s dependence on
unreliable export markets while providing
raw materials that are a substitute for
virgin plastic packaging to UK packaging
manufacturers. Demand for our solutions
has grown significantly in recent years as
consumers and regulators have demanded
that plastic packaging become more
sustainable.
In the year we completed the
commissioning of our Seaham rPET plant,
gaining regulatory and customer approvals
for our product. Whilst progress was slower
than we had hoped, we are now supplying
material to our customers who include
Nestlé, Alpla and Esterform. The facility is
now operating at full pellet production
rate and we are focusing on optimising
its operations. In addition we completed
the commissioning of our rPP plant at
Washington and commenced construction
of our 3rd rHDPE line at Redcar. With the
introduction of the Plastics Packaging Tax
from 1 April 2022, we expect to see strong
demand for the material we produce.
The Viridor acquisition added to the Group’s
capabilities and control of feedstock for the
Polymers business.
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Biffa plc / Annual Report and Financial Statements 2022
Chief Executive’s Review continued
RECOVER COLLECT
Find out more / pages 24–25
Find out more / pages 26–27
For waste that can’t be reduced or recycled,
energy recovery offers a cost-effective, low
carbon disposal option that also contributes
to the UK’s energy security. 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.
Biffa is the largest collector of waste and
recycling in the UK, and we have a long-
standing ambition to grow our leading I&C
business, both organically and through
acquisition. Since our IPO in 2016 we have
acquired and successfully integrated 26
businesses (in addition to Simply Waste
and Viridor) into our national I&C network,
helping our I&C business to materially grow
its revenues and margins over that time.
At the end of August 2021, we completed
the acquisition of Viridor’s collections
business, adding £84m in revenues during
FY22 and 21,000 customers to our business.
Since then we have focused our efforts on
integrating the business into Biffa’s systems
and operating network, a process that we
expect to unlock c.£10m in operational
synergies and take 12-18 months to
complete. Integration of both the Viridor and
the Simply Waste businesses is progressing
to plan, and we remain on track to deliver
our targeted synergies. The acquisition
pipeline remains promising, and now that
integration of these is nearing completion,
we are starting to assess the market for
further opportunities.
Since the year end, we acquired certain
trade and assets of DJB Recycling Limited,
a Sheffield-based waste collection and
recycling business, for a maximum cash
consideration of £1.9m. The business
generated revenue of c.£4.7m in the last 12
months, employed 31 people, had a fleet
of 13 vehicles and operated from 2 sites
in Sheffield prior to completion. The deal
completed on 30 June 2022.
In July 2022 we announced that Circularity
Scotland Ltd (CSL), the scheme administrator
for Scotland’s deposit return scheme,
appointed Biffa to provide collection,
counting and sorting services for the billions
of drinks containers which are placed on
the Scottish market each year. The scheme
requires highly complex operational
management and Biffa’s appointment is
testament to our ability to manage such
a programme from collection through to
recycling.
From August 2023 drinks bottles and cans
to carry a 20p refundable deposit. The DRS
aims to reduce litter and increase recycling
by at least 90% and similar schemes are likely
to follow across the rest of the UK in due
course.
The 10 year contract provides good margin
protection with opportunity to underpin
further growth of the Biffa Polymers business
and we are working with the drinks industry
to explore the opportunity to build a PET
recycling facility in Scotland. The agreement
includes c. £80m estimated capital
(including property lease commitments) to
be deployed by August 2023.
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Well positioned for future growth
We have a well defined and ambitious
investment plan that will see us continue
to grow Biffa over the next few years. As we
look further out, whilst being mindful of
the near term challenges the UK economy
is facing, we are encouraged by the secular
trends affecting our industry and how they
will open up opportunities for Biffa.
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.
Delivering our sustainability
commitments
We published our sustainability strategy,
Resourceful, Responsible, just over two years
ago. It sets out an ambitious plan for how we
will continue the transformation of Biffa over
the period 2020-2030.
We have made significant progress in
the year. The investments we are making
across our four strategic priorities will not
only ensure Biffa delivers its commitment
to a further 50% reduction in CO
2
e by
2030 but more importantly will help our
customers deliver their own sustainability
commitments.
Our plan is ambitious and was not meant
to be easy. One area where progress has
not been as swift as we would like is in the
transition to zero emissions collections
where neither the supply chain nor the
economic model are yet supportive of a
large scale conversion. We envisage that
these issues and alternative fuels will all
progress over the medium term.
Nevertheless our overall reduction in CO
2
e
emissions since 2019 is over 208,000 tonnes,
which is a 28% reduction on the 2019
baseline and 70% reduction since 2002
(scope 1 and 2). Other highlights in the year
include further strides in safety, diversity and
inclusion (including Board diversity), the
opening of two new Community Shops by
CSG and seeing the growing impact that
our charity partner WasteAid is making in
tackling waste issues across the world.
Our people
Biffa’s success in the year could not have
been achieved without the exceptional
efforts of our team. We had all hoped for a
more ‘normal’ year but it wasn’t to be, and
the team have had to deal with the various
supply chain and inflationary challenges
whilst ensuring we delivered our strategy.
My thanks go to everyone at Biffa for the
part they have played.
I’m pleased with the progress we have made
across a number of fronts to ensure that
Biffa is a safe, inclusive and engaging place
to work. We continue to be a sector leader
in safety, despite our accident frequency
levels being somewhat higher as a result
of the pandemic (which meant training
for our front line and supervisory staff was
more challenging), and we continue to
work hard to raise awareness of particular
issues that affect our operations such as the
risks associated with people sleeping in or
around bins. Our efforts in tackling the risk
of modern slavery and in fostering diversity,
equity and inclusion are of particular note.
We have been able to engage constructively
with trade unions to award enhanced terms
to our people. Whilst this came at substantial
cost in the short term, it was undoubtedly
the right thing to do and will make our
business stronger in the long run.
In the context of such a challenging year
for everyone, we were pleased that our
employee engagement score remained at
it’s all time high level of 59%.
Outlook and priorities for the
year ahead
I am delighted with the progress we have
made in the face of another eventful
and challenging year. Not only have
we demonstrated the resilience of our
business model, resulting in record adjusted
operating profits and the reinstatement of
the dividend, but we continued to invest
in the infrastructure and services that
are essential to the delivery of a circular
economy. As we look forward, whilst being
mindful of the near term challenges the
UK economy is facing, we are increasingly
well positioned to play a key role in the
transition that our sector is embarking upon,
supported by an ambitious policy agenda.
Michael Topham
Chief Executive Officer
5 August 2022
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REDUC
E
Our Aim
To pioneer and operate the UK’s leading waste
reduction and redistribution services.
Biffa actively promotes waste reduction
and reuse. Through our work with
commercial customers, we help them
to reduce waste, identify opportunities
for reuse and ensure that recycling
opportunities are maximised.
Our acquisition of Company Shop Group
establishes us as a leading enabler of
the UK circular economy, with genuine
alignment to our customers’ objectives
to reduce waste.
Progress this year:
• A difficult first year for CSG but
performance now improving.
• Two new CSG outlets and two new
Community Shop stores opened with
support of partners including Ocado and
Coca Cola European Partners.
• Growth in surplus redistributed
from c.28k tonnes to c.35k tonnes in
year – now handling c.98m products
annualised vs c.75m in 2019.
• Cross-selling opportunities are being
realised, e.g. Pilgrim’s Pride.
• Committed seed investment in LoveJunk,
an online marketplace that connects
upcyclers, refurbishers and reactive waste
providers to people who need to dispose
of waste or items they no longer need.
Priorities for the year
ahead:
• Consolidate recent improvements in
trading.
• Improve sourcing of surplus stock,
adding new supplier partners, opening
new categories to consumers and
leveraging Biffa’s existing customer
relationships with potential supply
chain partners.
• Continue to embed broader partnerships
to access greater surplus volumes.
• Continue to expand our social enterprise,
Community Shop, having opened
Community Shop Leicester in April 2022.
• Launch CSG ‘On the Go’, working
alongside our longstanding partner,
Ocado. (see page 15) .
See Operating Review for more
information on / pages 66–75
See Risks on / pages 76–83
Winner
Community Shop is a three- time
winner of the prestigious Queen’s
Award for Enterprise
Proving Strength and Scale in Our Investment Areas
20
Biffa plc / Annual Report and Accounts 2022
Additional
Information
REDUC
E
£91.5m
investment committed
since CMD
Pilgrim’s Pride
Pilgrim’s is a leading food and farming business and the world’s largest producer of higher welfare pork.
Biffa was awarded the UK waste contract for Pilgrim’s in 2020 and since acquiring CSG in 2021, we have worked on combining our
efforts to deliver a waste strategy that concentrates on moving surplus products further up the waste hierarchy by developing new
avenues of supply into CSG.
“Working with CSG means that we can redistribute
quality food to those who need it most. It also has
the benefit of reducing the amount of food that
is potentially wasted, which is an important part
of our sustainability efforts.’’
Julian Weeks
Site director at Pilgrim’s UK
For more information see our Operating Review / pages 66–75
Through its
relationship with CSG,
Pilgrim’s Pride will save
a further c.120 tonnes of
raw meat from going to
waste.
21
Strategic Report
Financial
Statements
Corporate
Governance Report
Overview
Biffa plc / Annual Report and Accounts 2022
RECYC
LE
Proving Strength and Scale in Our Investment Areas
Our Aim
To develop and operate the UK’s leading
recycling solutions.
Biffa is a true pioneer of closed-loop
plastic recycling, turning waste plastic
into food-grade material that can be
used as a substitute for virgin plastic.
Progress this year:
• Completed the commissioning of our
Seaham rPET plant, gaining regulatory
and customer approvals for our product.
We are now supplying material to our
customers who include Nestlé, Alpla
and Esterform.
• Washington PP plant commissioned.
• Completed the upgrade of our Aldridge
plastics recycling facility.
• Through the Viridor acquisition we
added to the Group’s capabilities and
control of feedstock for the Polymers
business.
See Risks on / pages 76–83
Priorities for the year
ahead:
• Continue to capitalise on our market-
leading position in closed-loop, food-
grade plastic recycling.
• Progress the development of our third
HDPE line at Redcar, which adds an
additional 14,000 tonnes of capacity.
• Optimise the Seaham rPET plant.
• Investigate the use of AI and robotics at
our Plastics Recycling Facilities to support
with advanced sortation.
• Pursue further growth opportunities.
22
Biffa plc / Annual Report and Accounts 2022
Additional
Information
RECYC
LE
£71.7m
investment committed
since CMD
Pioneers of Closed-Loop
Recycling
At Biffa, we are pioneers of closed-loop recycling – the
process by which packaging is continually reprocessed
and kept in constant circulation. Our world-class
facilities at Redcar, Seaham and Washington are at
the cutting edge of 100% recyclable food-grade
plastics recycling.
We have worked closely with the dairy industry over
the last decade to develop a world first in food-grade
rHDPE. This is now widely used in UK milk bottles at
an inclusion rate of up to 40%, allowing our customers
to not only achieve their sustainability targets, but
also to meet the newly introduced UK packaging
tax, which requires packaging to have at least 30%
recycledcontent.
How have we made milk bottles even more closed-loop?
• Shrink sleeve labels
We’ve encouraged customers to move away from using paper labels stuck
to bottles with glue and replace them with removable shrink sleeve labels,
which easily fall off when the bottle is squashed and reduces the risk of
contamination. The labels can then be recycled separately.
• Colourless caps
We’ve encouraged the dairy industry to remove the colour from milk bottle
caps and to instead use a natural cap. This will not only reduce levels of
contamination, but will also mean the caps themselves will become part of
the closed-loop process. This is now being rolled out across the industry and
we hope all milk bottles sold in the UK will soon have a natural cap.
Biffa’s expertise in polymer recycling means we are well placed to support
customers, including those in the dairy, food & beverage and retail industry, to
develop and continually improve their packaging from a sustainability perspective,
helping to enable the UK circular economy.
23
Biffa plc / Annual Report and Accounts 2022
Strategic Report
Financial
Statements
Corporate
Governance Report
Overview
Proving Strength and Scale in Our Investment Areas
Our Aim
To invest in Energy Recovery Facility (ERF)
infrastructure as a lower carbon alternative to landfill
for our customers’ waste that can’t be recycled.
As the UK’s largest waste collector,
we are committed to waste reduction
and recycling, however, we recognise
that the technology which will enable
a zero-waste future is still many years
away. In the meantime, having access to
domestic, low-carbon energy recovery
is essential, and ERFs helps to tackle this
waste gap as a low carbon alternative
to landfill, while contributing to UK
energy security.
Progress this year:
• Two ERFs (Newhurst and Protos) on track
(see case study on page 25).
• Agreements in principle for the
remaining tonnage in place.
Priorities for the year
ahead:
• Commence commissioning of our
Newhurstfacility.
• Continue construction of our Protos
facility.
• Investigate opportunities to increase
consented capacities.
• Investigate carbon capture opportunities,
with the Protos facility participating in
the deployment process for BEIS Cluster
Sequencing for Carbon Capture Usage
and Storage.
See Risks on / pages 76–83
RECOV ER
24
Biffa plc / Annual Report and Accounts 2022
Additional
Information
Energy recovery – reducing waste to landfill
Construction work is well underway on our two ERFs which will
drastically reduce the amount of non-recyclable waste sent to landfill,
while producing enough electricity to power around 170,000 homes.
In a joint venture with Covanta, Biffa is investing a total of £75m in the
two projects that will provide up to 91MW of renewable electricity
to the UK grid by safely incinerating up to 750,000 tonnes of non-
recyclable household and business waste each year.
The Newhurst ERF in Leicestershire is due to enter commercial operation
in 2023, while the Protos ERF in Cheshire is set to follow in 2024.
It is currently not possible to reduce and recycle all UK-generated waste,
therefore energy recovery is a much more sustainable alternative to
landfill. When waste is sent to landfill, it decomposes and generates
methane – a greenhouse gas 28-34 times more potent than CO
2
.
The carbon saved from energy recovery compared to landfill is 0.05
tonnes of CO
2
e per tonne of residual waste
1
. Over a 12-month period,
that’s a saving of 37,500 tonnes of CO
2
e – equivalent to the energy-
generated emissions from 4,700 homes or 8,000 fossil fuel-powered cars.
Energy recovery also plays a vital role in energy security, now providing
c.3% of the UK’s electricity needs. It will also help us to enable the
circular economy, by decreasing the UK’s dependence on exporting
waste, while recovering metals and aggregates for recycling from
the ash.
The heat generated by the facilities can also be captured and used for
district heating schemes and commercial applications.
1 Based on the Tolvik UK Energy From Waste statistics published in 2020.
£75.0m
investment committed
since CMD
RECOV ER
25
Biffa plc / Annual Report and Accounts 2022
Strategic Report
Financial
Statements
Corporate
Governance Report
Overview
COLLE CT
Our Aim
To build the UK’s largest, most efficient,
low carbon waste and recycling collections operation.
Our business waste collections platform
is the UK’s largest and most efficient. We
offer our customers flexible solutions
which helps them to maximise their
recycling. We believe our industry-
leading ‘route density’ also means we
have the lowest emissions. Our goal is
to continue to grow our business, both
organically and through acquisition
whilst continuing to focus on delivering
an efficient, high-quality service, keeping
costs firmly under control and delivering
efficiencies through the increased use
of technology.
Progress this year:
• Viridor acquisition completed – our
I&C business now includes Viridor’s
nationwide I&C fleet of 270 vehicles
along with 15 depots across the
UK, servicing 21,000 customers and
generating £84m of revenue in FY22.
We expect to deliver synergies of at least
£10m in full by the end of FY23.
• A strong year for organic growth with
all time low levels of customer churn.
• Made headway with the transition to
alternative fuels and electric vehicles.
Priorities for the year
ahead:
• Complete integration and synergy
delivery of Viridor and Simply
Wasteacquisitions.
• Recommence M&A where appropriate
– small I&C deal (c. £4.7m turnover)
completed end June 2022.
• Further investment in digital – new
customer portal and in-cab technology
being rolled out.
• Maintain pricing discipline to ensure
protection of margins against inflation.
See Operating Review for more
information on / pages 66–75
See Risks on / pages 76–83
Proving Strength and Scale in Our Investment Areas
26
Biffa plc / Annual Report and Accounts 2022
Lower carbon collections
Consolidating our I&C business through acquisitions helps to unlock
significant emissions and traffic benefits.
Since our IPO in 2016, we’ve improved the efficiency of our waste
collection services by removing 92 vehicles, which has saved 5,055 tonnes
of CO
2
e emissions to date.
Adding to the carbon-saving benefits of consolidating the fleet, each
of the vehicles removed represents the elimination of duplicate routes,
along with an improvement in route density.
For more information see our Operating Review / pages 66–75
Additional
Information
COLLE CT
£180.8m
investment committed
since CMD
27
Strategic Report
Financial
Statements
Corporate
Governance Report
Overview
Biffa plc / Annual Report and Accounts 2022
tCOe per £m revenue
4,000
3,500
3,000
2,500
2,000
1,500
1,000
500
0
tCO
2
e per £m revenue
2005/06 2007/08 2011/122009/10 2013/14 2015/16 2017/18 2019/20 2021/22
Sustainability
Biffa’s Sustainability
Strategy, ‘Resourceful,
Responsible’
Biffa’s Sustainability Strategy
In March 2020, we published our
sustainability strategy ‘Resourceful,
Responsible’, setting out our goals to 2030.
The strategy is focused on three core
pillars, each aligned to the United Nations
Sustainable Development Goals, where we
believe we can make the most meaningful
contributions. From building a circular
economy, to tackling climate change and
caring for our people, supporting our
communities.
As an enabler of the UK circular economy,
we are committed to unlocking £1.25bn of
investment in green economy infrastructure,
to cut our carbon emissions by a further 50%
from our 2019 baseline by 2030 and to reach
net zero by no later than 2050, in line with
Government targets (see pages 32-33).
We have also initiated climate change
scenario modelling, analysis of supplier
(‘scope 3’) emissions and committed to the
Science Based Targets initiative.
Our actions have enabled
us to reduce the carbon
intensity of our revenues
by 89% since 2005.
We are breaking the link between the
management of waste and carbon, but
there is still much more to do.
1 The full strategy document is available on our website: www.biffa.co.uk/sustainability
28
Biffa plc / Annual Report and Accounts 2022
Additional
Information
Since 2018, we have saved
17,700
tonnes
of CO
2
emissions by utilising
rail networks to transport inactive waste
as an alternative to road haulage.
We generate enough low carbon
energy to power around
117,000
homes
Through CSG,
we prevented
c.35,000
tonnes
of materials from going to waste.
The UK Plastics Packaging Tax
incentives manufacturers to include
at least
30%
recycled content in packaging.
Biffa is helping customers
achieve and, in many cases,
exceed this number.
We recycle
500,000
tonnes
of materials each year and keep
98.5%
of plastics recycled within the UK.
We have reprocessed over
three billion
HDPE milk bottles over the last
decade and around
85%
of milk bottles
in the UK contain Biffa material.
Did you know?
29
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Biffa plc / Annual Report and Accounts 2022
Sustainability highlights
Sustainability continued
ESG Index Scores
MSCI AA
Sustainalytics improved from medium risk to low risk
CDP improved from C to B-
EcoVadis silver medal (top 10% of all companies)
S&P top 34% within industry
For more information read our Sustainability Report /
https://www.biffa.co.uk/sustainability
CO
2
Emissions
(tonnes)
538,000
(Scope 1 & 2)
CO
2
Emissions
(tonnes)
622,000
(Scope 3)
Employee
Engagement
59%
Lost Time Injury
Rate
0.39
Plastics Recycling
Capacity (tonnes)
151,000
Reporting alignment
Our upcoming Reality
Check paper ‘From
Waste Hierarchy to
Carbon Hierarchy:
Biffa’s Blueprint for
Waste Net Zero’ will be
published in due course.
Switching the UK eet of
refuse vehicles to electric
would save 290 Kt of CO
2
each year.
1 tonne of surplus food
redistributed rather than
landlled saves 0.989
tonnes CO
2
e.
1
1 tonne recycled plastic
saves 2.3 tonnes of CO
2
e
compared to energy
recovery.
2
Every tonne of residual
household waste diverted
from landll avoids 0.452
tonnes of CO
2
e emissions.
1
Average net carbon
emission 0.34t CO
2
e per
tonne of input generating
584kWh of net electricity
export.
3
Carbon benefits Policy asks and changes needed
• Support a transition to low / zero carbon fuels for waste
– subsidies or/and ban fossil fuel vehicles from cities.
• Maintain competition to ensure a dynamic competitive market
enabling businesses to maximise recycling.
• Introduction of food waste reporting.
• Incentivise businesses to redistribute surplus produce.
• Introduce carbon pricing to reduce waste and ensure the
carbon cost of incinerating material which cannot be recycled
or reused is realised.
• End plastic waste export and consider other materials based
on the risk.
• Introduce a progressive plastics tax to stimulate further
investment and adoption.
• Implement a consistent UK wide deposit return scheme.
• Bring energy recovery into Emissions Trading Scheme from
2028 to stimulate innovation.
• Review energy recovery development to ensure lower carbon
waste reduction and recycling is prioritised and ensure no
over-capacity market distortion.
• Ensure 2028 ban on biodegradable waste is workable.
• Reform landll tax to ensure it doesn’t work against Net
Zeroambitions.
COLLECT
REDUCE
RECYCLE
RECOVER
DISPOSE
See page 44 for prior year
comparators under CO
2
emissions
See page 48See page 52 See page 23
30
Biffa plc / Annual Report and Accounts 2022
Additional
Information
Materiality Assessment and Sustainability Reporting
This year, we carried out our second
materiality assessment with the
dual aims of identifying material
sources of Environmental, Social and
Governance (ESG) as well as economic
risk and opportunity and informing our
sustainability reporting processes. We
asked our key stakeholders, including
our employees, customers, investors,
suppliers, government, regulators and
community representatives to rate the
ESG topics that matter most to them.
These topics were informed by
internationally accepted reporting
frameworks set out by the Sustainability
Accounting Standards Board (SASB)
and the Global Reporting Initiative (GRI),
sector trends, and investor perceptions.
Our Sustainability Report also provides
our annual sustainability performance
data, including environmental
performance and our alignment to the
most widely recognised sustainability
reporting frameworks.
Sustainability highlights in our four investment areas
RECOVER
COLLECT
REDUCE
RECYCLE
Surplus redistribution
• CSG is the UK’s only large-scale commercial redistributor, redistributing c.35,000t of produce to
consumers, avoiding over 34,500t of CO
2
compared to landfill.
• We are leveraging this unique integrated offering across waste, recycling and redistribution
to FMCG manufacturing and distribution sectors.
Plastics recycling
• Biffa is a UK pioneer in closed-loop, food-grade, plastic recycling.
• WRAP estimates 1 tonne of plastic recycled through a closed-loop process saves 2.3 tonnes of CO
2
,
vs energy recovery.
• We are making significant investment to meet the growing demand for plastics recycling –
c.£50m invested and capacity increased by 127% since 2019.
Energy recovery
• Avoids harmful methane emissions from landfill – 28-34 times more powerful than CO
2
.
3
• We have improved our methane capture rate in our Landfill Gas business to an industry-leading
85% ahead of the COP26 commitments around methane reduction.
• Carbon saved from energy recovery vs landfill is 0.050t CO
2
per tonne of residual waste.
4
• Energy recovery also plays a vital role in energy security, now providing c.3% of the UK’s
electricity needs.
I&C collections
• Emissions can be significantly reduced by achieving greater route density. Since acquiring
Viridor, we’ve removed 22 trucks from the road (with a further 29 to be removed in H1 FY23).
This equates to a total CO
2
e saving of 1,473t per year.
• Since IPO, more than £270m invested in 25 acquisitions in I&C division, with 92 vehicles
removed from service through route density synergies.
1. 1 https://www.zerowastescotland.org.uk/download/carbon-metric-factors-2011-2020
2. WRAP – Market situation report 2021 – plastic packaging, page 25
3. UNECE: https://unece.org/challenge
4. Tolvik-UK-EfW-Statistics-2020-Report_Published-May-2021.pdf, p12
You can read the outcomes of
our materiality assessment in our
Sustainability Report and on our website /
www.biffa.co.uk/sustainability
For further information on stakeholder
engagement / pages 102-107
31
Strategic Report
Financial
Statements
Corporate
Governance Report
Overview
Biffa plc / Annual Report and Accounts 2022
1,400
1,200
1,000
800
600
400
200
0
2010 2020 2030 2040 2050
Tonnes CO
2
e (thousand)
Sustainability continued
Down to Zero:
our pathway to Net Zero carbon
Net Zero
Past CO
2
e emissions Projected CO
2
e emissions
Committed
to Science-based Targets
TACKLING CLIMATE
CHANGE
Sustainability continued
32
Biffa plc / Annual Report and Accounts 2022
2010 2020 2030 2040 2050
Additional
Information
<5% of emissions will require
new technologies or offsetting
activities
Develop our renewable
energy capacity
Cease buying fossil fuels
20% increase in collection
route efficiency
Buy 100% renewable
electricity
Our path to 2030
Our 2030 targets are based on
existing technology and realistic
deployment. This deliverable strategy
builds the foundations for the next
phase of our long-term ambition of
reaching net zero emissions across
our direct operations (Scope 1 and 2
emissions) by no later than 2050.
Scaling up to
deliver Net Zero by
no later than 2050
Emerging technology and process
innovation will bring opportunities to
further accelerate the reduction of our
emissions and allow us to achieve net
zero emissions by no later than 2050.
50%
reduction in carbon emissions
Net Zero by
no later than
2050
33
Strategic Report
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Statements
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Overview
Biffa plc / Annual Report and Accounts 2022
Sustainability pillar Objective 2025 Target 2030 target Progress to date
BUILDING A CIRCULAR
ECONOMY
Leading on plastics recycling Triple plastic recycling capability Quadruple plastics recycling
See page 22 and
Sustainability Report page 13
Investing in energy recovery Build and commission two ERFs Both plants optimised
See page 24 and
Sustainability Report page 18
Growing business waste recycling collections 25% more waste collected for recycling 50% more waste collected for recycling
See Sustainability Report
page 15
Diverting general waste from landfill 80% of inputs to landfill inactive 90% of inputs to landfill inactive See page 31
Recyclable commodities trading All waste plastics recycled within the UK
All waste plastics continue being
recycled within the UK
See Sustainability Report page 15
Supporting customers on sustainable waste
management
Provide all waste service customers with
sustainable waste advisory services including
waste reduction and re-use
Provide all waste service customers with
sustainable waste advisory services including
waste reduction and re-use
See case study on page 21 and
Sustainability Report page 15
TACKLING CLIMATE
CHANGE
Reducing our carbon footprint 30% reduction 50% reduction See page 41
Greening the collection fleet Introduce 10% non-fossil-fuelled RCVs Cease buying fossil-fuelled RCVs
See page 42 and
Sustainability Report page 21
Improving collection route efficiencies Increase efficiency by 10% Increase efficiency by 20% See page 42
Moving waste by rail 50% of our inputs to landfill by rail Dependant on the availability of rail served landfill See page 41
Renewable energy purchasing Buy 100% renewable electricity Maintain 100% renewable electricity
See page 41 and
Sustainability Report page 23
Investing in solar power development
Develop 50MW of renewable energy
capacity through solar farms
Develop 100MW of renewable energy
capacity through solar farms
See page 44 and
Sustainability Report page 23
CARING FOR OUR PEOPLE,
SUPPORTING OUR
COMMUNITIES
Engaging our employees In top quartile for employee engagement Consistent top quartile business
See page 52 and
Sustainability Report page 31
Supporting the living wage
Employees paid Living Foundation rates where
possible
Become living wage workplace and
member of Living Wage Foundation
See page 47
Maintaining high health & safety standards 25% reduction to Lost Time Injury (LTI) rate 50% reduction in LTI rate See page 48
Tackling Modern Slavery
Maintain zero tolerance and be an
acknowledged market leader in anti-slavery
practices within the UK waste sector
Maintain zero tolerance and be an
acknowledged market leader in anti-slavery
practices, engaging and collaborating to positively
impact practices beyond our industry
See page 56
Promoting diversity & inclusion Increase the diversity of the workforce
Create an inclusive culture and
representative workforce
See page 54
Training staff
Increase training interventions per employee
by 30%
Double training interventions per employee See page 53
Investing in communities £15m delivered through Biffa Award £25m delivered through Biffa Award
See page 57 and
Sustainability Report page 33
Supporting biodiversity Manage 20% of estate for biodiversity Manage 30% of estate for biodiversity
See page 57 and
Sustainability Report page 34
Our sustainability strategy scorecard, outlining our
progress to date against our 2025 and 2030 targets.
For an in-depth update of our progress against our
sustainability strategy read our Sustainability Report /
https://www.biffa.co.uk/sustainability
Sustainability Pillars
Sustainability continued
34
Biffa plc / Annual Report and Accounts 2022
Additional
Information
Sustainability pillar Objective 2025 Target 2030 target Progress to date
BUILDING A CIRCULAR
ECONOMY
Leading on plastics recycling Triple plastic recycling capability Quadruple plastics recycling
See page 22 and
Sustainability Report page 13
Investing in energy recovery Build and commission two ERFs Both plants optimised
See page 24 and
Sustainability Report page 18
Growing business waste recycling collections 25% more waste collected for recycling 50% more waste collected for recycling
See Sustainability Report
page 15
Diverting general waste from landfill 80% of inputs to landfill inactive 90% of inputs to landfill inactive See page 31
Recyclable commodities trading All waste plastics recycled within the UK
All waste plastics continue being
recycled within the UK
See Sustainability Report page 15
Supporting customers on sustainable waste
management
Provide all waste service customers with
sustainable waste advisory services including
waste reduction and re-use
Provide all waste service customers with
sustainable waste advisory services including
waste reduction and re-use
See case study on page 21 and
Sustainability Report page 15
TACKLING CLIMATE
CHANGE
Reducing our carbon footprint 30% reduction 50% reduction See page 41
Greening the collection fleet Introduce 10% non-fossil-fuelled RCVs Cease buying fossil-fuelled RCVs
See page 42 and
Sustainability Report page 21
Improving collection route efficiencies Increase efficiency by 10% Increase efficiency by 20% See page 42
Moving waste by rail 50% of our inputs to landfill by rail Dependant on the availability of rail served landfill See page 41
Renewable energy purchasing Buy 100% renewable electricity Maintain 100% renewable electricity
See page 41 and
Sustainability Report page 23
Investing in solar power development
Develop 50MW of renewable energy
capacity through solar farms
Develop 100MW of renewable energy
capacity through solar farms
See page 44 and
Sustainability Report page 23
CARING FOR OUR PEOPLE,
SUPPORTING OUR
COMMUNITIES
Engaging our employees In top quartile for employee engagement Consistent top quartile business
See page 52 and
Sustainability Report page 31
Supporting the living wage
Employees paid Living Foundation rates where
possible
Become living wage workplace and
member of Living Wage Foundation
See page 47
Maintaining high health & safety standards 25% reduction to Lost Time Injury (LTI) rate 50% reduction in LTI rate See page 48
Tackling Modern Slavery
Maintain zero tolerance and be an
acknowledged market leader in anti-slavery
practices within the UK waste sector
Maintain zero tolerance and be an
acknowledged market leader in anti-slavery
practices, engaging and collaborating to positively
impact practices beyond our industry
See page 56
Promoting diversity & inclusion Increase the diversity of the workforce
Create an inclusive culture and
representative workforce
See page 54
Training staff
Increase training interventions per employee
by 30%
Double training interventions per employee See page 53
Investing in communities £15m delivered through Biffa Award £25m delivered through Biffa Award
See page 57 and
Sustainability Report page 33
Supporting biodiversity Manage 20% of estate for biodiversity Manage 30% of estate for biodiversity
See page 57 and
Sustainability Report page 34
Sustainability strategy scorecard key
On track to meet 2025 and 2030 targets
Not on track to meet 2025 target but likely to meet 2030 target
Not on track to meet 2025 or 2030 targets
35
Strategic Report
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Biffa plc / Annual Report and Accounts 2022
Sustainability continued
BUILDING A
CIRCULAR ECONOMY
We are contributing to a sustainable future built around a circular
economy; educating our customers and wider society, whilst
influencing the UK Government and policy makers to use materials
responsibly, to reuse as much as possible and to divert even more
general waste away from landfill into recycling and recovery.
We are making significant investments in our plastics recycling
capabilities, increasing our capacity from 63,000 tonnes to 151,000
tonnes since 2019. We also recognise that energy recovery will
have a vital role to play for many years as we transition to a more
circular economy and we have collaborated with established,
expert operators to build the energy recovery infrastructure
that the UK currently needs to manage waste in a lower carbon,
sustainable way.
We’ve also invested in surplus produce redistribution through
the acquisition of CSG, enabling us to deliver a unique circular
economy proposition for the UK.
We have now unlocked c.£1bn of the target of £1.25bn investment
in green economy infrastructure by 2030 as set out in our
sustainability strategy.
A communications campaign for operatives and business
customers has been carried out to ensure appropriate use of
recycling containers and the volumes collected for recycling
continue to improve.
Unlock £1.25bn of
investment in green
economy infrastructure
by 2030.
For more information on how we are enabling the circular economy, read our Sustainability Report / www.biffa.co.uk/sustainability
While we recognise that landfill is necessary for some specialist
and inert-type waste, and our sustainability strategy reflects
this, market pressures have meant that less refuse derived
fuel (RDF) is being produced and exported resulting in landfill
being used for the responsible disposal of active waste. With
an intelligent reform of Landfill Tax and a workable approach
to the 2028 ban on biodegradable waste to landfill, we expect
inactive waste to make up a greater proportion of our inputs
to landfill and our 2030 target remains within reach.
This year alone, we have
increased our plastics
recycling capacity by a
further 25% to 151,000
tonnes. This will save up
to 71,000 tonnes of COe
when compared to energy
recover y.
36
Biffa plc / Annual Report and Accounts 2022
Additional
Information
TACKLING CLIMATE
CHANGE
Having reduced
emissions by 70% since
2002, we will deliver a
further 50% reduction by
2030 and will be Net Zero
by no later than 2050.
Climate change is a global emergency that requires action now.
Our services deliver carbon reductions for waste producers by
wholeheartedly embracing the waste hierarchy, prioritising waste
prevention through surplus redistribution, closed-loop recycling
and energy recovery, all supported by the largest, most efficient
business waste collection network in the UK.
Our programme of mergers and acquisitions over recent years
has helped to improve collection efficiencies and route densities.
While it has been a challenging year due to the impact of
Covid-19 and driver shortages, we have seen an improvement
on our collection efficiencies baseline in the latter half of the
year. We will be undergoing a rerouting exercise to further realise
efficiencies from the Viridor integration to ensure this upward
trend continues.
During the year, 24% of our total inputs to our landfill sites were
by rail and 43% of our inactive inputs to landfill were also by rail.
We have increased our total volumes moved by rail to landfill
by 35% this year compared to FY21 volumes, mainly due to
the opening of our third rail hub in Barking in May 2021. While
the 2025 target remains challenging due to the need for more
rail-linked sites, we believe that as the economy recovers, and
with our additional rail hub in Barking, we will continue to make
positive progress towards our sustainability strategy targets.
Environmental Performance
Biffa has a team of environmental regulation and policy
specialists, who engage with the UK Government, regulators
and policy makers to help shape the national regulatory
and policy framework in relation to environmental matters.
See our stakeholders on pages 106-107.
We also provide our expertise in our Reality Check papers,
published in the press and on our website, which provide
Biffa’s expert opinion on important topics such as recycling,
plastics, exports and waste treatment. We will soon be
publishing our latest Reality Check paper ‘From Waste
Hierarchy to Carbon Hierarchy: Biffa’s Blueprint for Waste Net
Zero’ in which we set out why the UK should handle more
of its waste on its own shores and prioritise those processes
which deliver the most carbon benefit, to accelerate the UK
pathway to Net Zero.
Despite our successes, we recognise that we are in a
transitional period and remain reliant on new technologies, UK
Government investment alongside the practical deployment
of emerging legislation from the Environment Act in order to
deliver on some of the key aspects of our strategy, such as the
deployment of electric vehicles and alternative fuels. Likewise,
the viability of solar energy generation on closed or restored
landfill sites has proved challenging due to biodiversity
requirements on the sites conflicting with our plans, which we
will continue to manage closely.
For more information on how we are tackling climate change, read our
Sustainability Report at: www.biffa.co.uk/sustainability
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Sustainability continued
Task Force on Climate-related Financial Disclosures (TCFD)
TACKLING CLIMATE
CHANGE
Listing Rule Compliance
We’ve complied with the requirements of LR 9.8.6R, by including climate-related financial disclosures that are consistent with
the TCFD recommendations and recommended disclosures across the four pillars: governance, strategy, risk management and
metrics and targets.
This is our second year of climate-related disclosure, in line with the TCFD recommendations. Using this framework enables us to explain our
process for responding to climate-related opportunities and risks in a purposeful and comparable context to our key stakeholder groups.
Biffa’s Climate Change Response
Governance
How climate-related risks and
opportunities are managed
The Board has overall accountability for the long-term success of the business, which includes
ensuring that we have robust frameworks and processes in place to manage our response to
climate change.
Strategy
Climate-related risks
and opportunities
Climate change is a global emergency that requires action now. The waste sector will play a pivotal
role in enabling a circular economy and the UK’s transition to a net zero future. As a leader in
sustainable waste management, our journey to net zero will also include supporting our customers
with their own sustainability agendas. Anticipating and taking advantage of opportunities
presented by emerging technologies and process innovations will enable us to achieve our
ambitious targets as well as play a positive role in tackling climate change.
Risk management
Biffa’s process for assessing and
managing climate-related risks
Climate change is incorporated into our robust risk management and business planning processes.
When assessing climate-related opportunities and risks we consider both our existing business
model and long-term strategy.
Metrics and targets
Metrics used to assess our efforts
• Reduce Scope 1 and Scope 2 emissions by a further 50% by 2030 from a 2019 baseline and
reach net zero emissions across our direct operations by no later than 2050, in line with UK
Government targets.
• We are in the process of setting Scope 3 targets and will be submitting these, along with our
Scope 1 and 2 targets for SBTi validation over the next six months.
• Increase our collections route efficiency by 10% by 2025 and 20% by 2030.
• Purchase 100% renewable electricity by 2025.
Governance
Board
The Board is responsible for the delivery of sustainable value to our shareholders and key stakeholders and provide oversight of our
strategic commitments, which are aligned with our sustainability strategy which includes a pillar on Biffa’s actions on tackling climate change.
This ensures climate-related risks and opportunities are managed across our business including through capital expenditure, acquisitions
and performance objectives. The Board’s role and governance framework is described further in this Annual Report on page 96.
Board Sustainability Committee
The Board established a Sustainability Committee in November 2020 to oversee, on its behalf, the Company’s sustainability strategy and
response to climate change. During FY22, the Board Sustainability Committee met twice and received updates on progress made against
the strategy from members of the Group Executive Team and Corporate Affairs Team. For the full Sustainability Committee Report,
see pages 116-117 of this Annual Report.
Executive Sustainability Committee
The Executive Sustainability Committee is responsible for overseeing the Company’s sustainability strategy and response to climate change
at a business level. The Group Executive Team oversees senior management who are responsible for the day-to-day implementation,
monitoring and management of our sustainability performance including climate-related risks and opportunities.
38
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Additional
Information
Corporate Affairs Team
As part of the overall risk management process, we have a Corporate
Affairs Team which includes a dedicated sustainability team, reporting
into the Corporate Affairs Director.
The Corporate Affairs Team works closely with management teams
and employees across the business to:
• Ensure that any emerging climate-related risks and opportunities
are identified and reported to the Corporate Affairs Director and
Group Executive Team.
• Drive awareness of our sustainability targets including emission
reduction targets and commitments across the business and
ensure that where relevant, sustainability targets are incorporated
into our divisional balanced business plans.
• Evolve and refine the sustainability strategy and associated
targets, ensuring it keeps pace with Biffa’s overall ambitions,
market developments and the latest Science-based Targets.
• Ensure performance monitoring and reporting is completed
and rigorously audited, through both internal audit and external
verification to ensure that accurate information is communicated
across the business.
• Escalate any issues that may impact the delivery of the
sustainability strategy to the Corporate Affairs Director and Group
Executive Team.
• Maintain our sustainability dashboard which tracks performance
against the targets set out in our sustainability strategy. This
allows for greater transparency and visibility of performance data
amongst management teams.
• Participate in industry working groups, along with other subject
matter experts, and monitor best practice.
• Ensure the Company position is reflected in relevant, developing
Government policy through transparent and proactive interaction
with our regulators and policy makers.
Audit Committee
The Audit Committee supports the Board in the management of risk. Our Audit Committee reviews financial and non-financial risks outlined in
the Group Risk Register, which includes climate change.
For the Audit Committee Report, see page 118 of this Annual Report.
Biffa plc Board of Directors
Sustainability Committee
H&S Excellence Forum Corporate Affairs Team
Executive Sustainability Committee
Audit Committee
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Sustainability continued
Strategy
As a leader in UK sustainable waste management, we play a critical
role in climate action; enabling the UK circular economy and allowing
customers and society to reduce their emissions by moving waste
further up the waste hierarchy. Our business strategy ‘Reduce,
Recycle, Recover and Collect’ guides the services we offer, our
operations, our supply chain management and our investment in
research and development.
These four areas of our sustainable business model reflect the
outcomes and value creation delivered by our operational
capabilities and our capital allocation:
• Reduce: To pioneer and operate the UK’s leading waste reduction
and redistribution services.
• Recycle: To develop and operate the UK’s leading recycling
solutions.
• Recover: To invest in Energy Recovery Facilities infrastructure as a
lower carbon alternative to landfill for our customers’ waste that
can’t be recycled.
• Collect: To build the UK’s largest, most efficient, low carbon waste
and recycling collections operation.
See page 5 of the Annual Report for more information.
To further align our funding strategy with our sustainability strategy
and the climate-related risks and opportunities identified, we have
established a Sustainability-Linked Finance Framework which was
published in December 2020. You can download the framework
from the Biffa website: www.biffa.co.uk/investors/sustainability/
sustainability-linked-finance-framework.
Our sustainability strategy, Resourceful, Responsible, was published
in March 2020 and identifies 20 clearly defined targets which
mitigate against climate-related risks and capitalise on climate-
related opportunities. The strategy, including climate-related risks
and opportunities, is reviewed annually and will take on board any
changes in regulations, societal demand, technology availability and
the development of climate science. Where required, the strategy will
be adapted to reflect these changes.
Scenario Analysis
Undertaking scenario analysis is critical to ensuring our business
model and sustainability strategy remain resilient to a range of
potential future scenarios to 2030 and beyond. We have evaluated
against two scenarios which enable us to explore the key transitional
and physical risks and opportunities that Biffa may be exposed to:
• The ‘sustainable’ scenario – enables us to assess the
opportunities and risks arising from a successful transition to a low
carbon world, aligned with the Paris Agreement and its goal to
limit global warming to 1.5 °C, compared to pre-industrial levels.
• The ‘business as usual’ scenario – enables us to assess the
risks where the Paris Agreement is not met and we must face
the acute risk of severe weather events and chronic impacts of
temperature and precipitation changes. This scenario allows for
global average temperatures rising to above 4°C by the end of the
century.
Our scenarios considered were informed by the International Panel
on Climate Change (IPCC) Representative Concentration Pathways
1
and Shared Socioeconomic Pathways (SSPs)
2
. Data from the UK Met
Office was also used in the ‘business as usual’ scenario so we could
consider the UK specific physical impacts of climate change, as this is
most applicable to our UK operations.
The assessment was completed through climate-related workshops
across the business and central functions. We carried out our second
materiality assessment this year with our key stakeholder groups
to ensure that no material risks or opportunities were overlooked.
See page 4 of our Sustainability Report for more information on
outcomes of the assessment: www.biffa.co.uk/sustainability
We assessed the financial impacts of the climate-related risks and
opportunities identified using the criteria in our risk management
framework.
Footnotes
1 The Intergovernmental Panel on Climate Change Representative Concentration Pathways were used in our scenarios as they allow physical climate impacts to be considered such as temperature,
flooding and extreme weather, across differing average temperature rises resulting from varying radiative forces.
2 Socioeconomic Pathways (‘SSPs’) describe a set of alternative plausible trajectories of societal development, which are based on hypotheses about which societal elements are the most important
determinants of challenges to climate change mitigation and adaptation.
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Additional
Information
Summary of our most material climate-related risks and opportunities – Scenario 1 (sustainable world)
Low Medium High
TCFD category Sub-topic
Potential financial impact
Strategic response and resilience
Short 1-3
years
Medium
3-10 yrs
Long 10+
yrs
Resource
Efficiency
More efficient
technology
Reduced and avoided
operating costs for facilities
and collections fleet.
Our ambitious carbon reduction target
requires a focus on energy efficiency across
our UK operations and collections fleet.
Products/
Services/
Markets
Increased
demand for
low carbon
services and
materials
Increased revenue due to the
continued development and
reduced operating costs.
Our sustainability ambitions will be
delivered by optimising our processes and
combining these with our actions to help
customers move their waste further up
the waste hierarchy, helping to reduce the
carbon footprint of the services we offer.
Additional
technology
Increased revenue from
continued development of
additional services.
Our ambition is to unlock £1.25bn of
investment in green economy infrastructure
by 2030, which includes but isn’t limited to
investments in plastics recycling.
Resilience Collaborative
relationships
Increased market value and
revenue due to reputational
benefits.
We engage collaboratively with our key
stakeholder groups to help find solutions
to the most difficult climate challenges
and help our customers meet their own
sustainability targets.
Mergers and
acquisitions
Reduced operating costs
due to efficiency gains and
increased revenue.
We continue to develop our capabilities
through M&A, which will enable us to
continue to gain operating efficiencies and
new capabilities, helping us to achieve our
ambitious sustainability targets.
Policy and
Legal
Emissions
legislation
Increased operating costs in
order to maintain emissions
compliance and comply with
low emission zones.
Our commitment of a 50% reduction in our
emissions by 2030 is aligned with Science-
based Targets. We have also set a target for
Net Zero by no later than 2050. Achieving
our targets will reduce our expose to
emission-related costs.
Renewable
energy
legislation
Impact on revenue due
to changes in initiatives
available.
The cessation of the renewable obligation
schemes for landfill gas which we currently
receive for our landfill gas operations has
been built into our five-year business
plans. We are exploring other sources of
renewable energy that will allow us to
utilise our large land holding and grid
infrastructure.
Waste
legislation
Impact on revenue and
operating costs due to
change in service demand
and materials.
Changes in legislation have the potential
to significantly impact service demand
and the materials we collect. We engage
productively and transparently with
regulators and policy makers to ensure that
we have foresight of upcoming legislation.
Medium-term impacts arising from
Extended Producer Responsibility (EPR) and
Deposit Return Schemes (DRS) have been
modelled on the current business model.
A greater demand for recycled material as
well as the potential to be involved with the
collecting and processing of the materials
under DRS offers great opportunity for Biffa.
Risks Opportunities
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Sustainability continued
RisksRisks
Summary of our most material climate-related risks – Scenario 2 (business as usual)
TCFD category Sub-topic
Potential financial impact
Strategic response and resilience
Short 1-3
years
Medium
3-10 yrs
Long 10+
yrs
Acute physical
impacts
(increase
in severity
of extreme
weather) and
chronic
physical
impacts
(long-term
climate shifts)
Damage to
property/site
infrastructure
from extreme
weather events
Increased costs due to
physical damage.
Increased insurance
premiums and reduced
insurance availability for ‘high
risk’ areas.
Understanding the exposure of our
operations to the risk from extreme
weather events, including flooding, allows
us to identify business-critical locations
which can then be assessed for climate
change adaption investment. New facilities
incorporate climate change and flooding
measures into their planning phases and
development.
Increase H&S
risk
Increased capital costs as
a result of fire damage to
buildings/vehicles.
Indirect costs due to impacts
on health and wellbeing.
Increase in operational
costs for heating, cooling
and change in operating
practices due to shifting
temperatures.
Whilst the frequency and extent of extreme
weather is hard to predict, we continue to
monitor changing weather patterns on a
short-term basis and take action to mitigate
any negative effects.
TCFD category Sub-topic
Potential financial impact
Strategic response and resilience
Short 1-3
years
Medium
3-10 yrs
Long 10+
yrs
Technology Low emission
technology
Costs to transition to low
carbon technology.
We collaborate with suppliers on
technology advances that will enable
efficiency gains in the use of resources
and operational processes. Our target
on alternative-fuelled vehicles takes into
account the life expectancy of our existing
fleet and allows vehicles to be replaced
when they come to the end of their life
expectancy, however the viability of a wider
roll-out of these vehicles is dependent on
national infrastructure investment and at
present this is not as advanced as we need
it to be.
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Additional
Information
The Risks and Opportunities Identied
Our analysis indicates that the most material risks we face in Scenario
1, are intrinsically linked to changes in policy and legislation along
with technological advancements and innovation that support a low
carbon, energy-efficient economy.
Whilst there are waste and resource-specific elements to these risks,
those that relate to transport and emissions impact most sectors. We
have also considered reputational risks that may arise from Scenario
1, however when considering the mitigation we have in place
through the support from subject-matter experts and monitoring
future changes, these have remained a low risk across all timescales.
The risks identified from this high-level analysis are addressed by our
current business model and will continue to be monitored on an
annual basis.
Scenario 1 also provides significant opportunities for Biffa. These
opportunities include changes in resource efficiency, societal shifts
resulting in increased demand for recycling services and low carbon
materials as well as reputational benefits. These opportunities
are enhanced by England’s Resources and Waste Strategy, which
supports the circular economy and green consumerism. Our
business strategy ensures we are well placed to capitalise on these
opportunities over the next few years.
We have considered the risks we face under a ‘business as usual’
scenario. As with other businesses around the world we could face
changes in market conditions if global mitigation and adaption are
unsuccessful, however the nature and size of these impacts is highly
uncertain. We recognise that the physical impacts from climate
change, primarily related to severe weather events, could pose a
risk to our workforce and facilities in the long term and additional
safety measures and training could be required. We believe the best
mitigation against the risks from this scenario is to support the goals
of the Paris Agreement and make a positive contribution ourselves
and through our value chain.
We recognise that due to the amount of carbon already in the
atmosphere, some increase in extreme weather events and long-
term changes in temperature and rainfall patterns will impact our
business, even if the ‘sustainable’ scenario is achieved. We expect
that these impacts will be of a lesser magnitude compared to the
‘business as usual’ scenario.
Our business continuity planning ensures that we remain resilient to
any disruption caused by extreme weather events, and is informed
by both past and simulated events. Business-critical operations that
are at a higher risk can be assessed for adaptation if required.
Risk Management
We use our well-established risk management framework to review
our climate-related risks and opportunities.
Risk Governance
The Board recognises its responsibility to ensure that the Group’s
internal control systems and risk management framework are
effective. The Audit Committee has specific delegated authority to
review the effectiveness of the risk management and internal control
processes during the year.
The Group Executive Team is responsible for the day-to-day risk
management and control. This ensures that management provides
leadership and direction to employees so that our overall risk-taking
activity is kept within our risk appetite.
Biffa operates the ‘Three Lines of Defence’ model (page 76) to
manage the ongoing effectiveness of risk and control, to define
the relationship between the various management and oversight
functions, and to demonstrate how responsibilities are allocated. The
Internal Audit function assesses our risks and controls independently
and objectively.
Risk Appetite
The Board sets our overarching risk culture and appetite and ensures
that we manage risk appropriately across the Group. Health and
safety, legal, regulatory and environmental risks (including climate-
related risks) are our major focus. Biffa dedicates significant resources
and focus to managing and monitoring these risks, with other key
risks considered and reviewed alongside. In each case, controls and
mitigating actions aligned to the risk appetite are put in place.
Risk Assessment
A risk assessment matrix is used to ensure that risks are assessed
consistently. This matrix considers the likelihood of the risk
materialising and its potential impact. We assess both the inherent
risk, before any mitigating actions, and the residual risk, after
considering mitigating actions and controls. We also identify any
additional activities that could be undertaken to further mitigate
the risk.
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Sustainability continued
Emerging Risks
In addition to known risks, we identify and analyse emerging risks
and the need for mitigation as part of our existing risk management
processes. These risks are reviewed by both the Group Executive
Team and the Audit Committee, and include risks relating to climate
change, such as flood risk arising from high rainfall, and pandemic
and infectious diseases.
Risk Management Processes
The Group’s risk management processes are centrally coordinated
utilising a risk management tool, and consider the existing business
model and future strategy. Within this tool, climate-related risks each
have a separate section, but these risks are also included within the
operational risk profile for each area of the business where relevant.
An established network of ‘Risk Champions’ is in place to facilitate
updates to risks during the year. The Risk Champions are members
of the senior management team and take a lead role in engaging
local management to identify, agree and update risk information on
a regular basis.
The Group Executive Team are updated regularly on the principal and
emerging risks and ownership of each of these risks is assigned to
individual members of the Team.
The Audit Committee undertakes regular reviews of the principal and
emerging risks, as identified and assessed by management through
the above process. The Audit Committee also reviews summaries of
the work undertaken by the Internal Audit function, which operates a
risk-based annual plan of assurance reviews.
Our risk management systems are intended to mitigate and reduce
risk to the lowest extent possible; however, we cannot eliminate
all risks to the Group. The risk management processes can only
provide reasonable and not absolute assurance against material
misstatement or loss.
Metrics and Targets:
Our series of climate change indicators, that are relevant to our
business, enable us to assess our effectiveness of integrating climate-
related risks and opportunities into our business across multiple time
horizons. Our targets positioned under our ‘tackling climate change’
pillar are:
• Reduce our Scope 1 and 2 carbon emissions by 50% by 2030
from a 2019 baseline (746,925 tCO
2
e) and achieve Net Zero by
no later than 2050. During FY23 we will be developing Scope 3
targets and submitting these to the SBTi along with our Scope
1 and 2 targets for validation.
• Introduce 10% non-fossil-fuelled collection vehicles by 2025.
• Increase collection route efficiency by 10% by 2025.
• 50% of our inputs to landfill to be moved by rail by 2025.
• Purchase 100% renewable energy by 2025.
• Develop 50MW of renewable energy capacity through
installation of solar farms on our landfill estate by 2025.
These targets are detailed within our sustainability strategy,
‘Resourceful, Responsible’, with performance against these indicators
shown in the table below with further detail on pages 34-35 of this
Annual Report. Our internal audit provides a thorough examination
of our performance data and select KPIs are also externally assured.
The assurance statement is published here: www.biffa.co.uk/
sustainability.
Reducing our own carbon emissions and developing our ability to
offer low carbon services to our customers is critical to maintaining
our position as a leader in UK sustainable waste management.
Our emissions reduction target is built into the Group Balanced
Business Plan (BBP). This influences our divisional BBPs which in turn
determines senior leaders’ remuneration policy. Where relevant, the
other metrics are incorporated into our divisional BBPs.
Metric 2021/22 2020/21 2019/20
Total Scope 1 and 2 emissions
(Location-based) (tCO
2
e) 537,950 533,187 646,677
% reduction in Scope 1 and 2
emissions since 2019 27.98 28.62 13.42
Scope 3 (tCO
2
e) 622,120 484,568 524,212
% of alternative fuelled collection
vehicles 1.90 <1 0
Collection route efficiency (lifts
per km) 0.49 0.42 0.48
% increase in collection route
efficiency from 2019 2.08 -12.50 0
% landfill inputs transported by
rail 24 21 15
% inactive landfill inputs
transported by rail 43 35 23
% renewable energy purchased 72 60 0
Solar power development
Two sites
selected for
planning
application
process
Comments on the data
1 During 2020 we moved our main portfolio where we are responsible for the energy supplier
onto a renewable tariff.
2 Collection route efficiency was significantly impacted by Covid-19. FY22 has been another
challenging year with Covid-19 impacting the start of the year and driver shortages, however
positive progress has been made towards our 2025/30 target.
Task Force on Climate-related Financial Disclosures (TCFD) continued
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Additional
Information
We have seen a reduction in our Scope 1 and 2 carbon emissions of almost 28% compared to our 2019 baseline
1
. When taking into account
our purchasing of renewable energy, this reduction is 29.88%.
This has been achieved through the continued improvement of our landfill gas capture and efficiency gains within our operations, including
the removal of 31 diesel RCVs to date as a result of our acquisitions of Simply Waste and Viridor, equating to a saving of 895 tCO
2
e per year.
We will continue to explore further collection route efficiencies and already have plans in place to remove a further 29 RCVs across the first half
of FY23.
In FY20 we transitioned our portfolio to a new energy management system to aid more granular data analysis. Following our SECR audit in
June 2021, carried out by Carbon Decoded, an independent auditor, it was recommended that we remove our reliance on manual meter
readings. As a result, during May 2022 we have undertaken a Non-Half Hourly (NHH) meter replacement exercise, working with our electricity
provider to replace over 150 older manual meters with newer dial-in meters. Together, these actions allow us to have quicker access to
accurate data in order to analyse trends and identify problems and gives us a greater understanding of our true electricity usage. As a result,
we are now able to focus on implementing the most effective energy efficiency measures.
We operate a rolling upgrade programme of energy efficiency improvements across our sites and complete an annual survey to assess
progress. This year’s results show 48.8% of survey respondents have installed LED lighting and 14.6% have installed motion sensors. This is an
increase on FY21 when the results were 33% and 3.5% respectively.
In our Municipal business, we have undertaken an energy and utility audit to identify potential areas for energy efficiency improvements to be
made. By identifying our sites individual energy usage, we can take more effective measures to reduce the energy consumption. The plan for
FY23 is to roll out a similar audit across our I&C estate.
As a result of our positive progress to date, we are well on course to achieve our sustainability strategy targets to reduce carbon emissions by
30% by 2025 and 50% by 2030.
UK GHG Emissions and Energy Use Data for period 1 April 2021 to 31 March 2022
Emissions from: (in tonnes CO2e)
Current
reporting year
2021/22 2020/21 2019/20
Scope 1 507,630 506,228 617,527
Scope 2 (Market-based) 16,079 20,355 29,150
Scope 2 (Location-based): Electricity, heat, steam and cooling 30,320 26,959 29,150
Total Scope 1 and 2 emissions (Market-based) 523,709 526,583 646,677
Rebased Scope 1 and 2 emissions (Market-based) 531,825 547,435 668,232
Total Scope 1 and 2 emissions (Location-based) 537,950 533,187 646,677
Rebased Scope 1 and 2 emissions (Location-based) 546,552 554,039 668,232
Scope 1 and 2 (Market-based) intensity ratio – tCO
2
e per £m revenue 363 505 556
Rebased Scope 1 and 2 (Market-based) intensity ratio – tCO
2
e per £m revenue 369 525 575
Scope 1 and 2 (Location-based) intensity ratio – tCO
2
per £m revenue 373 512 556
Rebased Scope 1 and 2 (Location-based) intensity ratio – tCO
2
e per £m revenue 379 532 575
Scope 1 and 2 (Market-based) intensity ratio – tCO
2
e per employee 53.75 63.92 80.32
Rebased Scope 1 and 2 (Market-based) intensity ratio – tCO
2
e per employee 54.55 66.45 83.00
Scope 1 and 2 (Location-based) intensity ratio – tCO
2
e per employee 55.21 64.72 80.32
Rebased Scope 1 and 2 (Location-based) intensity ratio – tCO
2
e per employee 56.09 66.45 83.00
Total Scope 3 622,120 484,568 524,212
Rebased Total Scope 3 686,639 667,857 712,434
1 Based on the location-based methodology.
2 Based on the market-based methodology.
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Sustainability continued
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Comments on the data
1. Biffa collects and reports environmental data in accordance with the guidelines of the Greenhouse Gas Protocol. The CO
2
e emissions were calculated using the BEIS 2021 emission factors. We have
followed the GHG Protocol Scope 2 Guidance requiring dual reporting using two emission factors for each site - Market-based and Location-based. Prior to FY21 the Location-based method has been
used as a proxy for the Market-based method.
2. Scope 1 encompasses direct GHG emissions from energy generated from fossil fuels used within our operations such as diesel, gas and oil. It also includes our landfill gas emissions. Scope 2
encompasses indirect GHG emissions from the on-site generation and purchase of electricity using market-based emissions data. Scope 3 encompasses indirect GHG emissions in Biffa’s value chain
(upstream and downstream).
3. Limited assurance is provided by Bureau Veritas for Scope 1 and 2 emissions.
4. The data reported is based on our operational control. Reported emissions are within the UK only. No direct operations are carried out offshore. Our investments in Joint Ventures are included within
Category 15 of our Scope 3 emissions as they fall outside our operational control. Details of our investments in Joint Ventures can be found on page 25.
5. Scope 3 emissions includes purchased goods and services, capital goods, fuel and energy related activities, transportation including customers visiting CSG retail stores, waste generated in operations,
business travel, employee commuting, end-of-life treatment for products sold by CSG, leased assets and investments.
6. We have extended the boundary of our Scope 1, 2 and 3 emissions to include acquired businesses – CSG (acquired February 2021) and Viridor (acquired in September 2021). We have integrated these
to the previous year’s reporting using the ‘all-year’ methodology. The full 12 months of CSG and six months data for Viridor for FY22 has been used in these calculations. In the rebased calculations we
have used the six months of Viridor data and applied it for a full year for FY22. The appropriate BEIS emissions factors have been applied to each year.
Energy Consumption within the UK
Climate Change/GHG emissions table (kWh)
Current
reporting year
2021/22 2020/21 2019/20
Methane emissions (utilised) 389,925 422,215 434,148
Diesel fuel used 457,705,737 342,316,629 449,367,933
Red diesel used 77,179,734 71,590,025 80,800,198
Unleaded petrol used 643,513 196,097 846,055
Kerosene used 87,499 87,542 106,848
LPG 2,133 12,162 8,164
Natural gas 9,389,522 9,229,118 7,700,877
HVO 1,670,603 – –
Purchased electricity 108,025,000 81,480,688 76,585,813
Self-supplied electricity 34,769,481 34,155,151 37,460,319
Total kWh 689,863,147 539,489,627 653,310,355
Comments on the data
1. To calculate the above consumption figures, we used methodology based on the Streamlined Energy Carbon Reporting (‘SECR’) compliance scheme.
2. The data reported is energy used within the UK only. No energy is used offshore. All Biffa’s operations are UK-based.
3. SECR data is audited by Carbon Decoded.
4. ESOS phase 3 audit due by December 2023.
Energy Generation
Current
reporting year
2021/22 2020/21 2019/20
Generation (GWh) 383 396 423
Carbon benefit (k tonnes CO
2
e) 81 92 108
46
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Additional
Information
Caring for our people,
supporting our communities
Be recognised as a top
ranking employer and
continue to support good
causes to make a real
difference
Caring for our people
Our team of more than 10,000 colleagues are delivering on Biffa’s
purpose of changing the way people think about waste and deliver
essential waste services to homes and businesses across the country.
We strive to create an inclusive environment where differences are
valued, and our workforce can thrive.
Our people strategy guides our priorities with a focus on attraction,
leadership, engagement, development and performance and our
policies underpin this. They ensure that our positions on key topics
are clearly defined and communicated to our employees and that
we take consistent and appropriate action.
The labour market has been very challenging this year, particularly
with the nationwide shortage of HGV drivers, which resulted in
pressures on pay, coupled with increased inflation and higher
staff absenteeism, as a result of the ongoing impact of the
Covid-19 pandemic.
We responded decisively by introducing a driver referrals scheme and
running a national HGV driver campaign with the Sun newspaper,
which was designed to attract more drivers into our industry. We
also ran a ‘loaders to drivers’ programme, which enabled current
employees to diversify their skill base, as well as providing more
flexibility to the organisation and introduced our Driver Academy,
to ensure a steady pipeline of talent into our industry. We also
increased pay for our frontline workforce in line with market
demand and increased our Biffa Minimum Wage to 20 pence above
National Living Wage, helping us move further towards Living Wage
Foundation rates.
We also continued to prioritise health & safety performance. We
operate in a high-risk industry and want to ensure our people, and
the public, are kept safe. Safety is firmly embedded within our culture
and championed at all levels through our Safer Together pact.
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Keeping our
people safer
together
Our Performance
The pandemic had a significant impact upon our business as
our key workers kept the business going under very difficult
circumstances, so that we could continue to provide our
essential services to homes and businesses across the UK. This
year, we emerged positively and the Covid-19 related factors
that contributed to our previous year’s performance subsided.
We were able to reconnect with our workforce and re-engage with
them using our Safer Together pact as the platform for meaningful
conversations about H&S. As a result, we have now seen a reversal
of the deterioration in our frequency rates for incidents that result in
time off work, both of which are now in decline, which we believe is
sustainable.
Our frequency rate for lost time injuries peaked during the year
at 0.48 per 100,000 hours worked but we have now reversed this
trend and as we exited full year, our LTI rate was 0.39. We continue
to improve, and our aim is to return to pre-pandemic levels of
performance (LTI rate of 0.20) by the end of the coming year as we
push for our 2030 target of 0.14.
The frequency rate for the most serious incidents, i.e., those
reportable under the RIDDOR regulations, saw an even better
improvement. Our in-year peak was 0.31 injuries per 100,000
hours worked, but as we exited full year this was down to 0.17
and continues to fall.
For more information on RIDDOR / https://www.hse.gov.uk/riddor
Our Achievements
Our improvement in performance hasn’t happened by chance.
We’ve moved forward progressively in several areas that we
believe will help us to ensure that these improvements are
sustainable. Notable developments include:
• We have implemented a programme to reduce serious, at-fault
road traffic collisions. This uses fleet intelligence software to help
our drivers understand and improve their driving behaviour
which will keep them, and the public, safer together.
• We continue to produce ‘learning from incidents’ videos where
injured employees can tell their stories so that their colleagues
can learn, first hand, how behaviours can prevent workplace
injuries.
• We have seamlessly integrated operations from our two major
acquisitions (Viridor and Simply Waste) into our H&S management
system, without any material impact on performance.
• We have retained the external certification of our H&S
management system to the internationally recognised ISO 45001
standard.
• The British Safety Council has once again awarded us a maximum
five stars in their comprehensive, contemporary, and quantified
audit process of our R&E division. This allowed us to test our H&S
performance against the latest legislation, recognised standards,
and best practice techniques.
• We have adopted the Top-Set
2
incident investigation
methodology to help us to apply the insight we gain from
incidents into effective preventive strategies.
• A positive review by an external risk consultancy
3
of our Group
Engineering Technical Authority Organisation has recognised the
value it brings by raising H&S standards across the business.
1. https://www.hse.gov.uk/riddor/
2. Kelvin TOP-SET Methodology - Kelvin TOP-SET (kelvintopset.com)
3. Risk | Arthur D. Little (adlittle.com)
2022 0.39
2021 0.41
2020 0.23
Lost time injury rate
0.39
2022 0.17
2021 0.26
2020 0.20
RIDDOR rate
0.17
Sustainability continued
Health & Safety
Caring for our people,
supporting our communities
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Additional
Information
Our year
Our Challenges
The shortage of skilled and capable workers was another
significant factor in our H&S performance this year, like
many of our peers, despite the reduced impact of Covid-19.
The need to recruit and train high numbers of staff placed
an increased stress on our resources and required us to
constantly refresh our H&S messaging.
The nature of the waste we handle means that the risk from fire at
our premises requires constant attention. The removal of lithium
batteries and, seasonally at least, disposable barbeques in general
waste, is another industry-wide problem that requires industry-wide
and societal change.
Another big issue for the waste sector is people sleeping in and
around bins. We continue to work with our peers, supply chain
and customers to find ways to prevent incidents which can have
devastating consequences. We are also engaging with third-sector
organisations such as St Mungo’s, Crisis, Streetlink and Simon
Scotland, to try and influence the societal factors behind this
challenging issue. We participated in the much-publicised inquest
into the tragic death of Corrie McKeague, and we subsequently
responded constructively and positively to the Report to Prevent
Future Deaths issued by the coroner and continue to work with the
HSE and other stakeholders to improve risk controls relating to rough
sleepers across our sector.
Our employees continue to experience challenges from impatient
drivers who drive on the pavement when passing our vehicles. This
places our employees, the vehicle driver and members of the public
at significant risk. Instances of violence and aggression towards our
employees are also an ever-present risk. We had hoped that the
key-worker status our employees gained during the pandemic would
have changed attitudes more widely, but it remains a challenge for
the entire industry.
Our Plan
We continue to develop our Safer Together pact, and to
help us address some of the challenges we face, we have
developed a progressive, nine-point plan so we can achieve,
and go beyond, our 2030 targets.
Our focus will be on standards, tools, and people:
Standards
• Simplified management systems written with operations in mind.
• Effective and pragmatic controls for fire and other key risks.
• Focused, risk-based assurance.
Tools
• Data-driven insight and decision making.
• Scorecards that measure leading and lagging indicators.
• Using investigations to improve learning.
People
• Behaviours to bring our Safer Together pact to life.
• A positive culture to maximise engagement.
• Value-adding support from the H&S team.
This year has represented a turning point for H&S at Biffa. After a
very difficult period during the Covid-19 pandemic, we are now
seeing meaningful improvements in keeping each other safe. We
know waste is a hazardous industry and we remain committed to
continually reducing the likelihood and severity of workplace harm.
Our H&S function has a new management team in place who are helping
us to realise our H&S vision of being a waste industry leader where people
are, and feel, safer together. Safer because we keep pushing to improve and
together, because it’s a team effort; every Biffa employee has a role to play in
looking out for one another.
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Sustainability continued
Our Purpose and Values
We are changing the way people think about waste
We were delighted to launch a new set of values in the year, which
were co-created with our employee forum, the Biffa Involvement
Group (BIG), and were reviewed and approved by the Board. By
working with BIG, we captured the essence of Biffa and ensured
that the language used was meaningful and understandable.
Our values complement our purpose and our vision – to be the
leader in sustainable waste management. Our vision, purpose and
new values form a roadmap that can be followed by everyone at
Biffa, ensuring we have the right culture in place so that Biffa remains
a great place to work.
We were thrilled to win the ‘People and Purpose’ Award at the
Personnel Today Awards for our vision, purpose and values campaign
‘Little Acts Big Impact’, which is all about how the little acts our
employees do each day all contribute to a much bigger impact in
helping to change the way people think about waste. The award
recognises how we have connected our people strategy with our
purpose and driven employee engagement.
Our New Values
Our values demonstrate that it is not just what we do that is important, but how we do things and go about our everyday
tasks – and more importantly, how we work together as a team.
Working collaboratively with BIG, which encompasses c.100
colleagues from all across Biffa, the majority of whom are on the
front line, we developed four distinct values.
The BIG crew helped us to create the values by defining each
one and the meaning behind it to ensure they were the right fit
for Biffa.
What our BIG Team had to say:
By living our values every day,
our employees are contributing
to a much bigger impact –
helping to change the way
people think about waste.
#LittleActsBigImpact
Caring for our people,
supporting our communities
“The new values are applicable to
all employees, from directors to
loaders and drivers.’’
Roy
Administrator, based in the Midlands
“‘Simplifying the values to words
that actually mean something
and are relatable is what was
needed to help get across the
right message.’’
Jane
Operational Support Manager, based in the North
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Additional
Information
Wellbeing
Supporting our employees’ wellbeing continues to be a big focus
for Biffa. During the year, we continued with the roll-out of our
E.N.E.R.G.Y programme, which began in 2020 and covers emotions,
nutrition, exercise, rest, goals and you, focusing on what we all need
to consider, to provide us with the best chance of staying fit and well.
We specifically focused on mental health awareness, which will be
our continued area of focus in FY23.
Since the year end, we’ve been focusing on recruiting a number of
Mental Health First Aiders to bolster our support for our people who
are experiencing a mental health issue or emotional distress. We’ll
also be focusing on training managers to be able to better recognise
and support mental health, alongside a range of resources and our
employee helpline which is available 24/7 to support anyone at Biffa
or their family.
We also helped employees to set measurable goals through a
dedicated e-learning module all about setting ‘SMART’ wellbeing
objectives and tracking their physical, mental and financial wellbeing
by launching dedicated resources for each. This culminated in a
Wellbeing Week, held towards the end of the year, where employees
were provided with materials and activities, such as financial
wellbeing sessions with Barclays bank, yoga, mindfulness classes and
relaxation clubs.
Welcoming our Workforce back to the Oce
As lockdown measures started to lift in the UK, we began a ‘welcome
back to the office’ campaign for employees at our main offices, the
majority of whom had been working from home.
This was designed to enable employees to feel more comfortable
with returning to the office on a more permanent basis, allowing
them to talk and engage more with their colleagues, as well as to
reinforce the principles of our Smarter Working + programme, which
supports flexible working and a better work-life balance.
Our people received a goody bag of branded items and took part in
engaging activities, such as bake sales, group walks, relaxation and
meditation sessions and lunch with our Group Executive Team.
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Sustainability continued
Engaging our People
We want our people to be engaged in their work and with their
workplace. Research shows that organisations with high levels
of employee engagement are more efficient and effective and
that highly engaged employees care about the future of their
organisation and are motivated to help it achieve its objectives. We
have doubled engagement over the past 10 years and our ambition
is to be in the top 25% of all companies in the UK, which we are now
only 8 percentage points away from achieving.
Bia Buzz
Last year, we launched our first digital employee engagement
survey, Biffa Buzz, which is not only 100% online, but also provides
managers with more actionable insights.
We worked hard this year on delivering tangible actions following the
results of last year’s survey. This included placing a greater focus on
employee development and career progression, employee benefits,
communications and wellbeing. In response, we:
Improved our benefits:
• Enhanced our ‘Family Friendly’ policies (see page 55).
• Introduced a fuel discount card giving employees up to 5% off
diesel and 2p off a litre of petrol.
• Continued our Eco Drive scheme as a tax efficient way to
lease environmentally friendly electric cars and our ShareSave
scheme, giving employees the chance to buy shares in Biffa at a
discounted rate.
Provided more opportunities to communicate:
• Held our first-ever in-person BIG meet-up, which allowed
employees to meet with our senior team and discuss what’s
important to them.
• Worked with managers to ensure that local Buzz action plans
were implemented, with teams being updated regularly on
progress.
Offered more development and career opportunities:
• Published a training catalogue with opportunities to develop a
nd grow, and promoted our Know How learning platform for
general training.
• Enhanced our H&S training.
Prioritised wellbeing:
• Enhanced our E.N.E.R.G.Y. programme with various wellbeing
challenges and awareness days (see page 51).
• Launched a weekly relaxation club.
Board Workforce Engagement Activities
David Martin, our Senior Independent Director and Non-Executive
Director, has Board responsibility for workforce engagement. As part
of his role, David attended several workforce-related events over
the course of the year, including presenting on the role of the
Board and Non-Executive Directors at our BIG employee forum.
He was joined by Claire Miles, our Remuneration Committee Chair,
who gave an overview of the role of the Board and engaged on
executive remuneration.
David also attended our senior leader strategy event, our virtual
manager conference, our Diamonds Awards ceremony and the
Group Executive Team session to consider the annual employee
engagement survey results.
David said:
‘‘ I sensed a continuing high level of engagement and a real pride
in working for Biffa and an increasing awareness and buy-in to
the overall strategy, particularly around sustainability.
‘‘Once again, the Diamond Awards were a real reflection on
the great things that individuals, and indeed teams, have
delivered within the workplace and the communities they serve
and was greatly appreciated by all attendees. There was an
understandable sense of fatigue at the challenges of working
through Covid-19, but it was encouraging to see a genuine
appreciation of Biffa’s continuing focus on initiatives that
support individuals’ health and wellbeing.
‘‘The first ‘in-person’ gathering of BIG was very well attended
(c.100 employees) and was found to be very useful by the vast
majority. I believe that within BIG there is a thirst for knowledge
that can be built upon going forward.’’
David Martin
Non-Executive Director for Workforce Engagement
For details of how the Board has considered workforce interests during the
year in its decision making see / page 109
1. 72% response rate to Biffa Buzz.
Including the engagement scores
of c.2,000 employees who joined
the Group through acquisition
our score remains at 59%, which
is 3% above the UK average.
Caring for our people,
supporting our communities
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Additional
Information
We continue to maintain two-way engagement with our workforce,
ensuring that they are kept up to date with the latest business
developments and answering their questions. Our channels include
regular all-employee video calls with our Group Executive Team, CEO
vlogs, conferences and news updates via our intranet and employee
app, Biffa Beat. We were delighted to return to physical events in the
year, hosting our annual ‘Diamond Awards’ as well as our Leadership
Conference in person.
Biffa Beat helps us to communicate and engage with our frontline
workforce, enabling them to openly ask questions and voice their
opinions at the touch of a button.
Fundraising through Bia Beat to support Ukraine
At the end of the year, we ran a fundraising campaign to support the
people of Ukraine. We launched a dedicated tile on Biffa Beat with
fundraising initiatives that our employees could partake in to help
raise money. We even asked them to vote, through a dedicated poll
on Biffa Beat, on which charity they believed would benefit the most
from our fundraising.
Our employees chose the British Red Cross, who are providing
psychological and social support and essentials such as food and fuel
to the people of Ukraine.
In just four weeks, our employees
collectively raised >£7,500 for Ukraine,
which was match funded by Bia to
bring the total raised to >£15,000.
This demonstrates how powerful Biffa Beat is in ensuring our
employees stay connected, enabling us to quickly engage with them
about important matters.
Learning and Development
We continue to invest in the personal development of our
colleagues, by making learning accessible to everyone at Biffa. Since
the pandemic began, we have shifted our focus to virtual as well
as physical learning modules, in a broader range of subjects, using
the number of training interventions per employee to measure
our success. We have a target to double training interventions
per employee by 2030, and this year we made good progress by
increasing the number of training interventions to 4.35 days per
employee.
The focus of our training this year has been on driver attraction (see
page 47) as well as improving driver behaviours, which benefits the
business from both an H&S perspective (fewer accidents) and from a
cost and sustainability perspective.
Working with Jobcentre Plus, we have been able to access diverse
talent within our communities and help people into employment,
with 30 unemployed young people offered six-month work
placements through the Government’s Kickstart scheme
1
this year.
These placements have been in a wide range of areas including
Operations, Customer Services, Human Resources and Fleet, and
have helped build the employment skills and confidence of these
individuals to help them into employment. Seven have been offered
ongoing work with Biffa.
We also continued our ‘Mates to Manager’ programme, designed for
people wishing to be considered for, or taking their first step into,
supervisory management. This programme, through its six modules,
explores the key areas of successful management, focusing on topics
such as effective coaching, performance and financial management.
We also continued our Advanced Leadership Programme (ALP) to
help accelerate the development of some of our brightest talent
across the organisation and our apprenticeship programmes. We
kicked off our second ALP cohort in March 2022 with 17 people
joining the programme.
Anti-bribery
We have a long-standing anti-bribery policy which sets out the
standards of behaviour that is expected of anyone working for
Biffa and third parties working with Biffa. It includes guidance and
the requirements for our people on the giving and receiving
of business gifts and hospitality. A bribery risk assessment was
completed during the year and a number of recommendations were
made including a review of the policy. Following review, a new anti-
bribery policy and separate gifts and hospitality policy and guidance
have been created. These were approved by the Board at its April
meeting and were published in June 2022. There was also a review
of the e-learning module on this topic which has been updated
to reflect the new policies and guidance. The e-learning module
is required to be completed by all new starters with a Biffa email
address. Our existing workforce with an email address will also be
required to complete the e-learning to refresh their understanding
in this area. Any breaches of policy are investigated by the Internal
Audit function and are reported to the Audit Committee (see further
details on pages 118-125).
1. https://www.gov.uk/government/collections/kickstart-scheme
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D&I Training
In the year, we delivered D&I manager
briefings, designed to be delivered as
bite-sized toolbox talks to our frontline
employees, who also have access to our
D&I tile on Biffa Beat, where interactive
content, videos and campaign
communications are all shared. We have
also launched an anti-harassment and
bullying toolbox talk, designed to raise
awareness of bullying and harassment
and what to do if it happens at work.
Sustainability continued
Women in Waste Group
In 2020, we established our Women in Waste
group to support, empower and build the
confidence of women at Biffa, to attract
and develop more women, raise awareness
of gender D&I and to raise the profile of
women within the waste sector. During the
year, membership grew to over 200 and the
group established a mentoring programme
and launched our ‘feminine fit’ PPE, which is
designed specifically for the female form. The
group held four meetings during FY22 and
heard from various guest speakers including
Claire Miles (our Non-Executive Director).
Caring for our people,
supporting our communities
Championing Diversity & Inclusion (D&I)
We are creating an inclusive culture by promoting inclusive
leadership behaviours with the ambition of creating a
representative workforce. Our D&I strategy and policy is
underpinned by our values and is key to our desire to care for our
people and provide an environment where all our colleagues
can thrive. We are taking a holistic approachtoD&I,through
acknowledging and celebrating the fact that we are all different
– as we believe it’s our differences that make usstronger as an
organisation. Each year, we develop a D&I action planwhich is
reviewed by the Group Executive Team and the Nomination
Committee.
The waste sector is traditionally a male-dominated industry,
with the vast majority of operational teams being male. Across
the Group, the workforce comprises 20% female and 80% male
employees. We’ve taken great steps this year to improve the gender
balance, having exceeded the Hampton-Alexander target for both
the Board (43%) andthe Group Executive Team and their direct
reports (35%). We also met the Parker Review ethnic diversity target
following Board changes in the year.
Our Gender Statistics
Females on
the Board
Female
Executives
Female Direct Reports
of the Group
Executive Team
Female Executives
and Female Direct
Reports of the Group
Executive Team
Female
All Employees
No % No % No % No % No %
31 March 2021 1 16.7% 3 33.3% 12 27.9% 15 28.3% 1,670 18.2%
31 March 2022 3 42.9% 3 33.3% 15 35.7% 18 35.3% 2,043 20%
Difference +2 +26.2% 0 0 +3 +7.8% +3 +7.0% +373 +1.8%
Further details on our D&I Policy can be found in our non-financial information statement on page 84. More information on our D&I strategy (including targets for the
next 10 years) can be found in our Sustainability Report / www.biffa.co.uk/sustainability
Although women account for only 20% of the overall workforce, they are
better represented within professional and managerial roles, which means
on average they receive higher levels of pay and results in a negative
mean gender pay gap of -2.6%. However, we have a positive median
gender pay gap, which indicates that the median male is paid more than
the median female. Both figures have been significantly impacted by the
changing composition of our workforce with the acquisition of CSG, who
employ a larger number of women in relatively lower paid frontline roles.
More information can be found in our Gender Pay Gap report for FY21:
https://www.biffa.co.uk/about-us/policies.
We understand that gender is just one area of diversity and that there is
much more to do to create a consistently inclusive environment, where
differences are valued and where all colleagues can feel a sense of belonging.
Our D&I calendar continues to embrace and recognise a wide variety of
topics and events to promote awareness and action including: National
Inclusion Week, Black History Month, Pride Month, International Women’s
Day, International Men’s Day and International Day of People with Disabilities.
We also recognise and celebrate different religious and cultural observances
in order to raise awareness and embrace the richness of our diverse
workforce, such as Ramadan, Eid-al-Fitr, Eid al-Adha, Diwali, and Christmas.
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Additional
Information
We’re Family Friendly at Bia
Supporting our employees both inside and outside of work is one of our top priorities. We’re keen to make sure everyone
at Biffa feels like they have the right level of flexibility and support to do their job well, whilst balancing family life.
Following a review of our policy framework, in order to support
our D&I strategy and further improve our employee proposition,
in 2021 we launched a new suite of ‘family friendly’ policies, which
include the following benefits:
• Company maternity pay increased to 26 weeks full pay and 13
weeks half pay (inclusive of statutory maternity pay).
• Company paternity pay increased to two weeks full pay
(inclusive of statutory paternity pay) and optional two weeks
unpaid leave.
• Flexible return to work option where the individual can work
80% of contracted hours on full pay for the first three months.
• Child’s first (adoptive) birthday paid leave for both parents.
• Child’s first day of school paid leave for both parents.
• Up to three days paid leave for IVF treatment per cycle.
We also updated our flexible working policy, introduced a new
menopause policy, sabbatical policy, retirement policy and a
volunteering policy, which includes one day’s paid leave for team
volunteering activities.
The response to the policies has been extremely positive, helping
us to become an employer of choice and will enable us to attract
and retain key talent.
Pride Group
We are actively supporting and educating on other strands
of diversity and have had great success with our Pride group,
representatives of which received a Diamond Award for our Pride
Campaign, which helped to raise awareness and educate the
business about the LGBTQIA+ community. This received great
engagement and feedback across the business and provided a
network of people for the LGBTQIA+ community to connect with.
Ethics and Human Rights
We conduct our business with honesty, integrity, fairness and respect
and encourage all our people to embrace these principles. Our
employee handbook sets out our expectations and we also have
specific policies including whistleblowing, anti-fraud, bribery and
corruption, disciplinary and grievance, D&I, modern slavery and
human trafficking and corporate responsibility.
Whistleblowing
The Group has a long established whistleblowing policy by which
all employees (or other stakeholders) may, in confidence, report
any concerns where the interests of the Group or others are at
risk. Employees are encouraged in the first instance to talk to their
manager, a higher level of management or a member of the Human
Resources (HR) team. However, in circumstances where this is not
possible, or is inappropriate, the Group has provided an independent,
external whistleblowing hotline, via Safecall, for the reporting of such
matters on a named or anonymous basis.
All reports are entered in the Group Whistleblowing Register and are
treated in the strictest confidence. Any material investigations are
typically reviewed by a review body, which confirms the outcome
and any action to be taken, comprising the Group HR Director,
General Counsel and Company Secretary and other senior leaders as
appropriate, dependent on the nature of the complaint. The policy
is reviewed annually to ensure it is fit for purpose and continues to
reflect best practice.
This year the Group received 79 reports of concerns, ranging across
the categories of dishonesty, health, safety and environment and
people issues. 62 of the cases were investigated as whistleblowing
matters with 16% of the investigations that have been completed
resulting in disciplinary action, changes to processes or systems or
other action.
A Biffa employee benefiting from our family friendly policies.
55
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Sustainability continued
Caring for our people,
supporting our communities
Ride for Freedom
A group of determined Biffa cyclists took to the road,
joining forces with Ride for Freedom – a social enterprise
movement that undertakes inspiring cycling challenges
to raise awareness of modern slavery.
Starting in Newcastle, four teams took part in the relay challenge
to pass on a padlock to be attached to a ‘Freedom Wall’ at Biffa’s
head office in High Wycombe, showing support and raising
money for victims of MS.
Across four days, Biffa cyclists collectively cycled 248 miles,
with an additional 526 miles pledged by supporters,
which was a major triumph for the team and the Ride for
Freedom movement.
Tackling Modern Slavery
Modern Slavery (MS) is unfortunately a growing world-wide issue,
exacerbated by the rapid rise in global migration. Some of the risk
factors associated with MS include country, sector and workforce
demographics. At Biffa, we have a robust and effective approach
towards MS and human trafficking in order to protect our people
and supply chain. We procure goods and services under the Code
of Ethics of the Chartered Institute of Procurement & Supply and
complete due diligence checks on new and existing suppliers.
We have developed a three-strand MS strategy focusing on:
• Raising awareness – we are proud of the efforts we have made
to raise awareness of human trafficking and MS and will continue
to champion internal and external campaigns, promoting
awareness of this important global issue across our business,
supply chains and wider industry.
• Strengthening our response to the threat – we are vigilant
in our practices and policies to identify and proactively deal with
any suspected issues within our organisation or supply chain. We
strive to continuously improve and are not complacent to the
realities of guarding against MS.
• Victim and survivor support – we will expand our support
for any employees or individuals in our supply chain identified
as victims or survivors of slavery or trafficking to prevent re-
exploitation, and to enable rehabilitative care as appropriate.
We work with experienced partners to provide an appropriate,
survivor-centred remediation offering.
Systems and Training
We have strengthened our response to MS and expanded our
support for victims by implementing the following:
• We introduced MS ’Freedom’ champions in high-risk parts of the
business to strengthen our response and support awareness
raising and best practice.
• The Slave Free Alliance provided in-depth ‘Taking Action Against
Modern Slavery’ training to all managers and supervisors working
at Biffa sites with a managed service, as well as MS Champions,
HR, and representatives from Risk and Procurement (c.200
employees).
• Reviewed our MS Policy and introduced support for victims and
survivors identified in our employment or supply chain.
Maintain zero tolerance on MS and
be an acknowledged market leader
in anti-slavery practices, engaging
and collaborating to positively impact
practices beyond our industry.
More information can be found in our Modern Slavery Statement /
www.biffa.co.uk
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Biffa plc / Annual Report and Accounts 2022
Additional
Information
Giving Back to Our Communities
At Biffa we feel it is important to give something back to the
community, and we are proud to do so through our biodiversity
programmes, our Biffa Award funding programme and our charity
partnership with WasteAid. We also actively support campaigns, such
as the British Red Cross Ukraine Appeal, via employee fundraising.
Protecting our National Environment
through Biodiversity
Our current landfill portfolio is around 4,522 acres and around 1,441
acres (over 30%) is currently managed for biodiversity.
Landfill sites offer dedicated space for microhabitats, enabling
endangered species, such as bees and butterflies, a space to thrive.
We have restored >30% of our landll
sites for biodiversity, in line with our
sustainability strategy.
In the year we worked on introducing quality measures for
biodiversity and will be introducing a benchmarking survey in FY23
to align our biodiversity goals to external benchmarks.
However, we must continue to balance biodiversity goals with the
potential repurposing of our sites for new green energy projects,
such as solar power, in line with our sustainability strategy goals.
Social Value Bia Award
Biffa Award is a multi-million-pound environment fund, managed by
the Royal Society of Wildlife Trusts, which utilises landfill tax credits
donated by Biffa. The scheme is regulated by ENTRUST and managed
according to Government regulations.
Since 1997, Biffa Award has awarded grants totalling more than
£180m to community and environmental projects.
.
An independent study conducted by
M·E·L Research in 2021, found that in
the last ve years, over 3 million people
have beneted from Bia Award across
the UK, 22% of which are in areas of high
deprivation.
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Chief Financial Officer’s Review
Significant improvement
from the impact of the
pandemic
“The growth in the year is attributed to both organic
growth and acquisitions, notably the acquisition
of the Viridor collections business and certain
recycling assets.”
Richard Pike
Chief Financial Officer
The business has experienced significant
headwinds versus FY20 including driver
pay and other inflationary impacts, declines
in margins in Landfill Gas (“LFG”) due to
expected lower volumes, and Inerts as a
result of the Westmill Landfill site closure;
and underperformance versus expectation
in CSG and Polymers. Despite this we
have been able to improve overall profits,
primarily due to the flexibility built into our
contracts enabling inflation recovery and
contribution from Simply Waste and Viridor.
Adjusted EBITDA increased from £138m in
FY21 to £195m, surpassing the £174m level
achieved in FY20. A similar improvement
has been seen in Operating Profit, increasing
from a £38m loss in FY21 to an £8m loss
despite the £25m impairment in CSG
Goodwill, £21m EVP dispute write-offs and
£17m charge relating to the HMRC landfill
tax enquiry. Adjusted Operating Profit of
£97m is an all-time record for Biffa.
The Adjusted Operating Profit Margin
however fell to 6.7% in FY22 versus 7.8% in
FY20, primarily because of the decline in
higher margin contributions from LFG and
Inerts.
Group Performance
Financial performance across the Group
improved significantly in FY22 as the
business recovered from the impact of the
pandemic. Most performance measures
have returned to and surpassed FY20 levels.
The growth is attributed to both organic
growth and acquisitions, notably the
acquisition of the Viridor collections business
and certain recycling assets.
Record Statutory Revenue of £1,443m was
achieved, 39% higher than FY21 and 24%
above FY20 (7% excluding acquisitions). The
growth is attributed to both organic growth
and acquisitions, notably the acquisition of
the Viridor collections business and certain
recycling assets.
58
Biffa plc / Annual Report and Accounts 2022
The following investments have been made
in the year:
• The acquisition of the Viridor collections
business and certain recycling assets
for a total consideration of £131m, plus
£17m of lease liabilities.
• Further equity and shareholder loans of
£25m invested into the joint ventures
(“JVs”) facilitating the ongoing build
of our Protos and Newhurst energy
recovery facilities.
• Capital expenditure of £8m to upgrade
plastics recycling plants.
The Viridor business performed strongly
in the seven months of FY22 after it was
acquired. The acquisition has expanded the
Group’s collections business and recycling
capabilities, solidifying our leading position
in UK sustainable waste management.
The integration is ongoing, and the Group
expects to benefit from further synergies in
FY23.
The financial performance of CSG,
acquired in February 2021, has been below
expectations and as a result the acquired
goodwill was impaired by £25m at half
year. The factors disclosed at half year have
continued to impact performance in the
second half of the year, albeit a number of
strategic changes have been made, and
the benefits of these changes have had
a positive impact on the performance in
the last quarter of the year. We expect this
positive trajectory to continue into FY23.
Biffa remains in a well-funded financial
position at March 2022, with headroom of
£341m on the rolling credit facility (“RCF”)
and a Covenant Basis Leverage Ratio of 2.9x,
significantly below the 4.5x limit stipulated
in the lending covenants. This is consistent
with the guidance issued in the March 2022
Trading Update.
Group nancial performance for the last three years is summarised in the table below:
FY22
£m
FY21
£m
FY20
£m
Statutory Revenue 1,443.2 1,042.0 1,163.1
Net Revenue 1,363.9 988.1 1,102.8
Adjusted EBITDA 195.0 138.2 174.0
Operating Profit / (Loss) (8.3) (37.6) 74.1
Adjusted Operating Profit 96.6 44.2 90.5
Adjusted Operating Profit Margin 6.7% 4.2% 7.8%
Statutory Performance
To enable a better understanding of business
performance, certain items are excluded
when calculating the Group’s business
performance. These Alternative Performance
Measures (“APMs”) are also used to enhance
the comparability of information between
reporting periods and the Group’s divisions.
Adjusting Items
Adjusting items are fully explained in the
Appendix to the Financial Statements. The
net impact of adjusting items on Profit
Before Tax was a charge of £104m (FY21:
£82m charge). The main adjusting items
were impairment of the goodwill recognised
on the Company Shop acquisition (£25m),
impact of the negative outcome on the EVP
dispute (£21m), recognition of a provision
for the HMRC landfill tax enquiry (£17m),
strategy-related costs including costs
relating to the systems replacement project
(£5m), acquisition-related costs (£9m) and
amortisation of acquisition intangible assets
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Additional
Information
Biffa plc / Annual Report and Accounts 2022
Chief Financial Officer’s Review continued
(£30m). Tax relating to adjusting items was
a credit of £26m (note the tax credit/charge
figures in the table below sum to the total
statutory tax credit/charge).
The impact of real discount rate changes
on provisions was a £0.3m credit for the full
year and a full reversal of the £17m charge
recognised at half year. This is due to the return
of the discount rate to March 2021 levels.
The total cash impact of adjusting items in
FY22 was an outflow of £11m (FY21: £11m
outflow).
A reconciliation from Adjusted Operating
Profit to Statutory Profit/(loss) after tax is set
out above.
Taxation
The Group remains committed to fully
discharging its responsibilities in respect
of all relevant tax legislation in a clear and
transparent manner based on a collaborative
relationship with all tax agencies. Our tax
strategy is approved annually by the Board
and is available on the Group’s website.
The effective tax rate on Adjusted profit
before tax was 20% (FY21: 22%) due to the
impact of usual non-deductible tax items.
The statutory effective tax rate was 38%
(FY21: 23%), significantly higher than the
prevailing rate due to certain charges being
disallowed for UK corporation tax and Profit
before tax being at low levels. Payments in
respect of corporation tax in the year were
£0.3m (FY21: £0.6m). The Group’s deferred
tax liability balance of £32.5m (FY21: £11.1m)
includes balances totalling £53.7m (FY21:
£40.8m) in respect of accelerated capital
allowances, previously written off goodwill
and losses which will continue to moderate
tax payments in future years.
Earnings per Share
Statutory basic earnings per share improved
from a loss of 13.7 pence in FY21 to a loss of
5.8 pence in FY22. Adjusted basic earnings
per share increased from 7.7 pence in FY21
to 19.7 pence in FY22.
Retirement Benets
The Group operates a defined benefit
pension scheme for certain employees,
which is closed to new entrants, and which
closed to future accrual for the majority
of its members as at 1 November 2013. At
25 March 2022, the IAS 19 net retirement
benefit surplus was £166.1m compared to a
surplus of £112.1m at 26 March 2021.
Capital Allocation
The Group seeks to balance the allocation of
its discretionary capital between shareholder
returns, organic growth opportunities and
the Group’s four key investment areas:
Reduce, Recycle, Recover and Collect. The
main areas of capital allocation are I&C M&A,
Plastics recycling capacity, Energy Recovery
(“ERF”) and the Viridor business acquired
during the year.
In the year c.£8m has been invested in
plastics recycling facilities, while £25.0m of
investment has been made in the form of
shareholder contributions to the ERF JVs. The
Viridor business was acquired for a total cash
consideration of £130.8m, plus £17.0m of
lease liabilities.
Dividends have been reinstated for FY22.
During the year an interim dividend of
2.20p was paid (FY21: nil). The Board is
recommending a final dividend of 4.69p
(FY21: nil).
A reconciliation from Adjusted Operating Prot to Statutory Prot/(loss) after tax is set out below:
FY22
£m
FY21
£m
Change
£m
FY20
£m
Change
£m
Adjusted Operating Profit 96.6 44.2 52.4 90.5 6.1
Adjusted net finance charges (19.9) (14.4) (5.5) (18.7) (1.2)
Share of joint venture (1.1) (0.8) (0.3) (0.1) (1.0)
Adjusted Profit Before Tax 75.6 29.0 46.6 71.7 3.9
Adjusting items:
Onerous contracts
– (10.3) 10.3 1.5 (1.5)
Strategy-related and restructuring costs (4.8) 0.4 (5.2) (1.0) (3.8)
Acquisition-related costs (9.4) (2.0) (7.4) (1.1) (8.3)
Asset impairment (25.0) (21.9) (3.1) (3.8) (21.2)
Unwind of EVP balances (20.8) – (20.8) – (20.8)
Provision for HMRC landfill tax enquiry (17.0) – (17.0) – (17.0)
Amortisation of acquisition intangibles (29.6) (27.4) (2.2) (16.9) (12.7)
Impact of real discount rate changes on provisions 0.3 (20.6) 20.9 4.9 (4.6)
Other items 2.1 – 2.1 1.1 1.0
Statutory Profit / (Loss) Before Tax (28.6) (52.8) 24.2 56.4 (85.0)
Tax credit / (charge) excl. tax credit on EVP unwind (4.5) 12.3 (16.8) (10.8) 6.3
Tax credit on EVP unwind 15.5 – 15.5 – 15.5
Statutory Profit / (Loss) After Tax (17.6) (40.5) 22.9 45.6 (63.2)
60
Biffa plc / Annual Report and Accounts 2022
Finance Income and Charges
Adjusted net finance charges increased £5.5m from FY21, primarily due to the higher borrowing levels required to fund the Company
Shop and Viridor acquisitions. Net finance charges are more consistent year on year as both IFRIC 12 interest income and exceptional
interest income have been recognised in FY22.
A breakdown of net finance charges is provided below
FY22
£m
FY21
£m
Change
%
FY20
£m
Change
%
Interest on net borrowings 9.7 6.7 44.8 10.7 (9.3)
Interest on lease liabilities 9.8 8.5 15.3 8.4 16.7
Unwinding of discount provision 2.4 1.8 33.3 1.6 50.0
Interest on forward contracts 0.1 0.6 (83.3) – 100.0
Pensions and other interest (2.1) (3.2) (34.3) (2.0) 5.0
Adjusted net finance charges 19.9 14.4 38.2 18.7 6.4
IFRIC 12 provision discount unwind 0.4 – 100.0 – 100.0
Exceptional interest income (1.1) – (100.0) – (100.0)
Discount unwind on EVP instrument and IPO costs – – – (1.1) 100.0
Net finance charges 19.2 14.4 33.3 17.6 9.1
Cash Flow
Continued focus on cash delivery has resulted in strong cash generation as the business recovers from the impacts of Covid-19.
A summary of the Group’s cash flows is shown below:
FY22
£m
FY21
£m
Change
£m
FY20
£m
Change
£m
Adjusted EBITDA 195.0 138.2 56.8 174.0 21.0
Working capital movement (including provisions) (16.7) 5.0 (21.7) 15.2 (31.9)
Net capital expenditure (68.7) (47.9) (20.8) (55.8) (12.9)
Net interest paid (19.4) (14.5) (4.9) (16.9) (2.5)
Lease principal payments (56.9) (43.4) (13.5) (50.2) (6.7)
Pension deficit payments (4.3) (4.0) (0.3) (4.1) (0.2)
Employee share scheme purchase (3.6) (4.5) 0.9 (6.0) 2.4
Exercise of share options 0.6 4.9 (4.3) – 0.6
Tax paid (0.3) (0.6) 0.3 (0.2) (0.1)
Adjusted Free Cash Flow 25.7 33.2 (7.5) 56.0 (30.3)
Adjusting items (10.6) (11.0) 0.4 (14.2) 3.6
EfW JV investment (25.0) (9.2) (15.8) (7.4) (17.6)
Acquisitions (net of cash acquired) (122.9) (103.1) (19.8) (5.1) (117.8)
Changes in borrowings 153.9 (59.1) 213.0 0.5 153.4
Equity raise – 97.7 (97.7) – –
Movement in financial assets (4.4) (5.5) 1.1 10.1 (14.5)
Dividends (6.7) – (6.7) (18.3) 11.6
Net cash flow 10.0 (57.0) 67.0 21.6 (11.6)
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Additional
Information
Chief Financial Officer’s Review continued
Return on Capital
Group Adjusted Return on Capital Employed
(“ROCE”) increased from 1.9% in FY21 to 7.0%
in FY22. The recovery did, however, stop
short of the 8.9% level achieved in FY20.
Group Adjusted Return on Operating Assets
(“ROOA”) increased from 9.1% in FY21 to
18.2% in FY22, but again stopped short of
the 19.4% level achieved in FY20.
The increased returns in FY22 are due to
the improvement in Operating Profit as the
Group recovers from the pandemic. Both
measures above are expected to increase
further in FY23 and surpass the FY20 level
as CSG’s performance improves and the
acquired Viridor business contributes a full
year of profits and delivers further synergies.
Cash ow
Adjusted free cash flow has decreased
by £7.5m despite the £56.8m increase in
Adjusted EBITDA, reflecting the step up in
capital expenditure and lease payments
and the unwinding of working capital
as the Group has relaxed Covid-19 cash
management procedures.
The net cash flow of £10.0m represents the
ongoing investments in acquisitions, plastics
recycling facilities and JV ERF construction
activities. Borrowings increased by £153.9m
during the year primarily to fund the Viridor
acquisition.
Systems Replacement Project
A Group-wide IT system replacement
programme was re-launched during the
year, following the integration of the Viridor
acquisition.
Accounting guidance has changed in FY22,
resulting in the majority of IT-related spend
on the transformation project no longer
meeting the requirements for capitalisation.
Instead, these Software as a Service (SaaS)
costs have been expensed as incurred.
£4.6m of costs have been expensed as
adjusting items in strategy-related and
restructuring costs, with a similar amount
treated as adjusting cash items and hence
excluded from Adjusted Free Cash Flow. The
Group is expected to incur costs in the range
£10-15m in each of the following few years.
Net Debt and Borrowings
Group Net Debt is £595.8m (FY21: £456.8m),
representing 3.1x Adjusted EBITDA (FY21:
3.3x). The year-on-year improvement despite
the acquisition of the Viridor business
demonstrates continued strong cash
performance across the Group.
Covenant Basis Net Debt is £578.8m (FY21:
£444.2m), representing 2.9x Covenant
Basis EBITDA (FY21: 3.0x). This is consistent
with the guidance issued in the March
2022 trading update and gives significant
headroom against the covenant limit of
4.5x. It should be noted that currently
the covenant limit is due to fall to 4.0x in
September 2023.
The Group has a target leverage ratio of 3.0-
3.5x on a Covenant Basis.
Covenant Basis Interest Cover is 10.7x,
slightly above the FY21 level of 10.0x. This
also gives satisfactory headroom against the
covenant limit of 4.0x.
During the year, the RCF covenants have
been changed to a post-IFRS 16 basis so that
they are now closely aligned with current
accounting principles. This has increased the
leverage covenant limit from 3.5x to 4.5x.
There were two private placement issuances
during the year. The funds from the first
issuance in July 2021 were used to acquire
the Viridor business with an average all in
cost of 2.73%. The funds from the second
issuance in February 2022 were used to
significantly reduce the drawdown on the
RCF with an average all in cost of 2.49%.
The covenants on the two private
placements and the Group’s surety lines are
all consistent with those of the RCF.
Although the EVP/fluff dispute has now
been concluded, there is still interest
due to pre-IPO shareholders and pre
IPO management. £6.3m has therefore
continued to be included in Group Net
Debt, in line with previous years and
consistent with the arrangements put in
place at the time of the Group’s IPO.
Year end breakdowns of both Group Net Debt and Covenant Basis Net Debt are as follows:
FY22
£m
FY21
£m
Change
%
FY20
£m
Change
%
Cash and cash equivalents 40.8 30.8 32.5 87.8 (53.5)
Bank loans (RCF) (9.0) (197.6) 95.4 (249.0) 96.4
Private placements (345.0) – (100.0) – (100.0)
Lease liabilities (276.3) (283.7) 2.6 (258.0) (7.1)
EVP preference liability (6.3) (6.3) – (6.3) –
Group Net Debt (595.8) (456.8) (30.4) (425.5) (40.0)
EVP preference liability 6.3 6.3 – 6.3 –
Other financial assets 10.7 8.7 23.0 3.3 224.2
Capitalised loan arrangement fees – (2.4) 100.0 (3.0) 100.0
Covenant Basis Net Debt (578.8) (444.2) (30.3) (418.9) (38.2)
62
Biffa plc / Annual Report and Accounts 2022
To align our funding strategy with our
sustainability strategy, we have established
a Sustainability-Linked Finance Framework
linked to two KPIs:
1. Biffa’s scope 1 and 2 GHG emissions
2. Biffa Polymers plastics recycling capacity
The interest rate margin under our RCF will
be adjusted based on performance against
sustainability targets linked to the above
KPIs. We will report our progress on these
targets annually within the Annual and
Sustainability Reports.
Our sustainability-linked finance framework
is available on the Biffa investor website:
www.biffa.co.uk/investors
Landll Tax Matters
• Historical EVP/Fluff Case: The Group
has been engaged in a dispute with
HMRC concerning historical landfill tax.
Biffa has recently been refused leave
to appeal by the Supreme Court and
therefore the dispute is now concluded.
The amounts originally paid to HMRC
are now irrecoverable and of the £60.6m
previously classified as owing to pre-IPO
shareholders and pre-IPO management
in the future, £7.8m will still be payable
in respect of interest and a further
sum, of up to £10m will be due to the
same stakeholders, as and when tax
deductions are obtained by the Group
and approved by HMRC.
• Hazardous Waste: As previously
disclosed, HMRC assessed Biffa for £8.5m
of landfill tax relating to the period 2012
to 2016. Biffa paid these monies to HMRC
in December 2019 and is appealing the
assessment. The cash payment is held on
the balance sheet within prepayments as
we expect to successfully defend
this case.
• HMRC Landfill Tax Enquiry: Biffa
is currently the subject of an HMRC
enquiry (the “Enquiry”) primarily relating
to the interpretation of the qualifying
fines regime set out in in the landfill tax
guidance. HMRC also raised concerns,
based on its analysis of Biffa’s data,
over the potential conduct of Biffa and
specific customers which may have led
to the incorrect rate of landfill tax being
paid. To date, no formal claim for tax has
been received from HMRC and there is
no certainty that HMRC will bring a claim
in respect of the Enquiry.
The potential liability for the relevant
period could range from approximately
£170,000, up to approximately £168m
(being the total amount of protective
assessments issued by HMRC to Biffa
for the period from March 2016 to June
2020) plus penalties and interest. The
total protective assessments figure
has increased from the £153m figure
disclosed by the Group on 7 June 2022
due to the Group subsequently receiving
£15m of further protective assessments
from HMRC.
The protective assessments have been
issued before the conclusion of the
Enquiry to ensure that any claim for
payment of landfill tax that may be made
by HMRC because of the Enquiry is not
time-barred.
A provision of £3m was recognised in the
year to 26 March 2021, based on Biffa’s
best estimate of the liabilities at that
point in time, recognising the fact that
the Enquiry was at an early stage. This
reflected the information that had been
shared with Biffa at that time and the
Directors’ expectations of how the matter
would be resolved. Following the receipt
of further correspondence from HMRC in
February 2022, the provision at the year
end has been increased to £20m.
This reflects Biffa’s best estimate of the
potential liabilities arising from all specific
amounts asserted by HMRC to date.
Further liabilities could however arise, for
example in relation to the interpretation
of Biffa’s responsibilities under the landfill
tax guidance, or in relation to Biffa and
its customers’ conduct, and the cost of
settling any such liabilities is uncertain.
The remaining amount of the total
protective assessments figure has been
disclosed as a contingent liability.
Richard Pike
Chief Financial Officer
5 August 2022
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Additional
Information
Key Performance Indicators
Our financial performance
Organic Net Revenue Growth
(%)
20.0%
2022 20.0%
2021
(11.6)%
2020 2.5%
Acquisition Net Revenue
Growth (%)
18.0%
2022 18.0%
2021
2020 4.5%
Adjusted Operating Profit
Margin (%)
6.7%
2022 6.7%
2021 4.2%
2020 7.8%
Adjusted Return on
Operating Assets (%)
18.2%
2022 18.2%
2021 9.1%
2020 19.4%
Adjusted Return on Capital
Employed (%)
7.0%
2022 7.0%
2021
2020 8.9%
Adjusted Basic Earnings per
Share (pence)
19.7p
2022 19.7p
2021 7.7p
2020 23.1p
Group Leverage Ratio (Net
Debt: EBITDA) (x)
3.1x
2022 3.1x
2021 3.3x
2020 2.4x
Performance
The Group experienced significant
organic net revenue growth as a
result of strong recovery from the
pandemic, offsetting the decline
seen in FY21. Another contributing
factor is the rise in I&C volumes,
surpassing FY20 levels.
Acquisitions of the Green Circle and
Viridor businesses were completed
during FY22. The growth has been
driven by the Viridor acquisition that
was completed on 31 August 2021,
thus contributing seven months of
revenue in the year.
Operating Profit Margin has
improved as a direct result of the
recovery from the pandemic. The
recovery stopped short of FY20
levels due to inflationary cost
pressures, supply chain disruption
and driver shortages.
Adjusted Return on Operating
Assets has risen back towards FY20
levels, driven by the improvement
in Adjusted Operating Profit. The
recovery has been impacted by
Company Shop Group performance.
Adjusted Return on Capital
Employed has increased significantly
as a result of the improvement in
Adjusted Operating Profit. It has
stopped short of FY20 levels due
to joint ventures remaining yet to
provide a return on investment
and the Viridor acquisition not
contributing a full 12 months of
Operating Profit.
Adjusted Basic EPS has risen in
line with the increase in profit for
the year, as a result of the strong
recovery from the pandemic.
Leverage has reduced by 0.2x due
to the improvement in Adjusted
EBITDA during the year, despite the
increased borrowing levels to fund
the Viridor and Company Shop
Group acquisitions in August 2021
and February 2021 respectively.
Target
CPI +1%
> 2.5% Continuous
improvement.
Grow to over 20% and
maintain above this
level.
Grow to over 10% and
maintain above this
level.
Consistent growth. <3.5x and to return to
3x over medium term
(post-IFRS 16).
Remuneration
Linkage
Associated with annual bonus
financial or personal metrics.
Associated with annual bonus
financial or personal metrics.
Associated with annual bonus
financial or personal metrics.
Associated with annual bonus
financial or personal metrics.
Associated with annual bonus
financial or personal metrics.
LTIP – Earnings Per Share 50%. Associated with annual bonus
financial or personal metrics.
Link to Strategic
Sustainability
Pillars
BUILDING A CIRCULAR
ECONOMY
TACKLING CLIMATE
CHANGE
BUILDING A CIRCULAR
ECONOMY
TACKLING CLIMATE
CHANGE
BUILDING A CIRCULAR
ECONOMY
TACKLING CLIMATE
CHANGE
BUILDING A CIRCULAR
ECONOMY
TACKLING CLIMATE
CHANGE
BUILDING A CIRCULAR
ECONOMY
TACKLING CLIMATE
CHANGE
BUILDING A CIRCULAR
ECONOMY
TACKLING CLIMATE
CHANGE
BUILDING A CIRCULAR
ECONOMY
TACKLING CLIMATE
CHANGE
Definition
The increase/(decrease) in Net
Revenue in the period excluding
Net Revenue from acquisitions
completed in the period and
Net Revenue from acquisitions
completed in the prior period up
to the anniversary of the relevant
acquisition date, to the extent such
Net Revenue falls in the current
period. Where comparative periods
differ in duration, the KPI is adjusted
on a pro-rata basis.
Acquisition Net Revenue Growth
in any period represents the Net
Revenue Growth in the relevant
period from (i) acquisitions
completed in the relevant period
and (ii) any acquisitions completed
in the 12 months prior to the
relevant period up to the 12-month
anniversary of the relevant
acquisition date (to the extent such
Net Revenue falls in the current
period). Acquisition Revenue
Growth is calculated on the same
basis, using revenue in place of Net
Revenue.
Profit before adjusting items, net
finance costs and taxation expressed
as a percentage of statutory revenue.
Adjusted Operating Profit divided by
the average of opening and closing
Tangible Fixed Assets plus net
working capital.
Adjusted Operating Profit less
amortisation of acquisition
intangibles divided by the average
of opening and closing shareholders’
equity, Net Debt (including
lease liabilities), net defined
benefit surplus on pensions and
environmental provisions.
Adjusted Profit for the year divided
by the number of shares in issue.
The ratio of Group Net Debt at year
end to Adjusted EBITDA for the year.
1.2%
64
Biffa plc / Annual Report and Accounts 2022
Organic Net Revenue Growth
(%)
20.0%
2022 20.0%
2021
(11.6)%
2020 2.5%
Acquisition Net Revenue
Growth (%)
18.0%
2022 18.0%
2021
2020 4.5%
Adjusted Operating Profit
Margin (%)
6.7%
2022 6.7%
2021 4.2%
2020 7.8%
Adjusted Return on
Operating Assets (%)
18.2%
2022 18.2%
2021 9.1%
2020 19.4%
Adjusted Return on Capital
Employed (%)
7.0%
2022 7.0%
2021
2020 8.9%
Adjusted Basic Earnings per
Share (pence)
19.7p
2022 19.7p
2021 7.7p
2020 23.1p
Group Leverage Ratio (Net
Debt: EBITDA) (x)
3.1x
2022 3.1x
2021 3.3x
2020 2.4x
Performance
The Group experienced significant
organic net revenue growth as a
result of strong recovery from the
pandemic, offsetting the decline
seen in FY21. Another contributing
factor is the rise in I&C volumes,
surpassing FY20 levels.
Acquisitions of the Green Circle and
Viridor businesses were completed
during FY22. The growth has been
driven by the Viridor acquisition that
was completed on 31 August 2021,
thus contributing seven months of
revenue in the year.
Operating Profit Margin has
improved as a direct result of the
recovery from the pandemic. The
recovery stopped short of FY20
levels due to inflationary cost
pressures, supply chain disruption
and driver shortages.
Adjusted Return on Operating
Assets has risen back towards FY20
levels, driven by the improvement
in Adjusted Operating Profit. The
recovery has been impacted by
Company Shop Group performance.
Adjusted Return on Capital
Employed has increased significantly
as a result of the improvement in
Adjusted Operating Profit. It has
stopped short of FY20 levels due
to joint ventures remaining yet to
provide a return on investment
and the Viridor acquisition not
contributing a full 12 months of
Operating Profit.
Adjusted Basic EPS has risen in
line with the increase in profit for
the year, as a result of the strong
recovery from the pandemic.
Leverage has reduced by 0.2x due
to the improvement in Adjusted
EBITDA during the year, despite the
increased borrowing levels to fund
the Viridor and Company Shop
Group acquisitions in August 2021
and February 2021 respectively.
Target
CPI +1%
> 2.5% Continuous
improvement.
Grow to over 20% and
maintain above this
level.
Grow to over 10% and
maintain above this
level.
Consistent growth. <3.5x and to return to
3x over medium term
(post-IFRS 16).
Remuneration
Linkage
Associated with annual bonus
financial or personal metrics.
Associated with annual bonus
financial or personal metrics.
Associated with annual bonus
financial or personal metrics.
Associated with annual bonus
financial or personal metrics.
Associated with annual bonus
financial or personal metrics.
LTIP – Earnings Per Share 50%. Associated with annual bonus
financial or personal metrics.
Link to Strategic
Sustainability
Pillars
BUILDING A CIRCULAR
ECONOMY
TACKLING CLIMATE
CHANGE
BUILDING A CIRCULAR
ECONOMY
TACKLING CLIMATE
CHANGE
BUILDING A CIRCULAR
ECONOMY
TACKLING CLIMATE
CHANGE
BUILDING A CIRCULAR
ECONOMY
TACKLING CLIMATE
CHANGE
BUILDING A CIRCULAR
ECONOMY
TACKLING CLIMATE
CHANGE
BUILDING A CIRCULAR
ECONOMY
TACKLING CLIMATE
CHANGE
BUILDING A CIRCULAR
ECONOMY
TACKLING CLIMATE
CHANGE
Definition
The increase/(decrease) in Net
Revenue in the period excluding
Net Revenue from acquisitions
completed in the period and
Net Revenue from acquisitions
completed in the prior period up
to the anniversary of the relevant
acquisition date, to the extent such
Net Revenue falls in the current
period. Where comparative periods
differ in duration, the KPI is adjusted
on a pro-rata basis.
Acquisition Net Revenue Growth
in any period represents the Net
Revenue Growth in the relevant
period from (i) acquisitions
completed in the relevant period
and (ii) any acquisitions completed
in the 12 months prior to the
relevant period up to the 12-month
anniversary of the relevant
acquisition date (to the extent such
Net Revenue falls in the current
period). Acquisition Revenue
Growth is calculated on the same
basis, using revenue in place of Net
Revenue.
Profit before adjusting items, net
finance costs and taxation expressed
as a percentage of statutory revenue.
Adjusted Operating Profit divided by
the average of opening and closing
Tangible Fixed Assets plus net
working capital.
Adjusted Operating Profit less
amortisation of acquisition
intangibles divided by the average
of opening and closing shareholders’
equity, Net Debt (including
lease liabilities), net defined
benefit surplus on pensions and
environmental provisions.
Adjusted Profit for the year divided
by the number of shares in issue.
The ratio of Group Net Debt at year
end to Adjusted EBITDA for the year.
Our Non-Financial KPIs are set out on / pages 34-35
and in our Sustainability Report: www.biffa.co.uk/sustainability
1.9%
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Biffa plc / Annual Report and Accounts 2022
Additional
Information
Operating Review
Collections
division
“During the year,
Biffa acquired
Viridor’s Collections
business, broadening
our customer base
and solidifying our
leading position in
UK sustainable waste
management.”
Maxine Mayhew
Chief Operating Officer, Collections
& Specialist Services
The Collections division comprises the
Industrial & Commercial (“I&C”) and
Municipal businesses. It provides sustainable
waste and recycling collections and related
services to industrial, commercial, public
sector and local authority customers.
The division delivered a strong performance
against a challenging economic backdrop
coupled with tough operating conditions
including driver shortages, cost inflation and
supply chain issues.
Collections Net Revenue for FY22 was 12%
higher than the comparable period two
years ago at £874m (FY20: £781m). As a
result, Adjusted EBITDA improved by 13% to
£131m (FY20: £115m). Adjusted operating
margins have also improved over the same
period from 8.0% to 8.6%, principally due to
improved underlying performance in I&C.
During the year, Biffa acquired Viridor’s
Collections business, broadening our
customer base and solidifying our
leading position in UK sustainable waste
management. Integration of both this
business and Simply Waste is progressing to
plan and we remain on track to deliver our
targeted synergies.
Industrial and Commercial
The I&C business provides waste collection
and materials handling services for
commercial customers, covering 95% of UK
postcodes. Biffa is the largest operator in
the fragmented UK I&C Collections market
benefitting from scale, higher route densities
and as a result, lower operating costs and
a lower comparative carbon footprint than
our competitors.
Performance Summary
The I&C business performed strongly in
the year against challenging conditions.
I&C volumes (adjusted for acquisitions)
were marginally above FY20 levels which,
together with the impact of acquisitions and
price increases, resulted in a 14% uplift in
revenues to £691m.
The I&C business has been affected by
substantial inflationary cost pressures
impacting the UK economy. Whilst these
pressures have had a significant impact on
our operating costs, pricing flexibility built
into our contracts has enabled the business
to pass on most of these cost increases to
customers and protect our profitability.
FY22
£m
FY21
£m
Change
%
FY20
£m
Change
%
Statutory Revenue 873.9 677.6 29.0 781.0 11.9
I&C 690.9 495.5 39.4 603.7 14.4
Municipal 183.0 182.1 0.5 177.3 3.2
Net Revenue 873.9 677.6 29.0 781.0 11.9
Operating Profit 65.6 27.8 136.0 56.6 15.9
Operating Profit Margin 7.5% 4.1% n/a 7.2% n/a
Adjusted EBITDA 130.7 98.5 32.7 115.3 13.4
Adjusted Operating
Profit
75.0 40.9 83.4 62.7 19.6
Adjusted Operating
Profit Margin
8.6% 6.0% n/a 8.0% n/a
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Biffa plc / Annual Report and Accounts 2022
We have also been impacted by various
supply chain challenges which have
affected our ability to source items such as
new vehicles, fuel and waste containers.
Through our scale, reputation, and supply
chain relationships we have dealt with these
challenges well, but they continue to be
areas that require careful management. As
a measure of how well we have dealt with
these difficulties, SME customer churn rates
continued at historically low levels at 7.2%
(FY21:8.5%, FY20: 9.9%).
We have successfully managed the well-
publicised national shortages of qualified
HGV drivers. We engaged constructively with
trade unions and have agreed meaningful
pay increases to ensure that we retain our
position in our sector as an employer of
choice. As a result, the shortage of HGV
drivers eased in the second half of the year
but requires careful ongoing management.
At the end of August 2021, we completed the
acquisition of Viridor’s collections business,
adding £84m in annualised revenues
during FY22 and 21,000 customers to our
business. The acquisition is a key step in
our consolidation of the highly fragmented
I&C collections market and we continue to
expect to deliver annualised synergies of at
least £10m by the end of FY23.
New corporate clients included Barnardo’s
and Co-Op Retail. We also secured a three-
year contract with Sainsbury’s to service their
front of store customer recycling bins and
renewed key customer contracts including
Saint-Gobain Building Distribution, Dunelm,
B&Q and Northumbrian Water.
During the year we supported more
customers to improve the recyclability of
their packaging by deploying our internal
packaging expertise. This process identifies
opportunities to improve the design of
packaging to optimise recycling and offer
alternative materials and labelling options.
We continue to develop our digital estate
and have rolled out next generation in-cab
devices which will further improve customer
experience. We also installed energy efficient
driver software, which provides data on fuel
usage and wear and tear on vehicles, to
further improve driving standards.
Strategy and Outlook
We will continue to drive forward our
plan to consolidate the fragmented I&C
collections market. Acquisitions are highly
synergistic, due to the removal of duplicate
routes and locations, and result in a more
efficient, flexible service proposition for our
customers with a lower-carbon intensity.
The acquisition pipeline remains promising,
and now that the integrations of the Simply
Waste and Viridor businesses are nearing
completion, we are starting to assess the
market for further opportunities.
Since the year end, we acquired certain
trade and assets of DJB Recycling Limited,
a Sheffield-based waste collection and
recycling business, for a maximum cash
consideration of £1.9m. The business
generated revenue of c. £4.7m in the last 12
months, employed 31 people, had a fleet
of 13 vehicles and operated from 2 sites
in Sheffield prior to completion. The deal
completed on 30 June 2022.
In July we were also appointed as the
logistics provider for the Deposit Return
Scheme for Scotland by Circularity Scotland
Ltd (CSL) with responsibility for collecting
counting and sorting bottles and cans from
c.30,000 locations. DRS will start in August
2023 and drinks containers will carry a
20p refundable deposit with the aim of
reducing litter and increasing recycling by
at least 90%.
The 10 year contract includes c. £80m
estimated capital (including property
lease commitments) to be deployed by
August 2023.
Supporting customers with improved
digital capabilities is a key focus. We have
invested in refreshing our ‘Customer Zone’
providing improvements to an already
leading-edge customer self-service portal as
well as developments in allowing customers
to get quotes and book services directly
which we believe will see increase revenues
and improve customer service. The portal
became available to customers in Q1 FY23.
We plan to expand the services we offer
our established corporate customer base
and capitalise on the synergies we have
available through the acquisition of CSG.
We have made progress, particularly with
supermarket chains in showcasing the
benefits of Biffa’s integrated offering. We also
see opportunities to grow our SME customer
base, both organically and inorganically.
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Biffa plc / Annual Report and Accounts 2022
Additional
Information
Municipal
The Municipal business provides household
waste and recycling collections, street
cleaning and other services for households,
on behalf of local authorities.
Performance Summary
The Municipal business performed well
this year, despite difficult market conditions
Revenues were up 3% versus FY20 at £183m.
The business continued to experience the
impact of Covid-19 in the early part of the
year, followed by driver shortages, supply
chain issues and inflationary pressures.
Some services, such as green, food and
bulky waste, were temporarily suspended
in the first half of FY22 with the agreement
of our municipal customers; however,
services have since returned to normal. The
Viridor acquisition added two household
waste recycling centre (“HWRC”) contracts
to the Municipal business. These contracts
generated c£11m of revenue in FY20 (prior
to acquisition) and have performed as
expected since the acquisition, generating
c£9m of revenue.
New contract wins in the period included a
street cleansing contract with Stratford-on-
Avon District Council, a further profitable
eight-year extension with Manchester City
Council and an extension with Cannock
Council.
We continued with the roll out of the UK’s
largest fleet of electric Refuse Collection
Vehicles (“eRCVs”) in Manchester. Our
27-strong fleet is now in operation,
supporting Manchester City Council’s
objective to be Net Zero by 2038. We are
trialling eRCVs with other local authorities,
such as Kent and South Oxfordshire, an
electric recycling vehicle in Anglesey and
electric sweepers with Stratford-on-Avon
and Arun. Our scale and route density
positions us well, but the transition will take
time as despite the positive progress made
so far, the supply chain, infrastructure and
economics do not currently support a more
widespread roll out.
Many local authorities are currently
considering how the new Environment
Act will impact them, both from a financial
perspective and through changes to their
operating model. This uncertainty is causing
many customers to seek to extend contracts
until the timing and form of the changes
become clearer. The Environment Act has a
particular focus on areas such as extending
producer responsibility to make producers
pay for the cost of collection and recycling of
packaging, greater consistency of recycling
collections in England and charges for single
use plastics and restricting exports of waste
outside the OECD countries.
Strategy and Outlook
The Municipal business is well placed to
continue to deliver its growth strategy,
capitalising on its scale and expertise.
In the short term the business will face
ongoing inflationary pressures including
driver pay and the ongoing disruptions
to supply chains. However, the business
benefits from higher inflation indexation
that positions it well to withstand these
challenges, but it will require careful
management.
Looking further out, the business will seek
to capitalise on the opportunities that are
presented by the regulatory changes that
are approaching, including rolling out food
waste collection services and playing our
role in the Scottish DRS Scheme.
Operating Review continued
Collections division continued
“We continued with
the roll out of the UK’s
largest fleet of electric
Refuse Collection
Vehicles in Manchester.
Our 27 strong fleet is now
in operation, supporting
Manchester City
Council’s objective to be
Net Zero by 2038.”
Roger Edwards
Managing Director, Municipal Division
68
Biffa plc / Annual Report and Accounts 2022
69
Strategic Report
Financial
Statements
Corporate
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Overview
Biffa plc / Annual Report and Accounts 2022
Additional
Information
Operating Review continued
Specialist Services
division
FY22
£m
FY21
£m
Change
%
FY20
£m
Change
%
Statutory Revenue 174.1 92.4 88.4 89.8 93.9
Industrial Services 103.4 86.6 19.4 89.8 15.1
Company Shop Group 70.7 5.8 1,119.0 - n/a
Net Revenue 174.1 92.4 88.4 89.8 93.9
Operating Profit/(Loss) (19.9) 8.2 n/a 9.5 n/a
Operating Profit Margin (11.4%) 8.9% n/a 10.6% n/a
Adjusted EBITDA 11.6 11.3 2.7 11.1 4.5
Adjusted Operating
Profit
5.4 8.2 (34.1) 9.5 (43.2)
Adjusted Operating
Profit Margin
3.1% 8.9% n/a 10.6% n/a
The Specialist Services division helps
customers fulfil their sustainability ambitions
by providing bespoke solutions including
surplus redistribution, integrated resource
management and hazardous waste services.
The division contains two businesses -
Industrial Services and CSG.
The Industrial Services business provides
bespoke solutions to customers who have
more complex waste requirements such as
manufacturing and distribution businesses.
Solutions include on site services and
equipment rental (“Integrated Resource
Management” or “IRM”), hazardous waste
collection and treatment and packaging
producer responsibility compliance services
(“Biffpack”).
The acquisition of CSG in February 2021,
added waste reduction and redistribution
capabilities to Biffa’s range of sustainable
waste management solutions. It also enables
us to support customers in moving surplus
products further up the waste hierarchy
and to deliver on their sustainability
ambitions. Alongside its core network,
CSG operates Community Shop,
a not-for-profit community interest
company that supports some of the most
deprived areas of the UK through a network
of hubs which sell produce provided by
donations from supplier partners at deeply
discounted prices, alongside the provision of
a number of community services
The division delivered a mixed performance
during the year, with a strong performance
from Industrial Services being partially
offset by the previously reported
underperformance in CSG.
Net Revenue for FY22 was £174m, up
94% on the comparable period two years
ago due to the strong growth in Industrial
Services and a full year of contribution
from the CSG acquisition. Adjusted EBITDA
was £12m (FY20: £11m). The division
reported an operating loss of £20m after
the previously reported CSG impairment
charge and an Adjusted Operating Profit
of £5m (FY20: £10m).
“CSG has worked
collaboratively
with the wider Biffa
business to unlock
more opportunities for
customers and increase
supplier volumes
into CSG. ”
Maxine Mayhew
Chief Operating Officer, Collections
& Specialist Services
70
Biffa plc / Annual Report and Accounts 2022
Industrial Services
Performance Summary
Industrial Services continued to perform
strongly this year. Revenues in the business
were £103.4m, up 15% vs FY20. Organic
growth has doubled, and the business
has also benefited from higher packaging
recovery note (“PRN”) prices.
The IRM business performed well, supported
by new contract wins and retentions
including Mitsubishi Chemicals and Moy
Park, who are also a key supplier into CSG.
Biffpack performed in line with expectations,
helping customers to meet their legal
compliance with packaging regulations. The
Hazardous Waste business meanwhile saw
further top line and margin improvements.
Industrial Services is a growing market
and Biffa’s unique position in having a fully
integrated waste management platform
means we can take advantage of cross-
selling services from our I&C customer base.
The business had similar challenges this year
to the Collections division, with labour, fuel
and supply issues. Despite these difficulties,
there were no disruptions to services.
Strategy and Outlook
Through the Viridor acquisition, the
Industrial Services business acquired
depots in Taunton and Thurrock as well
as a wastewater treatment plant in
Rickmansworth, complementing the
existing geographical coverage of the
business. We also acquired the tanker fleet
of Viridor, broadly doubling our operational
fleet in the division. Initial optimisation
work has assisted a reduction in “empty
miles”, being the number of non-revenue
earning road miles travelled, by 14%.
We are confident that this will continue
to improve in FY23.
We will continue to focus on organic and
acquisitive growth, particularly in the
Hazardous Waste sector and build on our
enhanced geographical coverage and
improved service delivery, which has been
strengthened by the Viridor acquisition.
Company Shop Group
Performance Summary
The past 12 months provided unique
challenges not only in terms of the
macroeconomic issues highlighted above,
but also Covid-19 related changes in
shopping patterns. However, retailers and
manufacturers have shown a clear desire
and commitment to reducing food waste.
As previously reported, CSG’s performance
in the year was challenged as a result of
lower footfall and gross margins, especially
at stores which were opened immediately
prior to, and during the pandemic. Due to
the short term underperformance of the
business, we booked an impairment charge
of £25m at the half year. We continued to
experience losses through the second half,
however, in the final quarter of the year we
saw encouraging progress in membership,
footfall and margins and are confident of
an improved performance in the coming
year. CSG has worked collaboratively with
the wider Biffa business to unlock more
opportunities for customers and increase
supplier volumes into CSG.
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Biffa plc / Annual Report and Accounts 2022
Additional
Information
Other highlights in the year include
Community Shop winning the Queen’s
Award for Enterprise in the Promoting
Opportunity category, awarded for
deep social impact that helps build
stronger individuals and more confident
communities. This is the third time CSG
has received royal recognition, having
won awards in both 2015 and 2019. Also,
the Luminary Programme, which is CSG’s
mentoring scheme for leaders and rising
stars in the food and drink sector, won the
prestigious Innovation Award at the Food
and Drink Federation Awards 2021 and the
Grocer Gold ‘Waste Not Want Not’ Award
2021.
Strategy and Outlook
The CSG business is firmly focused on
recovery, following a challenging 12 months,
and returning to financial performance
levels achieved prior to the pandemic. We
are improving our sourcing of surplus stock,
adding new supplier partners, opening new
categories to consumers and leveraging
Biffa’s existing customer relationships with
potential supply chain partners.
We anticipate that we will continue to see
further improved footfall as the cost of
living continues to rise and the need for
discounted products grows, particularly for
low-income households. Ultimately our goal
is to generate long-term loyalty so we can
capture and retain members in the most
sustainable way.
We will seek to continue to expand our
social enterprise, Community Shop, having
opened Community Shop Leicester in
April 2022.
We will also be trialling the Community
Shop ‘On the Go’ concept – a greengrocer
style van that enables local people to buy
fresh fruit and vegetables at convenient
locations, such as schools, helping to
bring the economic and social benefits
of Community Shop out to vulnerable
communities. We are working alongside our
longstanding partner, Ocado, to launch the
initiative in FY23
Operating Review continued
Specialist Services division continued
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Biffa plc / Annual Report and Accounts 2022
“In the year we’ve made
good progress in our
Polymers business
increasing capacity
to 151kt. With the
introduction of the
Plastics Packaging Tax
from 1 April 2022, we
expect to see strong
demand for the material
we produce.”
Mick Davies
Chief Operating Officer, Resources & Energy
Resources & Energy
division
FY22
£m
FY21
£m
Change
%
FY20
£m
Change
%
Statutory Revenue 395.2 272.0 45.3 292.3 35.2
Recycling 140.8 80.6 74.7 79.5 77.1
Organics 78.0 53.6 45.5 56.9 37.1
Inerts 56.7 44.5 27.4 52.4 8.2
Landfill Gas 40.4 39.4 2.5 43.3 (6.7)
Net Revenue 315.9 218.1 44.8 232.1 36.1
Operating Profit/(Loss) 17.5 (43.9) n/a 32.5 n/a
Operating Profit Margin 4.4% (16.1%) n/a 11.1% n/a
Adjusted EBITDA 73.4 40.7 80.3 63.4 15.8
Adjusted Operating Profit 41.1 11.8 248.3 37.7 9.0
Adjusted Operating Profit
Margin
10.4% 4.3% n/a 12.9% n/a
The Resources & Energy (“R&E”) division
focuses on the sustainable treatment,
recycling, energy recovery and ultimate
disposal of waste. It comprises the Recycling,
Organics, Inerts and Landfill Gas businesses
as well as our equity investments in two new
Energy Recovery Facilities (“ERFs”) which
are under construction in Cheshire and
Leicestershire.
The R&E division had a strong performance
this year with Net Revenues of £316m,
36% higher than the comparable period
two years ago (FY20: £232m), reflecting
the ongoing expansion of our Recycling
business, as well as the acquisition of certain
Viridor assets. Adjusted Operating margins
improved year-on-year but dropped
compared with FY20 from 13% to 10%
as a result of the expected reduced
contribution from the higher margin Inerts
and Landfill Gas (“LFG”) businesses, due to
the closure of the Westmill landfill and LFG
yields declining as expected each year, as
well as the delayed contribution from the
Polymers Seaham plant.
Performance Summary
Recycling
Our recycling business comprises our
leading Polymers plastics business and
our Materials Recycling Facilities (“MRFs”).
Net Revenues in the year were up 77% on
FY20 at £141m.
The Polymers business had a transitional
year due to customer acceptance at
the Seaham facility taking longer than
anticipated. However, following the facility
receiving food-grade status by the European
Food Safety Authority in January 2022,
we achieved customer acceptances
and signed various multi-million-pound
agreements with customers to supply
food grade rPET pellet.
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Additional
Information
Resources and Energy division continued
Operating Review continued
By converting 57,000 tonnes of rPET each
year, 130,000 tonnes of CO
2
e
1
is saved when
compared to energy recovery. We expect
demand for plastics recycling will continue
to strengthen following the introduction of
the UK Government’s Plastic Packaging Tax.
The Washington plant (rPP line) is fully
commissioned and performing in line with
expectations. In addition, the Aldridge
upgrade was completed during the year,
and we commenced construction of our
third rHDPE plant at Redcar.
We saw a good performance at our MRFs
again this year due to strong operational
performance, improved commodity prices
and a number of customer wins and
retentions. This includes a six-year contract
with Staffordshire Waste Partnership, a three-
year extension with Durham County Council
and a three-year extension with Milton
Keynes Council.
Three MRFs have also been added to the
Recycling business through the acquisition
of Viridor and these have traded ahead of
expectations. By November 2022, more
than 80% of the feedstock required for
the food-grade Polymers business will be
internally sourced.
Organics
The Organics business includes Biffa’s
anaerobic digestion (“AD”), composting
and residual waste treatment assets. Assets
are generally supported by long term local
authority contracts. In the year the business
was expanded through the addition of
contract-backed assets from the Viridor
acquisition.
The business had a good year, with the
composting business performing strongly,
AD performing in line with expectations, and
the assets acquired from Viridor performing
well. Net Revenues are up 37% on FY20
levels to £78m, mainly as a result of the
acquired revenues from Viridor.
Inerts
Our Inerts business includes the treatment
and disposal of complex construction waste
and provides landfill disposal for untreatable
residues.
The business saw Net Revenues up by 8% at
£57m on the comparable period two years
ago (FY20) due to ongoing improvements
in pricing. Volumes have returned to pre-
pandemic levels, as a result of a growth
in tonnages from our rail hubs and in
commercial waste volumes.
Our rail hubs are proving a successful
gateway into landfill sites, particularly those
in city centres, helping to reduce road
haulage and transportation costs. Inputs to
landfill by rail have increased by 35% this
year, mainly due to the opening of our third
rail hub in Barking in May 2021. Since 2018,
over 1.5m tonnes of inert waste has been
transported by rail instead of road, saving
17,700 tonnes of CO
2
e emissions.
We’ve had a strong improvement in
environmental compliance this year, which
has resulted in close to a 50% reduction in
the number of complaints received from
the public.
As part of our sustainability strategy, we
have a target in place to manage 30% of our
landfill estate for biodiversity. In the year we
worked on introducing quality measures
for biodiversity and will be introducing a
benchmarking survey in FY23 to align our
biodiversity goals to external benchmarks.
Landll Gas
The Landfill Gas business provides energy
generation from landfill gas extraction.
Profitability in FY22 was broadly consistent
with FY21 due to prices achieved
counteracting the expected volume
declines, but was 17% lower than FY20.
Margins have fallen across both FY21
and FY22.
Export power prices are 100% hedged
through FY23 fixed @ £61.98 per MwH.
1 Based on 2021 WRAP estimates. Source: https://wrap.org.uk/sites/default/files/2021-10/WRAP-Plastics-Market-Situation-Report-2021.pdf, page 26 -31
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Energy Recovery
The treatment of general waste for energy
recovery remains an important part of our
investment strategy for waste which cannot
be avoided, reduced or recycled.
Good progress is being made on the
construction of our two energy recovery
facilities, both of which are being
developed in partnership with Covanta.
The Newhurst facility, which is due to start
its commissioning in late 2022, remains
on track to begin operations in 2023. We
have already secured most of the tonnage
for the site, which will process residual
waste sustainably, avoiding landfill and
help to decrease the UK’s dependence on
exporting waste. The Protos facility remains
on schedule for 2024 and is making good
progress through its build phase, having
already completed the majority of the
ground engineering works.
We are investigating opportunities to
increase consented capacities as well
as carbon capture opportunities, with
the Protos facility participating in the
deployment process for BEIS Cluster
Sequencing for Carbon Capture Usage
and Storage.
Strategy and Outlook
Looking ahead, the priorities for the
R&E division are to optimise operations
(including the newly commissioned Seaham
facility) while continuing the development
of plastics recycling and energy recovery
infrastructure.
Other priorities will include investigating
the use of Artificial Intelligence and robotics
to support with advanced sortation,
developing our fourth rail hub to support
our Inerts offer, and looking into the viability
of solar energy generation on closed or
restored landfill sites. We have a number of
planning consultations in progress; however,
it is proving to be more challenging than
we first envisaged due to biodiversity
requirements on the sites conflicting with
our solar plans. This is something we will
continue to manage to ensure the most
sustainable outcome.
We are continuing to partner with a
wide variety of stakeholders across the
value chain, from start-ups and academic
institutions to large corporations and non-
governmental bodies, to help innovate and
develop new technologies, systems and
services. Through partnerships, we share
insights and expertise that help us to jointly
tackle the key challenges our industry faces,
supporting the sustainability and circularity
of both our customers and the sector
more broadly.
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Additional
Information
Managing Our Risks
Proactive risk management
underpins the success
of our growth strategy
The Board has overall responsibility for risk
management at Biffa. In support of this, risk
management is firmly embedded within our
everyday business activities and our culture.
Governance
The Board recognises its responsibility to
ensure that the Group’s risk management
and internal control systems are effective.
The Audit Committee supports the Board
in the management of risk and has been
delegated with authority to review the
effectiveness of the risk management and
internal control processes during the year.
Day-to-day risk management and control
is the responsibility of the Chief Executive
Officer supported by the Group Executive
Team who ensure that management
provides leadership and direction to our
workforce so that our overall risk-taking
activity is kept within our risk appetite.
Risk Management Framework
Biffa operates the ‘Three Lines Model’ to
manage the ongoing effectiveness of risk
and control, to define the relationship
between the various management and
oversight functions, and to demonstrate
how responsibilities are allocated. Refer to
the Risk Management Framework below.
The Internal Audit function assesses our risks
and controls independently and objectively.
On a quarterly basis, management self-
certify that the key controls within their
area of responsibility have been operating
effectively. The Internal Audit function
independently validate these results through
sample testing.
Risk Appetite
The Board sets our overarching risk culture
and appetite and ensures that we manage
risk appropriately across the Group. Health
and safety, investment, legal and regulatory
risks are our top priority. Biffa dedicates
significant resources and focus to managing
and monitoring these risks, with other key
risks considered and reviewed alongside this.
Management assess the appetite for risk,
which the Board has considered and agreed.
The Group categorises these risks into four
areas: investment risk; commercial contract
risk; commodity and other disposal risk, and
insured categories of risk. This assessment
includes the associated mitigations or
compensating returns. This enables Biffa
to have informed decision making in line
with its risk appetite, ensures confidence in
the response to risks, enables transparency
over the principal risks faced and how these
aremanaged.
Risk Management Framework
Board
Audit Committee
Group Executive Team
1st Line
Owns and manages risks and implements/
operates business controls
Who is responsible:
Operational management/employees
Activity/controls:
• Policies and procedures
• Internal controls
• Planning, budgeting, forecasting
processes
• Delegated authorities
• Business workflows/IT system controls
• Personal objectives and incentives
Who is responsible:
Compliance/oversight functions
Activity/controls:
• H&S Team with audit programme in place
• Environmental/legal/regulatory
compliance
• Risk management
• Controls compliance monitoring
• Management/Board reporting and review
of KPIs and financial performance
• Corporate policies and central function
oversight
Who is responsible:
Internal Audit
Activity/controls:
• Approved Internal Audit plan
• Internal audit reporting line to Audit
Committee
• Regular Internal Audit updates to Audit
Committee
2nd Line
Oversight of risks and control compliance
3rd Line
Independent assurance
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Risk Management Processes
The Group’s risk management processes
are centrally coordinated via a second line
risk management function working with an
established network of ‘Risk Partners’ in place
to facilitate updates to risks during the year.
The Risk Partners are members of the senior
management team and take a lead role in
engaging local management to identify,
agree and update risk information on a
regular basis.
We use a risk assessment matrix to ensure
that all risks are assessed consistently. This
matrix considers the likelihood of the risk
materialising and its potential impact. We
assess both the inherent risk, before any
mitigating actions, and the residual risk, after
considering mitigating actions and controls.
We also identify any additional activities,
such as further actions, that could be
undertaken to further mitigate the risk.
The Group Executive Team engages with the
risk management function to review and
update principal risks on a cyclical end-to-
end process. Risks are updated individually
by Group Executive Team members in
conjunction with the risk management
function on a regular basis prior to Group
Executive Team meetings. The risks are then
assessed and reviewed and then further
updated as part of the cycle. Ownership of
each of these risks are assigned to individual
members of the team. They are responsible
for ensuring the effectiveness of the internal
control systems and for implementing risk
mitigation plans. The Audit Committee
undertakes regular reviews of the principal
and emerging risks, and mitigations, as
identified and evaluated by management
through the above process. The Audit
Committee also reviews summaries of the
work undertaken by the Internal Audit
function, which operates a risk-based annual
plan of assurance reviews.
Our risk management systems are intended
to mitigate and reduce risk to the lowest
extent possible, however we cannot
eliminate all risks to the Group. The risk
management processes can only provide
reasonable and not absolute assurance
against material misstatement or loss.
We now consider Covid-19 to be part of
business-as-usual operations and so no
longer consider it to be a separate principal
risk on the basis that any Covid controls are
now well incorporated into relevant key risk
mitigations.
Emerging Risks
In addition to known risks, we have a
horizon scanning review process to consider
emerging risks. This entails involving key
stakeholders, including members of the
Group Executive Team and external third
parties, in the identification of emerging risks
(including usage of internal surveys) along
set timelines, collating the information,
reviewing and considering in-depth analysis
and then creating a risk radar to illustrate the
relative time horizons and assessments.
This enables us to engage in a systematic
examination of information to identify
potential threats, risks, emerging issues and
opportunities. These risks are reviewed by
both the Group Executive Team, the Board
and the Audit Committee, and include
risks relating to future environmental, social
and governance challenges, funding the
transition to a greener environment, waste
zoning, post-pandemic talent and the
use of alternative fuels.
Principal Risks
Link to
Strategic
Sustainability
Pillars
Risk
Movement
Current
Risk
Level
Strategic
Changes in Government policy and legal and
regulatory compliance
Strategic/competitive threat to business model
Strategic initiatives
Operational
Long-term contracts and tendering
Health & Safety
Business continuity, cyber security and IT resilience
Availability and cost of labour
Commodities market and pricing volatility
Financial
Finance availability/investment
Economic environment
Overview of our Principal Risks and Uncertainties
Link to Strategic
SustainabilityPillars
Building a circular economy
Tackling climate change
Caring for our people,
supporting our communities
Risk Movement
Increasing
Stable
Decreasing
Risk Level
Low
Medium
High
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Additional
Information
Principal Risks and Uncertainties
Risks Description Mitigating Actions Changes in Year
Changes in
Government
policy and legal
and regulatory
compliance
Link to stakeholder
groups
Employees
Customers
Investors
Suppliers
Government & Regulators
Risk movement and level
Strategic sustainability
pillar
Risk impact
Reputational
Regulatory
Financial
The Group operates in a highly
regulated industry and any changes to
Government policy, requirements with,
or failure by our staff or third parties
who we do business with to comply
with laws or regulations or to uphold
our high ethical standards could have
an adverse impact on the Group’s
operations and results.
A key industry area of risk is landfill
tax compliance, in particular the
misclassification of waste causing the
incorrect rate of landfill tax to be paid.
Historically, the Group has made a
number of material payments to
HMRC due to what HMRC perceive
to be non-compliance with landfill
tax guidance.
The latest landfill tax enquiry to
arise poses a significant financial risk
to the business, given the scale of
the protective assessments issued
by HMRC.
There remains a high level of
uncertainty around the final
outcome of this enquiry.
Experienced and qualified teams,
supported by external advisers where
necessary, that monitor changes and
plan appropriate mitigations and set
policies and procedures.
Representation on the Environmental
Services Association and other external
bodies; liaison with policy-makers and
Regulators at national and local levels;
responses to Government/regulatory
consultations and sustainability
reporting.
Direct involvement from HMRC, on a
without prejudice basis, in the design
of testing procedures to ensure
compliance with the desired intention
of the landfill tax guidance.
Environmental compliance strategy
in place including annually reviewed
targets and actions at local, divisional
and Group levels.
Established compliance policy and
procedures are in place to manage
other regulatory compliance risks, such
as landfill tax, bribery, data protection,
modern slavery, competition and
vehicle operating licences.
Industry leader in raising awareness
of modern slavery risk and founding
member of the Slavery Free Alliance.
Developed a three-strand strategy for
dealing with modern slavery including
raising awareness, strengthening our
response to the threat and victim and
survivor support.
Training for staff on a range of
compliance topics including landfill
tax procedures, modern slavery,
anti-bribery, data protection and
competition.
We continue to fully co-operate with HMRC in
relation to the ongoing landfill tax enquiry and
are receiving advice from Ernst & Young.
An independent review was commissioned
by the CEO following the Group’s conviction in
August 2021 for the illegal export of household
waste and a report presented to the Board.
Good progress has been made with the
recommendations contained in the report.
We continued to work to embed data
protection compliance across the Group.
See page 56 for details of modern slavery
initiatives delivered during the year.
A bribery risk assessment was completed
during the year and a number of areas identified
where improvements could be made. New anti-
bribery and gifts and hospitality policies have
recently been published.
Link to strategic sustainability pillars
Building a circular economy
Tackling climate change
Caring for our people,
supporting our communities
Risk movement
Increasing
Stable
Decreasing
Risk level
Low
Medium
High
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Risks Description Mitigating Actions Changes in Year
Strategic/competitive
threat to business
model
Link to stakeholder
groups
Employees
Customers
Investors
Suppliers
Risk movement and level
Strategic sustainability
pillar
Risk impact
Financial
Market disruption from the
application of new technology
and the advent of new business
models could change the waste
supply chain and adversely impact
Biffa’s established operating asset
base of a traditional collection
network and processing facilities.
Internal business Innovation Special
Interest Group focuses on market
developments and acts as an incubator for
ideas and new business models.
Continual competitor analysis to consider
threats and changes to the landscape.
Annual strategy review to ensure that
Biffa business model remains current and
competitive.
Customer surveys to ensure that the Biffa
offering remains relevant and compelling.
Ongoing investment in and improvement
of the customer experience through
digitisation, improved processes and
management information.
Collaboration has increased this year with
external parties such as universities, start-ups
and incubators to broaden our innovation
scope.
Consortia have been joined which are aligned
to our interests of digitalisation of collections,
sustainable packaging and hard to recycle
wastes.
The Innovation Special Interest Group has
been developed as a way of our senior leaders
assessing and collaborating on emerging
concepts.
Strategic initiatives
Link to stakeholder
groups
Employees
Customers
Investors
Suppliers
Government & Regulators
Environment &
Communities
Risk movement and level
Strategic sustainability
pillar
Risk impact
Financial
Operational
Failure to deliver strategic
initiatives, such as energy
recovery facilities and business
transformation, acquisition
integrations, commercial projects
and system implementations.
Business transformation is focused
on our products and services, how
they are sold and delivered, the
technology used and the online
services offered to customers.
The key M&A risks are not being
able to find and secure suitable
targets and risks and issues that
arise post completion, that impact
on the investment case.
As with any such projects, there are
risks that the project fails to deliver
the anticipated improvements
and/or benefits for the budgeted
investment, adversely impacting
reputation and operating results.
CSG’s performance in the year was
below expectations due to lower
footfall and margins.
Board and Group Executive Team
sponsorship and leadership.
Selected software is a proven ‘off the shelf’
product.
Dedicated programme team and
experienced resources recruited.
Post-investment reviews of all projects.
Change network in place to ensure line
management ownership of business
transformation.
Robust due diligence completed prior to
financial close of ERF projects.
Proven ERF technology, substantial UK
and worldwide reference plants with
>30 operational treating more than 10m
tonnes per annum.
ERF joint venture providing
complementary skill sets and experience
to minimise risk.
Limited recourse project structure.
Due diligence undertaken for all M&A
transactions, including use of external
advisers depending on target value and
complexity. A standardised approach using
an established valuation model is in place
with all transaction reviewed/approved
by the Investment Committee and (where
appropriate) the Board.
Dedicated corporate finance expertise
in place, who together with experienced
Biffa subject matter experts act as senior
stakeholders for the acquisition process
and help drive opportunities through
the pipeline.
Good progress on our digital customer
propositions with a new customer portal
nearing completion and ready to deploy in
early FY23.
New in-cab devices and software installed on
our I&C and Hazardous Waste fleet.
New HR solution has been built and is entering
test ready to deploy in FY23.
Transformation team remobilised following
pandemic and focus on integration of the
Viridor acquisition.
Next phase of transformation will focus on
Finance and Procurement.
Newhurst and Protos ERF are continuing in
accordance to plan.
Newhurst ERF is expected to start
commissioning in September 2022. Both
projects benefit from fixed time and cost
contracts.
Completed the acquisition of Viridor’s
collections business and certain recycling assets,
as well as Green Circle Polymers.
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Additional
Information
Risks Description Mitigating Actions Changes in Year
Long-term contracts
and tendering
Link to stakeholder
groups
Employees
Customers
Suppliers
Risk movement and level
Strategic sustainability
pillar
Risk impact
Financial
Reputational
Operational
The Group is exposed to risks
inherent in long-term fixed-price
contracts, in particular in its
Municipal and Resources & Energy
divisions and related operations.
Risks include inaccurate long-
term cost estimates due to
changes in the external operating
environment and market
dynamics that lead to material
deviations from initial underlying
assumptions.
Group Delegated Authorities Policy for
the review/approval of bids by senior
management, Investment Committee
and the Board (depending on bid size and
compliance with risk frameworks).
Material bids are compiled by dedicated
development teams with significant
expertise and experience. They are
supported by subject matter experts as
appropriate.
Protection from change of law or force
majeure for unforeseen circumstances is
agreed in contracts, where possible.
A contract risk framework is in place to
identify key commercial/legal risks and
confirm through the governance process
that these have been considered and
mitigated.
The risk framework has been embedded and
firmly enforced in the bidding process, with two
successful tenders during the year mobilised
successfully and operating at expected profit
levels.
Improved capacity and capability across
our project management and mobilisation
facilitating a culture of continuous
improvement.
Increased resourcing levels in the commercial
department to build on last year’s investment.
Health & Safety
Link to stakeholder
groups
Employees
Customers
Investors
Suppliers
Government & Regulators
Environment & Communities
Risk movement and level
Strategic sustainability
pillar
Risk impact
Reputational
Regulatory
Biffa’s operations present inherent
H&S risks to our employees, our
customers and the wider public.
Violations of H&S laws/regulations
could have a material adverse
effect on Biffa’s business and
reputation.
Group H&S Director reports to the CEO.
Active and regular engagement by senior
management including weekly reporting
and calls with the Group Executive Team.
Inclusion of H&S targets and objectives
within Group Balanced Business Plans with
one of the five pillars being ‘Safer Together’.
Existing H&S standards updated and
incorporated into a new Group Integrated
Management System.
Embedded policies, standards and
procedures in place across Biffa for the
systematic control of significant H&S risks.
Primary authority relationship with
Hampshire & Isle of Wight Fire and Rescue
Service enables access to advice and
counsel on fire risk issues.
Maintained management system
certification of ISO 45001:2018.
A programme has been implemented to
reduce serious, at fault road traffic collisions.
This uses fleet intelligence software to help our
drivers understand and improve their driving
behaviour which will keep them, and the public,
safer together.
Operations from our two major acquisitions
(Viridor and Simply Waste) have been
seamlessly integrated into our H&S
management system, without any material
impact on performance.
The British Safety Council has again awarded us
a maximum five stars in their comprehensive,
contemporary, and quantified audit process of
our R&E division.
Principal Risks and Uncertainties continued
Link to strategic sustainability pillars
Building a circular economy
Tackling climate change
Caring for our people,
supporting our communities
Risk movement
Increasing
Stable
Decreasing
Risk level
Low
Medium
High
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Risks Description Mitigating Actions Changes in Year
Business continuity,
cyber security and
ITresilience
Link to stakeholder
groups
Employees
Customers
Suppliers
Risk movement and level
Strategic sustainability
pillar
Risk impact
Financial
Reputational
Operational
A significant disruption to
Biffa’s infrastructure, including
IT systems, could potentially
have an impact on the activity
of the Group’s customers, such
as increased billing times,
interruptions to collection
operations and processing
logistics, and additional costs.
Additionally, the theft, loss,
destruction, misappropriation,
or release of sensitive and/or
confidential information could
result in business disruption,
data protection breach, negative
publicity or brand damage.
Crisis management and emergency
response plans in place for key sites and
operations.
Server infrastructure supporting key IT
services hosted in Microsoft Azure Cloud
providing resilience, failover and backup
services.
ISO 27001 certification (Information
Security) in place.
Cyber Essentials Plus certification in place.
Intrusion detection in place and a
cloud-based ‘always on’ security service
provided by Microsoft protecting against
key cyber threats.
Cyber security education initiatives
taken place.
Established data protection policy and
procedures to ensure compliance.
Cyber essentials plus certification renewed
ISO 27001 renewed (three-year cycle).
Microsoft security score improved by 38.8%.
IT Security Manager appointed.
Availability and cost
of labour
Link to stakeholder
groups
Employees
Customers
Suppliers
Risk movement and level
Strategic sustainability
pillar
Risk impact
Financial
Operational
The inability to source and retain
appropriately priced and skilled
labour to maintain competitive
advantage, could have a material
adverse effect on Biffa’s business
results, operations, financial
condition and prospects.
Implemented market rates for key roles
e.g. Drivers and Fleet Technicians to
support recruitment and aide retention.
Ongoing review of the recruitment and
retention of key workers such as drivers.
Benefits appropriate and comparable to
market including Performance Share Plan
for senior management and Sharesave
Scheme for all employees.
Talent and management development
programmes deployed at senior levels
and progressively to other levels
going forward.
Established apprenticeship programme.
I&C pay negotiations agreed and implemented.
Municipal GMB National Agreement talks
progressing well with the GMB recommending
acceptance of our proposal.
We have made significant progress on our
journey to becoming a Living Wage Foundation
employer with 80% of our employees currently
paid at or above Living Wage Foundation rates
(currently excluding CSG).
Launched Advanced Leadership Programme for
17 high potential leaders.
Introduced a new suite of family friendly policies
to aid retention.
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Additional
Information
Risks Description Mitigating Actions Changes in Year
Commodities market
and pricing volatility
Link to stakeholder
groups
Customers
Risk movement and level
Strategic sustainability
pillar
Risk impact
Financial
Operational
Biffa produces significant volumes
of recycled commodities for resale.
Commodities produced include
various paper grades, card, plastics,
and ferrous and non-ferrous
metals.
In addition, Biffa generates power
from renewable sources and
changes to electricity export
prices impact revenues and profits
achieved.
Markets for these recyclate
products have individual supply
and demand dynamics impacting
both price and availability of
off-take.
Ongoing monitoring and improvements to
product quality within recycling processes.
Off-taker strategy review to limit
dependency, where able, on non-OECD
markets.
Commodity price risk sharing within long-
term commercial contracts.
Working with key customers (e.g., Local
Government) to agree gate fees to reflect
any increased costs and dual collection
methods.
Power price hedging policy in place, which
is regularly reviewed.
Route to market Power Purchase
Agreement with top tier off-taker gives off-
take certainty and credit worthiness.
Investment in sorting technology and process
improvements to ensure we can continue to
supply markets with a high-quality product
and that we maximise the product captured
and recycled.
Supply agreements now in place with domestic
processors and EU mills for the off-take of
all mixed papers. There is still 50% export of
cardboard to non-OECD countries but this
represents a significant transition.
Continued investment in plastic recycling has
significantly reduced reliance on exports, with
most of recovered plastics being processed to
end destination internally.
Continued focus on minimising exposure to
recycle commodity price fluctuations by risk
sharing with our local authority customers.
At the end of FY22, we mitigated 63% of
commodity price risk through this approach.
This fell slightly from FY21 due to certain
contracts acquired from Viridor. On a like-for-
like basis (excluding Viridor) our mitigation
increased from 64% to 67%.
Finance availability/
investment
Link to stakeholder
groups
Investors
Risk movement and level
Strategic sustainability
pillar
Risk impact
Financial
If the Group were to not maintain
adequate cash balances, the Group
would be unable to pay suppliers,
payroll and other creditors in
a timely manner or on agreed
terms. This could result in delays
or ceasing of operations, both of
which could lead to reputational
damage and a deterioration in
financial performance.
If the Group were to fail to
comply with any of the financial
or non-financial covenants in its
credit facilities (due, for example,
to deterioration in financial
performance), it could result in a
default and the acceleration of the
Group’s obligations to repay those
borrowings, increased borrowing
costs or cancellation of certain
credit facilities.
A large one-off cash outflow,
similar in amount to the total
protective assessments issued
by HMRC as part of the ongoing
HMRC landfill tax enquiry, would
increase the risk of covenant non-
compliance.
Significant and flexible bank funding facility
with substantial headroom to enable the
Group to progress strategic priorities and
accommodate any downside performance
risk. As at the end of the year, the Group
held a cash balance of £40.8m.
£350m unsecured revolving credit facility
expiring in March 2025, with 84% of the
facility available until March 2026. As at the
end of the year, £341m of the facility was
undrawn. Drawdowns can be requested and
processed at short notice if the need arises.
In addition to the bank funding facility, the
Group has over £50m of undrawn asset
financing facilities, although these are
uncommitted.
Ongoing monitoring of financial and non-
financial covenants with regular updates
to the Board.
Incorporate cash performance and
funding requirement considerations into
budgeting and forecasting processes.
Consider the impact on covenants when
making key strategic decisions such
as acquisitions, disposals and capital
expenditure.
Ongoing monitoring of the status of the
HMRC landfill tax enquiry with regular
updates to the Board.
The Group has significant headroom on
the lending covenants and intends to
maintain high levels of headroom going
forward. This, combined with the flexibility
in the business model, enables the
Group to mitigate any financial risks that
materialise.
The Group has arranged a private placement
with two lenders for £150m covering a term of
7 and 10 years with an average borrowing cost
of 2.73%.
The Group has arranged an additional private
placement with three lenders for £195m
covering a term of 8, 10 and 12 years with an
average borrowing cost of 2.49%.
The covenants on the revolving credit facility
have been changed to a post-IFRS 16 basis so
that they are more closely aligned with current
accounting principles. This has increased the
covenant metrics by 1.0x. The covenants on the
private placements are consistent with those of
the rolling credit facility.
The Group has established a sustainability-
linked finance framework which aligns the
Group’s funding with the sustainability strategy.
The Group has recognised a provision of £20m
in relation to the HMRC landfill tax enquiry.
This is accompanied by a contingent liability
disclosing that the protective assessments
issued by HMRC sum to £168m plus penalties
and interest.
Covenant basis leverage ratio was 2.9x at
March 2022, an improvement from the ratio
of 3.0x reported at March 2021. This provides
significant headroom against the covenant
limit of 4.5x (note the limit will fall to 4.0x) in
September 2023.
Principal Risks and Uncertainties continued
Link to strategic sustainability pillars
Building a circular economy
Tackling climate change
Caring for our people,
supporting our communities
Risk movement
Increasing
Stable
Decreasing
Risk level
Low
Medium
High
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Biffa plc / Annual Report and Accounts 2022
Risks Description Mitigating Actions Changes in Year
Economic
environment
Link to stakeholder
groups
Customers
Investors
Suppliers
Government & Regulators
Environment & Communities
Risk movement and level
Strategic sustainability
pillar
Risk impact
Financial
Economic conditions in the UK
may have an adverse impact
on the Group’s operational and
financial performance.
The Group exposure includes:
• Political, social and
macroeconomic risks relating to
the UK’s exit from the EU.
• Any economic weakness that
leads to reduced volumes of
waste and recyclate.
• A deterioration in
macroeconomic conditions
resulting in increased pricing
pressure and customer turnover.
The Group has revenues and costs that are
impacted by the value of Sterling relative
to key currencies such as the US Dollar or
the Euro. This provides some degree of
offset and natural hedge.
To improve short-term earnings visibility
and reduce the susceptibility of financial
performance to price fluctuations, the
Group enters into forward contracts for:
• The sale of electricity.
• Short-term currency exposures.
• The purchase of fuel.
During the year the Group held interest
rate swaps to reduce exposure to the
impact of rate fluctuations on the
rolling credit facility interest charge. This
arrangement was terminated towards the
end of the year when the drawdown on
the facility fell to low levels, thus reducing
the exposure significantly.
Biffa provides services to customers in the
public and private sectors right across the
UK economy. The breadth of customers
offers a degree of protection against
economic pressures that may affect
specific markets and industries.
The Group continues to monitor this risk,
specifically the impact of increasing interest
rates, inflationary pressures and supply chain
constraints, and remains confident that
existing mitigations enable the impact of any
weakening conditions to be minimised.
83
Strategic Report
Financial
Statements
Corporate
Governance Report
Overview
Biffa plc / Annual Report and Accounts 2022
Additional
Information
Non-Financial Information Statement
The Non-Financial Reporting Requirements set out in the Companies Act 2006 are addressed in the statement below, which cross references
other areas of the Annual Report and Accounts, the Sustainability Report and the Biffa website where further information can be found.
The statement reflects Biffa’s approach to environmental, social and employee-related matters and the majority of our policies can be found:
www.biffa.co.uk/about-us/policies
Main policies and standards which govern
our approach
How we monitor the effectiveness of the
policies
Where material information can
be found
Colleagues
1
Anti-bribery and gifts and
hospitality policies
Updated policies have been recently reviewed
and approved by the Biffa plc Board. They set
out the standards that are expected of anyone
working at Biffa and third parties working
with Biffa. It includes guidance and the
requirements on the giving and receiving of
business gifts and hospitality.
• Biffa enforces a strict prohibition against the
giving, receiving, offer, acceptance, payment
or authorisation of any bribes, and also
against any other form of corruption.
• We also demand transparency and integrity
in all of our business dealings, to avoid any
improper advantage, or the appearance of
questionable conduct by our employees or
third parties with whom we do business.
• Any instances of potential or actual non-
compliance with these policies are fully
investigated and reported to the Audit
Committee.
For further information see page 53
of the Annual Report and page 30
of the Sustainability Report:
https://www.biffa.co.uk/investors/
sustainability
Whistleblowing policy
The Group has a long-established
whistleblowing policy by which all employees
may, in confidence, report any concerns where
the interests of the Company or others are at
risk.
• All whistleblowing reports are entered in
the Group Whistleblowing Register and are
thoroughly investigated.
• The output of an investigation is typically
reviewed by the Group HR Director, General
Counsel and Company Secretary and other
senior leaders as appropriate, dependent on
the nature of the complaint, which confirms
the outcome and any actions to be taken.
• The Audit Committee has responsibility
(delegated from the Board) for monitoring
the Group’s whistleblowing policy and
arrangements.
For further information see page 55
of the Annual Report and page 30
of the Sustainability Report:
https://www.biffa.co.uk/investors/
sustainability
84
Biffa plc / Annual Report and Accounts 2022
Colleagues
1
continued
Diversity and inclusion policy
Our Diversity Policy is designed to provide
equal opportunities in employment and to
avoid unlawful discrimination.
Biffa will not discriminate directly or indirectly
in our recruitment, employment and post-
employment practices because of age,
disability, sex, gender reassignment, pregnancy,
maternity, race (which includes colour,
nationality and ethnic or national origins),
sexual orientation, religion or belief, or because
someone is married or in a civil partnership.
• Every employee is required to assist us to
meet our commitment to provide equal
opportunities in employment and avoid
unlawful discrimination.
• We have manager guidelines for diversity,
helping them to consider diversity/equal
opportunity obligations. Managers are also
advised to make reasonable adjustments to
our standard working practices to overcome
barriers caused by disability and we have a
Flexible Working Policy in place to support
requests for variations to standard working
practices.
• Our Diversity Policy also covers specific
arrangements for people with disabilities
including:
– Giving full and fair consideration to
applications from disabled persons,
having regards for their skills and abilities.
– Continuing the employment of and
arranging appropriate training for those
who have become disabled while at Biffa.
– Career development and promotion of
disabled employees.
For further information see page 54
of the Annual Report and page 32
of the Sustainability Report.
https://www.biffa.co.uk/investors/
sustainability
You can also read our annual Gender
Pay Gap Report here: www.biffa.
co.uk/-/media/files/sustainability/csr/
biffa_gender-pay-gap-2021.ashx
Family friendly policies
Following a review of our policy framework in
order to support our D&I strategy and further
improve our employee proposition, in 2021 we
launched a new suite of ‘family friendly’ policies.
Benefits include extended company maternity
and paternity pay, child’s first (adoptive)
birthday paid leave, child’s first day of school
paid leave and up to three days paid leave for
IVF treatment per cycle.
We have also introduced a new menopause
policy, sabbatical policy and retirement policy.
• The policies exist to maintain a clear
procedure that ensures the reasonable, fair
and consistent treatment of all employees.
• Managers are responsible for ensuring
reasonable adjustments are made to provide
a supportive working environment for
employees.
See page 55 of the Annual Report
for more information.
Health, safety and wellbeing policy
Health, safety and wellbeing is the highest
priority within the business and Biffa is
committed to monitoring and reviewing
performance on a regular and ongoing basis.
Our goal is to keep our people, our customers
and the public safe through effective
leadership and risk management, promoting
high standards of health, safety
& wellbeing in the workplace and in all
our activities.
• Employees are expected to report and
discuss health, safety and wellbeing matters
with their managers, and company Health
& Safety business partners who will offer
or obtain further expert advice, where
necessary.
• Employees are encouraged to contribute
good ideas and improvements and report
any shortfalls so management can make
informed decisions and improve standards
across the business.
• We monitor performance through our LTI
rate and have a target in place to reduce lost
time injuries by 50% by 2030 from our 2019
baseline. See page 48.
For further information see page 48
of the Annual Report and page 28
of the Sustainability Report.
https://www.biffa.co.uk/investors/
sustainability
1 In some instances, the policies in this section extend to third parties, including contractors, customers, suppliers and members of the public.
85
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Corporate
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Biffa plc / Annual Report and Accounts 2022
Additional
Information
Non-Financial Information Statement continued
Colleagues
1
continued
Salary review and changes policy
The policy is in place to effectively manage
salary levels and changes to salaries in order to
maintain our competitiveness in the market,
attract and retain talented employees and
ensure our practices are fair, equitable and
affordable.
• We are committed to paying our people fairly
and ensuring our employees are valued and
treated well. To support pay parity, we have a
robust structured approach to pay.
• The annual salary review process provides
the opportunity for Biffa to review salaries
against a range of factors (including but not
limited to: prevailing economic indicators
and forecasts, business performance, and
other relevant considerations) and make any
appropriate changes that are agreed at that
time.
For further information see page 127
of the Annual Report and page 31
of the Sustainability Report.
https://www.biffa.co.uk/investors/
sustainability
Environmental Information
Environment, sustainability and
carbon policy
Protection of the environment and the
climate is a cornerstone of Biffa’s business,
both operationally and at corporate level. It
is underpinned by our Vision and Purpose
to be the leader in UK sustainable waste
management and to change the way people
think about waste and it is delivered by our
sustainability strategy and our operational
environmental compliance strategy. Biffa is
committed to its compliance obligations
as well as promoting high standards of
environmental, sustainability, carbon and
energy management at all our workplaces, and
in all our activities.
• Our Corporate Affairs and H&S teams work
together across the business ensuring
we meet our compliance obligations by
monitoring, evaluating, auditing, coaching
and training.
• Our Board Sustainability Committee oversees
sustainability strategies and performance.
Responsibility for environmental compliance
sits with the Board.
• We report on our progress against our
sustainability strategy targets annually in our
Sustainability Report.
For further information see page 116
of the Annual Report and page 7
of the Sustainability Report.
https://www.biffa.co.uk/investors/
sustainability
You can also visit:
www.biffa.co.uk/sustainability
86
Biffa plc / Annual Report and Accounts 2022
Human rights
Modern slavery and human
tracking policy
The policy sets out the measures, systems and
procedures which Biffa employs to minimise
the opportunity for modern slavery and
human trafficking taking place within the
Group and within our supply chain.
• Biffa conducts risk assessments across
its activities and supply chain in order to
identify any area of its operations that might
represent higher potential risks for slavery or
human trafficking to occur.
• Biffa works with specific recruitment agencies
and labour resourcing partners who are
equally committed to ensuring the work
environment is free of slavery and human
trafficking.
• All Biffa colleagues and managed service
providers have regular meetings with onsite
account managers where we discuss their
actions regarding the prevention of modern
slavery. It is a standing item on monthly
business meeting agendas and quarterly
business reviews. Labour providers also give
biweekly updates on any activity of concern.
• We produce an annual modern slavery
statement, which the Board reviews and
approves.
For further information see page 56
of the Annual Report and page 30
of the Sustainability Report.
https://www.biffa.co.uk/investors/
sustainability
And you can read our modern slavery
statements and case studies here:
www.biffa.co.uk/about-us/policies
Social matters
Suppliers – social responsibility and
ethical standards
Our suppliers of goods and services must
comply with all relevant legislation and
international standards including trading
policy, child and forced labour, health
and safety of workers, non-discrimination,
employment law, human rights, bribery and
corruption. We procure under the Code of
Ethics of the Chartered Institute of Purchasing
and Supply.
• We have a social responsibility to our
suppliers. When problems arise with a
supplier’s performance, we work with the
company concerned to help them to meet
requirements.
• We will be fair and lawful in our dealings
but avoid any conduct which could be
counteractive to our corporate social
responsibility and ethical standards. We
reserve the right to discontinue business
with suppliers who do not comply with our
requirements in this area.
• Our standard trading terms with suppliers are
60 days. This has been the policy since May
2008 and is applicable to all existing and new
suppliers alike.
For further information visit
https://www.biffa.co.uk/about-us/
suppliers/social-and-ethical-standards
87
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Biffa plc / Annual Report and Accounts 2022
Additional
Information
Social matters continued
Sustainable procurement policy
In the delivery of cost-effective and high-
quality services to our customers, Biffa is a
significant purchaser of goods and services.
We recognise that the impact of this spend
requires us to ensure our procurement
practices are not only responsible, but also
environmentally, economically, and ethically
sound.
• Biffa works with key stakeholders both within
the business and externally in order to share
best practice, identify new opportunities and
deliver programmes that promote our aims
for sustainable procurement.
• Performance is monitored and recorded, and
key performance measures such as carbon
emissions reductions are regularly reported.
For further information see page 56
of the Annual Report.
www.biffa.co.uk/sustainability
Corporate responsibility policy
Our corporate responsibility framework
encompasses our people, health, safety &
wellbeing, communities, the environment,
our marketplace and relationships with our
customers, suppliers and other parties as
well as our commitment to business ethics and
conduct.
• We are committed to complying with our
permits as well as promoting high standards
on all of our sites, premises, and in all of our
activities.
• Our Group Executive Team is responsible
for the delivery of the policy at a business
level, with oversight and direction from
the Sustainability Committee. Its success is
measured through our sustainability KPIs,
which track our performance across three key
areas (building a circular economy, tackling
climate change and caring for our people,
supporting our communities), enabling us
to deliver against our responsible business
objectives.
For further information see page 55
of the Annual Report
Employee volunteering policy
and procedure
Biffa recognises that facilitating the voluntary
involvement of our employees in community-
based projects can result in a range of positive
outcomes.
Biffa will grant one day’s paid leave per annum,
in line with an employee’s contracted hours,
to eligible employees to get involved in team
volunteering opportunities within our local
communities and environmental- based
projects.
• Managers are responsible for assessing local
operational needs and employees proposed
volunteering activity, taking into account the
benefits to both the employee and to Biffa.
• Managers will also consider personal
development and where appropriate,
volunteering may be offered as one of the
methods of meeting development needs.
• Since its introduction, Biffa employees
have volunteered for a wide-range of
organisations.
For further information, see page 55
of the Annual Report.
Other non-financial information
Non-financial information Section Pages
Business Model Our Sustainable Business Model 08–09
Principal Risks Managing Our Risks 76–83
Non-Financial KPIs Sustainability Pillars 34–35
Non-Financial Information Statement continued
88
Biffa plc / Annual Report and Accounts 2022
Viability Statement and Going Concern
During FY22, Biffa’s financial performance
recovered strongly from the previous year,
which had been materially impacted by
the Covid-19 pandemic and the associated
lockdown measures. The Group has
since seen a return to pre-Covid-19
performance levels but has encountered
new macroeconomic challenges in the
form of significant inflationary cost
pressures and labour shortages.
As of March 2022, the Group had unutilised
committed bank facilities available of £341.0m
and cash and cash equivalents of £40.8m.
The Group completed the acquisition of
Viridor’s Collections business and certain
recycling assets on 31 August 2021.
Total consideration was £130.8m and an
additional £17.0m of lease liabilities was
recognised on acquisition. The acquisition
contributed £84.0m and £11.8m to
Revenue and Profit Before Tax respectively
for the seven months to March 2022. The
contribution is expected to be greater
in FY23 due to both a full year of trading
and realisation of further synergies, as the
business is integrated further into the Group.
The Viridor acquisition was funded by the
issuance of a private placement facility with two
investors for £150m covering a term of 7 and 10
years with an average interest rate of 2.73%.
There was an issuance of an additional
private placement facility in February 2022
with three investors for £195m covering a
term of 8, 10 and 12 years with an average
interest rate of 2.49%. This funding has been
used to significantly reduce the amount
drawn down on the rolling credit facility.
The financial covenants on the rolling credit
facility were changed to an IFRS 16 basis
during the year. The equivalent covenants
on the private placements are aligned with
those of the rolling credit facility as of March
2022. Additionally, a sustainability-linked
finance framework has been incorporated
into the rolling credit facility, with the
interest rate margin linked to the Group’s
performance against two environmental
key performance indicators.
The Group has satisfactory headroom on
the net debt:EBITDA lending covenants,
with a ratio of 2.9x on a covenant basis at
March 2022 versus the covenant threshold
of 4.5x. The headroom on the interest cover
covenant is significantly greater.
While the Group is subject to a number
of principal risks as disclosed in the
Strategic Report (see pages 76-83), these
are considered to be well managed by
the Board. The Group’s business model
has proven its resilience over the last
year, seeing a strong recovery from the
pandemic despite encountering significant
macroeconomic headwinds.
In accordance with provision 31 of the UK
Corporate Governance Code 2018, the Board
has assessed the viability of the Group over
a longer period than twelve months and
has adopted a period of five years for the
assessment. In determining the appropriate
period over which to assess viability, the
Board has considered budgeting, forecasting
and strategic planning cycles, the timeframe
within which the Group assess risks and the
maturity of the Group’s credit facilities.
Five years is considered a reasonable period
for a shareholder to expect a waste business
to be assessed over. It also aligns with the
Group’s internal budgeting and forecasting
as reviewed by Management. Beyond the
five-year period, the Group is satisfied that
the longer term pre-Covid-19 strategy is
still relevant and appropriate. This includes
further recycling capacity, reduction in
waste, acquisition growth and investment in
energy recovery.
The viability of the Group has been assessed
by considering a number of the principal
risks in the Strategic Report including
availability and cost of labour, commodities
market and pricing volatility and long-term
contracts and tendering. However the focus
of the assessment has been on the finance
availability/investment principal risk, as the
key impact of the other risks is the reduction
in financial performance and liquidity.
The base case assumes the Group will
continue to progress with the plastic
processing plants and small scale M&A
activity. The base case is formed of a Board-
approved detailed budget for FY23, which
has been modelled on a site-by-site basis
using a bottom-up approach. The forecast
for years 2 to 5 is from the 5-year plan for the
Group, which has been built up on a sub-
divisional basis and approved by the Board.
The low case assumes depressed volumes
similar to those experienced during the
Covid-19 lockdowns, and for a longer period
of time, alongside no M&A activity. This
has total impacts of £325m and £225m
on EBITDA and Net Cash Flow respectively
across the five year assessment period.
An additional low case has been tested
which involves a large one-off cash
payment in FY23, similar in amount to the
sum of the protective assessments issued by
HMRC on the ongoing landfill tax enquiry.
The Group’s profitability, liquidity and
financial headroom have all been assessed
and incorporated within the above-
mentioned scenario analysis.
Within these forecasts the Board carried out
a robust assessment of the principal risks
facing the Group, including the impact of
further Covid-19 lockdowns on the various
sectors the business operates in and the
waste streams arising in all the Group’s
operating areas. To assess viability, multiple,
material risks are selected by the Board and
are assumed to crystallise in parallel during
the assessment period, putting financial and
operational performance of the business
under plausible, but unlikely, stresses.
If certain risks do materialise and the
financial position of the Group worsens
significantly, the Board has considered
the various mitigating actions available to
improve liquidity. These include reducing
dividends, reducing discretionary capital
expenditure and disposing of assets. These
are considered to have substantial beneficial
impacts on liquidity if utilised. Further
options are available can be taken as a last
resort, which include an equity raise and
applying for a covenant waiver.
Based on the results of this analysis and after
careful consideration of the uncertainty
and dynamic nature of Covid-19, including
reviewing the fast changing external
factors and their cumulative impact in the
short, medium and long term, and other
considerations including the Group’s business
model and ability to model a range of severe,
but plausible, reasonable worst-case scenarios,
the Directors confirm that they have a
reasonable expectation that the Group will be
able to withstand the impact of each of these
scenarios, in isolation and in a number of
plausible combinations, should they occur in
the course of the five-year assessment period.
In each event the Group would continue in
operation and meet its liabilities as they fall
due. Therefore, the Board have concluded
that there is a reasonable expectation that
the Group will remain viable for the entire
five-year assessment period based on the
analysis performed over this period.
89
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Biffa plc / Annual Report and Accounts 2022
Additional
Information
Governance at a Glance
The UK Corporate Governance Code: How we comply
The Corporate Governance Report, which includes the
principal Committee Reports and Directors’ Report, explains
how the Board has applied the principles and complied with
the provisions of the UK Corporate Governance Code 2018
(the Code). The Code is available to view on the website of the
Financial Reporting Council at www.frc.org.uk.
The Board confirms that it has applied the principles and
complied with the provisions of the Code throughout the year
ended 25 March 2022 except for provision 38 which requires
pension contribution rates for Executive Directors to be aligned
with those available to the wider workforce.
As stated in the Directors’ Remuneration Policy, newly appointed
Executive Directors’ pension contributions will be aligned to the
wider workforce from appointment. The incumbent Executive
Directors, being Michael Topham and Richard Pike, will remain
on their current pension contribution rates until the end of 2022
when they will be aligned to the wider workforce rates. Further
information can be found in the Directors’ Remuneration Report
on page 129.
The tables below sets out where the key content can be found
in the Corporate Governance Report. The Report has been
organised to follow the structure and principles of the Code.
1. Board Leadership and Company Purpose
A. An effective Board
p.98
B. Purpose, values and culture p.97
C. Governance framework p.96
D. Stakeholder engagement p.102-107
E. Workforce policies and practices p.97
2. Division of Responsibilities
F. Roles and responsibilities
p.110
G. Independence p.110
H. Time commitment and conflicts of interest p.110
I. Key activities of the Board p.98-101
3. Composition, Succession and Evaluation
J. Appointments to the Board
p.112
K. Board skills, experience and knowledge p.115
L. Board evaluation p.111
4. Audit, Risk and Internal Control
M. Financial reporting
p.122
Effectiveness of Internal and External Audit p.122
N. Viability statement and going concern p.89
O. Internal control p.123
Risk management p.122
5. Remuneration
P. Remuneration aligned with purpose and values p.128
Q. Directors’ Remuneration Policy table p.137
R. Remuneration performance outcomes p.130
Personal performance targets p.130
Board Composition
Scheduled Board attendance FY22
The table below sets out the Directors’ attendance at
scheduled meetings they were eligible to attend for the year
ended 25 March 2022.
Director Independent
Board
meetings
attended/
maximum
possible
meetings
Michael Averill
(until 31 December 2021)
Yes 5/5
Carol Chesney
Yes 7/7
Ken Lever
Yes 7/7
David Martin
Yes 6/7
Claire Miles
Yes 7/7
Linda Morant
(from 1 December 2021)
Yes 2/2
Richard Pike
No 7/7
Michael Topham
No 7/7
1. The Board rescheduled its November 2021 Board meeting. David Martin was unable to
attend the rescheduled meeting due to an unavoidable prior commitment.
Documents available at: www.biffa.co.uk
• Biffa plc Articles of Association
• Matters Reserved to the Board
• Terms of Reference for Board Committees
• Board Diversity and Inclusion Policy
• Modern Slavery Statement
• Tax Strategy
• Gender Pay Gap Report
• Whistleblowing Policy
0-2 years 2
2-4 years 2
4-6 years 3
Independent 5
Executive 2
As at 25 March 2022
Board Independence Board Tenure
90
Biffa plc / Annual Report and Accounts 2022
Chairman’s Introduction
I was pleased that the Board could resume
physical Board meetings during the year
and hold meetings at the Company Shop
Group’s head office in Barnsley in September
2021 and the Company’s Newhurst Energy
Recovery Facility in April 2022. The site visits
provide an important opportunity for the
Board to engage with employees and
other stakeholders. See pages 98 and 100
for more details.
In May 2021, we announced the agreement
to acquire the collections business and
certain recycling assets from the Viridor
Group, for a total purchase consideration of
£131m. The transaction marked a significant
step forward in the Group’s growth
strategy. Further information on how the
Board considered our stakeholders in their
decision-making process to approve the
transaction can be found on page 109.
Changes to the Board during the Year
There have been a number of changes to
the Board and its Committees during the
year. In September 2021, we announced that
Michael Averill had informed the Board of
his intention to relocate to Australia and to
retire from the Board at the end of 2021 and
that Linda Morant would be appointed with
effect from 1 December 2021.
Michael retired from the Board on
31 December 2021 following a long
involvement with Biffa making an enormous
contribution to the Board. Linda joined
the Board as a Non-Executive Director,
Chair of the Sustainability Committee and
member of the Nomination Committee
from 1 December 2021. Her biography can
be found on page 93 and details of her
selection and appointment process can be
found on page 112.
Claire Miles was appointed Chair of the
Remuneration Committee, succeeding
Michael Averill, on 7 September 2021.
Claire joined the Board on 1 April 2021 and
has been a member of the Remuneration
Committee since that date. She was also
previously a member of the Remuneration
Committee at Northgate plc for four and
a half years. In addition, Claire joined the
Nomination Committee and Sustainability
Committee on 6 September 2021 and the
Audit Committee on 1 January 2022.
Diversity and Inclusion
I am pleased to report that, following the
changes to the Board during the year, the
Board has met the Hampton-Alexander
Review and Parker Review targets for gender
and ethnic diversity as set out in the Board’s
Diversity and Inclusion Policy. There are now
three female members of the Board, which
amounts to 43% of the Board, and one Board
member from an ethic minority background.
Further information can be found on 115.
Sustainability
The Company has continued to make
progress towards our ambitious
sustainability goals with support and focus
from the Board Sustainability Committee.
See pages 116-117 for more details
.
Values
The Board is responsible for setting the
Company’s values and ensuring that
they are aligned with the Group’s culture.
The Company spent considerable time
developing a new set of values to reflect the
development of the business and capture
the essence of Biffa. These were reviewed
and approved by the Board during the year.
Further details can be found on page 97.
Governance
We take corporate governance seriously
at Biffa but continue to seek to achieve a
balance and focus on those areas that are
supportive of creating value.
Set out on pages 108-109 is the Board’s s172
statement. During the year, the Board has
clearly demonstrated its s172 duties in the
principal decisions it has taken. Stakeholder
engagement remains a focus of the Board
and details of how the Board has engaged
with the different stakeholder groups during
the year can be found on pages 102-107.
Ken Lever
Chairman
5 August 2022
On behalf of the Board, I am pleased to introduce the Company’s Corporate
Governance Report for this year.
The Board’s focus has been to navigate the Group through its strong recovery from
the impact of the Covid-19 pandemic and the ongoing fulfilment of our strategic
objectives. The Board approved the re-establishment of the Company’s dividend
policy during the year with payment of an interim dividend in December2021.
Delivering strong
shareholder value
for the future
91
Strategic Report
Financial
Statements
Corporate
Governance Report
Overview
Biffa plc / Annual Report and Accounts 2022
Additional
Information
Board of Directors
Ken Lever
Non-Executive Chairman
Michael Topham
Chief Executive Officer
Richard Pike
Chief Financial Officer
Carol Chesney
Non-Executive Director
David Martin
Senior Independent Director
Claire Miles
Non-Executive Director
Linda Morant
Non-Executive Director
Sarah Parsons
General Counsel and
Company Secretary
Date of Appointment
28 September 2016
Date of Appointment
18 August 2016
Date of Appointment
29 September 2018
Date of Appointment
12 July 2018
Date of Appointment
28 September 2016
Date of Appointment
1 April 2021
Date of Appointment
1 December 2021
Date of Appointment
July 2019
Committee Memberships
N S
Committee Memberships
None
Committee Memberships
None
Committee Memberships
A N R S
Committee Memberships
A N R S
Committee Memberships
R A N S
Committee Memberships
S N
Committee Memberships
None
Nationality
British
Nationality
British
Nationality
British
Nationality
American/British
Nationality
British
Nationality
British
Nationality
American
Nationality
British/Australian
Relevant Skills and Experience
Ken was appointed Chairman
in March 2018. He has strong
leadership skills and extensive
listed company experience in a
number of UK industry sectors.
He also has a wealth of corporate
finance experience, having
previously held board executive
director positions with Numonyx
BV, Tomkins plc, Albright and
Wilson plc and Alfred McAlpine
plc. Ken joined Xchanging plc
as its chief financial officer, and
was subsequently appointed
and served as its chief executive
officer from 2011 to 2015. Ken is a
Fellow of the Institute of Chartered
Accountants and a former partner
at Arthur Andersen.
Ken was previously a non-
executive director of Blue Prism
Group plc, Catesby Property Group
plc, iSoft plc and Vega Systems
plc, and served for six years on the
UK Accounting Standards Board
between 2006 and 2012.
Relevant Skills and Experience
Michael was appointed Chief
Executive Officer in September
2018, having previously held the
role of Chief Financial Officer from
2013. He has proven abilities to
develop and acquire companies
which deliver sustainable
growth while strengthening the
Groupportfolio.
Michael has more than 15
years’ experience in the waste
management sector, having held
divisional managing director and
finance director roles within Biffa
before being appointed Chief
Financial Officer, and as finance
director of Greenstar UK prior to its
acquisition by Biffa in 2010.
He trained as a Chartered
Accountant with PwC in London
where he held positions in
both the audit and transaction
servicespractices.
Relevant Skills and Experience
Richard was appointed Chief
Financial Officer in September
2018. Richard has a wealth of
financial experience, having
trained as a chartered accountant
with Price Waterhouse, he went
on to hold a variety of financial
and management positions at
Pilkington plc, Scapa Group plc
and Manchester Airports Group.
Latterly, Richard was the chief
financial officer of AB Sugar,
managing director of British Sugar
and group chief financial officer of
Boparan Holdings Limited.
Relevant Skills and Experience
Carol has a wealth of financial and
regulatory experience. She is a
Fellow of the Institute of Chartered
Accountants in England and Wales,
and qualified with Arthur Andersen
in the UK.
Carol was previously a non-
executive director of Renishaw
plc and the company secretary
of Halma plc, the FTSE 100
health, safety and environmental
technology group, where she
oversaw governance, pensions,
group insurance and ethics
compliance from 1998 until 2018.
Prior to this role, Carol was Halma’s
group financial controller with
oversight of all day-to-day financial
planning and reporting matters.
Relevant Skills and Experience
David is a chartered management
accountant and has significant
experience of both domestic and
global transport businesses.
He was involved in the acquisition
of National Express and the
successive management buy-out,
leading to the creation of British
Bus Group Limited. David was
subsequently appointed chief
executive of Arriva plc, a position
he held from 2006 to 2015.
David is the Group’s nominated
Non-Executive Director for
workforce engagement.
He was previously a non-executive
director of Ladbrokes plc and
Arriva plc.
Relevant Skills and Experience
Claire is currently the chief
executive officer of Yell, the UK
digital marketing services business.
Prior to this, Claire was managing
director of Centrica Hive Limited
as part of a nine-year career at
Centrica holding various general
management and operational
positions, including managing
director of HomeCare, where she
gained significant experience
in customer service, digital and
business transformation.
Claire previously held executive
leadership roles at General Electric
and Santander and was a non-
executive director at Northgate plc
for four and a half years.
Relevant Skills and Experience
Linda is currently the chief
digital officer for The Crown
Estate, a unique business with a
diverse portfolio that stretches
across England, Wales and
NorthernIreland.
Linda has over 20 years of
experience working with leading
global companies to drive growth
and transformation, including
Microsoft and Nokia. Most recently,
Linda served as Vice President,
Downstream Digital at British
Petroleum (BP). She has a broad
range of global expertise, with
particular strengths in digital
technologies and transformation,
growth strategies, and sales and
marketing leadership.
Relevant Skills and Experience
Sarah joined Biffa in 2019 as
General Counsel and Company
Secretary. She is responsible
for managing legal risk and
supporting Biffa’s Chairman
and the Board in maintaining
high standards of corporate
governance. Sarah also leads
the insurance, property and
planningteams.
Sarah is a senior lawyer with over
20 years’ experience in private
practice and in-house legal roles
in England and Australia. She
joined Biffa from Rotork plc where
she was senior legal counsel and
company secretary. Before this,
Sarah spent seven years as senior
legal counsel for ANZ Bank in
Australia. She began her career
at Bryan Cave Leighton Paisner
in London where she spent more
than a decade as a corporate
M&A lawyer. Sarah is qualified as a
solicitor in England and Australia.
External Appointments
Ken is chairman of RPS Group plc
and a non-executive director of
Vertu Motors plc and Rockwood
Strategic plc.
External Appointments
Michael is a director of the
Environmental Services Association
Limited.
External Appointments
None
External Appointments
Carol is a non-executive director of
Hunting plc and IQE plc.
External Appointments
David is chairman of FirstGroup plc.
External Appointments
Claire is chief executive officer of
Yell.
External Appointments
Linda is chief digital officer at The
Crown Estate.
External Appointments
None
92
Biffa plc / Annual Report and Accounts 2022
Ken Lever
Non-Executive Chairman
Michael Topham
Chief Executive Officer
Richard Pike
Chief Financial Officer
Carol Chesney
Non-Executive Director
David Martin
Senior Independent Director
Claire Miles
Non-Executive Director
Linda Morant
Non-Executive Director
Sarah Parsons
General Counsel and
Company Secretary
Date of Appointment
28 September 2016
Date of Appointment
18 August 2016
Date of Appointment
29 September 2018
Date of Appointment
12 July 2018
Date of Appointment
28 September 2016
Date of Appointment
1 April 2021
Date of Appointment
1 December 2021
Date of Appointment
July 2019
Committee Memberships
N S
Committee Memberships
None
Committee Memberships
None
Committee Memberships
A N R S
Committee Memberships
A N R S
Committee Memberships
R A N S
Committee Memberships
S N
Committee Memberships
None
Nationality
British
Nationality
British
Nationality
British
Nationality
American/British
Nationality
British
Nationality
British
Nationality
American
Nationality
British/Australian
Relevant Skills and Experience
Ken was appointed Chairman
in March 2018. He has strong
leadership skills and extensive
listed company experience in a
number of UK industry sectors.
He also has a wealth of corporate
finance experience, having
previously held board executive
director positions with Numonyx
BV, Tomkins plc, Albright and
Wilson plc and Alfred McAlpine
plc. Ken joined Xchanging plc
as its chief financial officer, and
was subsequently appointed
and served as its chief executive
officer from 2011 to 2015. Ken is a
Fellow of the Institute of Chartered
Accountants and a former partner
at Arthur Andersen.
Ken was previously a non-
executive director of Blue Prism
Group plc, Catesby Property Group
plc, iSoft plc and Vega Systems
plc, and served for six years on the
UK Accounting Standards Board
between 2006 and 2012.
Relevant Skills and Experience
Michael was appointed Chief
Executive Officer in September
2018, having previously held the
role of Chief Financial Officer from
2013. He has proven abilities to
develop and acquire companies
which deliver sustainable
growth while strengthening the
Groupportfolio.
Michael has more than 15
years’ experience in the waste
management sector, having held
divisional managing director and
finance director roles within Biffa
before being appointed Chief
Financial Officer, and as finance
director of Greenstar UK prior to its
acquisition by Biffa in 2010.
He trained as a Chartered
Accountant with PwC in London
where he held positions in
both the audit and transaction
servicespractices.
Relevant Skills and Experience
Richard was appointed Chief
Financial Officer in September
2018. Richard has a wealth of
financial experience, having
trained as a chartered accountant
with Price Waterhouse, he went
on to hold a variety of financial
and management positions at
Pilkington plc, Scapa Group plc
and Manchester Airports Group.
Latterly, Richard was the chief
financial officer of AB Sugar,
managing director of British Sugar
and group chief financial officer of
Boparan Holdings Limited.
Relevant Skills and Experience
Carol has a wealth of financial and
regulatory experience. She is a
Fellow of the Institute of Chartered
Accountants in England and Wales,
and qualified with Arthur Andersen
in the UK.
Carol was previously a non-
executive director of Renishaw
plc and the company secretary
of Halma plc, the FTSE 100
health, safety and environmental
technology group, where she
oversaw governance, pensions,
group insurance and ethics
compliance from 1998 until 2018.
Prior to this role, Carol was Halma’s
group financial controller with
oversight of all day-to-day financial
planning and reporting matters.
Relevant Skills and Experience
David is a chartered management
accountant and has significant
experience of both domestic and
global transport businesses.
He was involved in the acquisition
of National Express and the
successive management buy-out,
leading to the creation of British
Bus Group Limited. David was
subsequently appointed chief
executive of Arriva plc, a position
he held from 2006 to 2015.
David is the Group’s nominated
Non-Executive Director for
workforce engagement.
He was previously a non-executive
director of Ladbrokes plc and
Arriva plc.
Relevant Skills and Experience
Claire is currently the chief
executive officer of Yell, the UK
digital marketing services business.
Prior to this, Claire was managing
director of Centrica Hive Limited
as part of a nine-year career at
Centrica holding various general
management and operational
positions, including managing
director of HomeCare, where she
gained significant experience
in customer service, digital and
business transformation.
Claire previously held executive
leadership roles at General Electric
and Santander and was a non-
executive director at Northgate plc
for four and a half years.
Relevant Skills and Experience
Linda is currently the chief
digital officer for The Crown
Estate, a unique business with a
diverse portfolio that stretches
across England, Wales and
NorthernIreland.
Linda has over 20 years of
experience working with leading
global companies to drive growth
and transformation, including
Microsoft and Nokia. Most recently,
Linda served as Vice President,
Downstream Digital at British
Petroleum (BP). She has a broad
range of global expertise, with
particular strengths in digital
technologies and transformation,
growth strategies, and sales and
marketing leadership.
Relevant Skills and Experience
Sarah joined Biffa in 2019 as
General Counsel and Company
Secretary. She is responsible
for managing legal risk and
supporting Biffa’s Chairman
and the Board in maintaining
high standards of corporate
governance. Sarah also leads
the insurance, property and
planningteams.
Sarah is a senior lawyer with over
20 years’ experience in private
practice and in-house legal roles
in England and Australia. She
joined Biffa from Rotork plc where
she was senior legal counsel and
company secretary. Before this,
Sarah spent seven years as senior
legal counsel for ANZ Bank in
Australia. She began her career
at Bryan Cave Leighton Paisner
in London where she spent more
than a decade as a corporate
M&A lawyer. Sarah is qualified as a
solicitor in England and Australia.
External Appointments
Ken is chairman of RPS Group plc
and a non-executive director of
Vertu Motors plc and Rockwood
Strategic plc.
External Appointments
Michael is a director of the
Environmental Services Association
Limited.
External Appointments
None
External Appointments
Carol is a non-executive director of
Hunting plc and IQE plc.
External Appointments
David is chairman of FirstGroup plc.
External Appointments
Claire is chief executive officer of
Yell.
External Appointments
Linda is chief digital officer at The
Crown Estate.
External Appointments
None
Committee Membership
A Audit Committee
N Nomination Committee
R Remuneration Committee
S Sustainability Committee
Committee Chair
Michael Averill retired from the Board on 31 December 2021
93
Biffa plc / Annual Report and Accounts 2022
Strategic Report
Financial
Statements
Corporate
Governance Report
Overview
Additional
Information
Group Executive Team
Michael Topham
Chief Executive Officer
Michael’s full biography appears
on page 92..
Richard Pike
Chief Financial Officer
Richard’s full biography appears
on page 92..
Sarah Parsons
General Counsel and Company Secretary
Sarah’s full biography appears
on page 93.
Maxine Mayhew
Chief Operating Officer,
Collections and Specialist Services
Mick Davis
Chief Operating Officer,
Resources & Energy
Roger Edwards
Managing Director,
Municipal
Jane Pateman
Group HR Director
David Gooding
Chief Information Officer
Cory Reynolds
Corporate Affairs Director
Date of Appointment
April 2022
Date of Appointment
September 2010
Date of Appointment
October 2010
Date of Appointment
December 2010
Date of Appointment
July 2011
Date of Appointment
November 2020
Maxine leads Biffa’s Collections
and Specialist Services divisions.
Using her significant experience,
Maxine is focused on growing
both businesses in line with
theirstrategy.
Prior to joining Biffa in April 2022,
Maxine was the managing director
of the natural resources division at
Costain Group plc, where she was
responsible for the water, energy
and defence sectors as well as
Costain’s consultancy proposition.
Maxine has also held senior roles at
other companies including Karbon
Homes, Northumbrian Water
Group and United Utilities. Maxine
is the senior independent director
at Low Carbon Contracts Company
and Electricity Settlements
Company and is a council member
at Cranfield University.
Mick joined Biffa when it acquired
Greenstar UK in 2010, where
he was recycling director. He
progressed to become Managing
Director of Biffa’s Resource,
Recovery & Treatment business,
before taking on the position of
Chief Operating Officer for the
Resources & Energy division in
2019. The Resources & Energy
division is responsible for much
of Biffa’s recycling infrastructure
and initiatives, with Mick playing
an instrumental role in the
development of Biffa’s state-of-the
art £27.5m plastic recycling facility
in Seaham. He is also responsible
for the Newhurst and Protos
energy recovery facilities, which
will turn non-recyclable waste into
much-needed renewable energy
for the UK.
In addition, Mick is a Trustee of
the Biffa Award, which supports
community projects around
the UK such as improving local
biodiversity as well as sitting on
Biffa’s steering committee for its
WasteAid partnership, where Biffa
supports the charity to help less
developed countries tackle waste
in a sustainable manner.
Roger started his career in the
waste industry over 30 years ago
with Drinkwater Sabey before
becoming a founding member of
Verdant Municipal, joining Biffa
in 2010 after the acquisition of
Greenstar UK. Roger leads Biffa’s
Municipal business.
He has successfully grown
recycling levels across the
Municipal business and is focused
on developing a more sustainable
future for waste management
including the further development
of the Group’s alternative fuels
strategy. Additionally, he is
focused specifically on Biffa’s
sustainability strategy pillar ‘Caring
for our People, Supporting our
Communities’, ensuring that Biffa is
supporting its local communities
and championing local causes
through its Community
Shopbusiness.
Jane joined Biffa in 2010 having
worked as HR director for
several FTSE listed companies,
providing strategic HR direction
and implementing people
programmes to support business
growth. She has a strong track
record of delivering business
benefits through the effective
deployment of human capital
strategies. At Biffa, Jane focuses on
its people strategy to ensure that
Biffa maintains its industry-leading
approach to people management
and employee wellbeing.
Her responsibilities include
employee relations, learning
and development, employee
engagement, and rewards and
benefits. Under Jane’s leadership
Biffa’s employee engagement
score has doubled since 2011.
Jane is also a non-executive
director and remuneration
committee chair of the legal and
professional services business,
Knights plc.
David oversees Biffa’s IT, business
intelligence and innovation
functions. He has worked in the
waste management industry for
20 years, starting at Biffa as its
Head of IT Business Systems before
spending two years at Greenstar
UK prior to its acquisition by Biffa
in 2010.
As Chief Information Officer, David
is responsible for technology
and business model innovation,
developing and optimising
Biffa’s systems, ensuring that the
business is operating as efficiently
as possible and maximising
opportunities for development.
As part of this he helps align
new projects with Biffa’s strategy,
such as initiatives supporting the
growth of the circular economy.
David sits on the Board of
Community Shop. Outside of Biffa,
David is also a trustee of Oasis
Church Trust in Birmingham.
Appointed in 2020, as Biffa’s
first Corporate Affairs Director,
Cory is focused on delivering
sustainability and environmental
strategy alongside strategic
communications to build a positive
profile around Biffa’s purpose
‘changing the way people think
about waste.’
She is responsible for Biffa’s
Corporate Affairs including
environment and sustainability
strategy, media relations
and PR, brand, social media,
investor relations, regulatory
and public affairs. Cory is also
the lead for internal employee
communications.
Cory’s background is in both
public and private sector
communications with a focus on
environment and sustainability.
Before joining Biffa, she was the
director of communications, brand,
and public affairs at Southern
Water and prior to this she worked
for Brighton & Hove City Council.
Cory had experience in the media
earlier in her career as a BBC senior
journalist and editor, giving her
a unique insight into the most
effective way to communicate
through the media.
94
Biffa plc / Annual Report and Accounts 2022
Maxine Mayhew
Chief Operating Officer,
Collections and Specialist Services
Mick Davis
Chief Operating Officer,
Resources & Energy
Roger Edwards
Managing Director,
Municipal
Jane Pateman
Group HR Director
David Gooding
Chief Information Officer
Cory Reynolds
Corporate Affairs Director
Date of Appointment
April 2022
Date of Appointment
September 2010
Date of Appointment
October 2010
Date of Appointment
December 2010
Date of Appointment
July 2011
Date of Appointment
November 2020
Maxine leads Biffa’s Collections
and Specialist Services divisions.
Using her significant experience,
Maxine is focused on growing
both businesses in line with
theirstrategy.
Prior to joining Biffa in April 2022,
Maxine was the managing director
of the natural resources division at
Costain Group plc, where she was
responsible for the water, energy
and defence sectors as well as
Costain’s consultancy proposition.
Maxine has also held senior roles at
other companies including Karbon
Homes, Northumbrian Water
Group and United Utilities. Maxine
is the senior independent director
at Low Carbon Contracts Company
and Electricity Settlements
Company and is a council member
at Cranfield University.
Mick joined Biffa when it acquired
Greenstar UK in 2010, where
he was recycling director. He
progressed to become Managing
Director of Biffa’s Resource,
Recovery & Treatment business,
before taking on the position of
Chief Operating Officer for the
Resources & Energy division in
2019. The Resources & Energy
division is responsible for much
of Biffa’s recycling infrastructure
and initiatives, with Mick playing
an instrumental role in the
development of Biffa’s state-of-the
art £27.5m plastic recycling facility
in Seaham. He is also responsible
for the Newhurst and Protos
energy recovery facilities, which
will turn non-recyclable waste into
much-needed renewable energy
for the UK.
In addition, Mick is a Trustee of
the Biffa Award, which supports
community projects around
the UK such as improving local
biodiversity as well as sitting on
Biffa’s steering committee for its
WasteAid partnership, where Biffa
supports the charity to help less
developed countries tackle waste
in a sustainable manner.
Roger started his career in the
waste industry over 30 years ago
with Drinkwater Sabey before
becoming a founding member of
Verdant Municipal, joining Biffa
in 2010 after the acquisition of
Greenstar UK. Roger leads Biffa’s
Municipal business.
He has successfully grown
recycling levels across the
Municipal business and is focused
on developing a more sustainable
future for waste management
including the further development
of the Group’s alternative fuels
strategy. Additionally, he is
focused specifically on Biffa’s
sustainability strategy pillar ‘Caring
for our People, Supporting our
Communities’, ensuring that Biffa is
supporting its local communities
and championing local causes
through its Community
Shopbusiness.
Jane joined Biffa in 2010 having
worked as HR director for
several FTSE listed companies,
providing strategic HR direction
and implementing people
programmes to support business
growth. She has a strong track
record of delivering business
benefits through the effective
deployment of human capital
strategies. At Biffa, Jane focuses on
its people strategy to ensure that
Biffa maintains its industry-leading
approach to people management
and employee wellbeing.
Her responsibilities include
employee relations, learning
and development, employee
engagement, and rewards and
benefits. Under Jane’s leadership
Biffa’s employee engagement
score has doubled since 2011.
Jane is also a non-executive
director and remuneration
committee chair of the legal and
professional services business,
Knights plc.
David oversees Biffa’s IT, business
intelligence and innovation
functions. He has worked in the
waste management industry for
20 years, starting at Biffa as its
Head of IT Business Systems before
spending two years at Greenstar
UK prior to its acquisition by Biffa
in 2010.
As Chief Information Officer, David
is responsible for technology
and business model innovation,
developing and optimising
Biffa’s systems, ensuring that the
business is operating as efficiently
as possible and maximising
opportunities for development.
As part of this he helps align
new projects with Biffa’s strategy,
such as initiatives supporting the
growth of the circular economy.
David sits on the Board of
Community Shop. Outside of Biffa,
David is also a trustee of Oasis
Church Trust in Birmingham.
Appointed in 2020, as Biffa’s
first Corporate Affairs Director,
Cory is focused on delivering
sustainability and environmental
strategy alongside strategic
communications to build a positive
profile around Biffa’s purpose
‘changing the way people think
about waste.’
She is responsible for Biffa’s
Corporate Affairs including
environment and sustainability
strategy, media relations
and PR, brand, social media,
investor relations, regulatory
and public affairs. Cory is also
the lead for internal employee
communications.
Cory’s background is in both
public and private sector
communications with a focus on
environment and sustainability.
Before joining Biffa, she was the
director of communications, brand,
and public affairs at Southern
Water and prior to this she worked
for Brighton & Hove City Council.
Cory had experience in the media
earlier in her career as a BBC senior
journalist and editor, giving her
a unique insight into the most
effective way to communicate
through the media.
95
Biffa plc / Annual Report and Accounts 2022
Strategic Report
Financial
Statements
Corporate
Governance Report
Overview
Additional
Information
Our Governance Framework
1. The EVP Litigation Committee is an additional Board Committee which provides an independent review of the EVP dispute proceedings (see Note 31 on page 208 of the Financial Statements).
The members are David Martin (Chair), Ken Lever, Carol Chesney, Claire Miles and the Chief Financial Officer. The Committee members have no financial interest in the outcome of the dispute.
The Company has a clear corporate governance framework which was established to
provide clear lines of accountability and responsibility.
The framework comprises the Matters Reserved to the Board, the Board and Executive Committees with their Terms of Reference and the
Group Delegated Authorities Policy and Matrix which ensures decision making takes place at appropriate levels within the Group.
Audit Committee
The Audit Committee reviews
the integrity of Biffa’s Financial
Statements, the adequacy and
effectiveness of Biffa’s systems
of internal control and risk
management and maintains the
relationship with the External
Auditor. Further information
can be found in the Audit
Committee Report on
pages 118-125.
Investment Committee
The Investment Committee is an executive
management committee comprising the Chief
Executive Officer, the Chief Financial Officer, and
the General Counsel and Company Secretary.
It reviews and approves significant capital
expenditure, potential acquisitions and disposals,
major contracts and tenders and property
transactions within specified authority limits
delegated by the Board.
Remuneration
Committee
The Remuneration Committee
proposes the Directors’
Remuneration Policy and sets
remuneration for the Chairman,
Executive Directors and Group
Executive Team taking into account
wider Group remuneration policies.
It also approves performance linked
pay schemes and share incentive
plans. Further information can
be found in the Remuneration
Committee Report on
pages 126-140.
H&S Excellence Forum
The H&S Excellence Forum is an executive
management committee comprising the
Chief Executive Officer, Chief Operating Officer
Collections and Specialist Services, Chief
Operating Officer Resources & Energy, Managing
Director Municipal, and Group Health & Safety
Director. The purpose of the forum is to provide
the leadership, direction and support on health
and safety matters across the Group enabling the
provision and maintenance of a safe and
healthy workplace.
Nomination Committee
The Nomination Committee reviews
Board composition and diversity,
proposes new Board appointments
and reviews succession planning
and talent development. Further
information can be found in the
Nomination Committee Report on
pages 113-115.
Executive Sustainability
Committee
The Executive Sustainability Committee is an
executive management committee comprising
the Chief Executive Officer, Chief Financial
Officer, Group HR Director, Director of Corporate
Affairs, and General Counsel and Company
Secretary. It oversees at a business level the
Company’s sustainability strategy and broader
stakeholder engagement and reports to the Board
Sustainability Committee.
Sustainability
Committee
The Sustainability Committee
oversees the Company’s
sustainability strategy and broader
stakeholder engagement on behalf
of the Board. Further information
can be found in the Sustainability
Committee Report on
pages 116-117.
Board of Directors
The role of the Board is to promote the long-term success of the Company, generating value for shareholders and contributing to wider society by providing effective
leadership and direction to the business as a whole. It sets the Group’s strategy and sustainability strategy, having regard to stakeholders, while maintaining a balanced
approach to risk within a framework of effective controls. It has also established the Company’s purpose and values and monitors culture to ensure alignment. Its sets the
tone and approach to corporate governance and is responsible for the overall financial performance of the Group.
Group Executive Team
The Group Executive Team is responsible for the day-to-day running of the business. It meets monthly and receives regular reports on financial and business matters, health
& safety, and receives periodic presentations on other areas of the business. The biographical details of the Group Executive Team are on pages 94-95.
Board Committees
1
Biffa plc / Annual Report and Accounts 2022
96
Purpose, Values and Culture
The Board is responsible for establishing the Company’s purpose, values and strategy
and satisfying itself that these and the Group’s culture are aligned.
Our purpose
to change the way people think about waste
Our Values and Culture
We pride ourselves on our common-sense
approach to sustainable waste management,
our collaborative way of working and our ability
to get things done. We work hard to create
a culture and an environment that allows
everyone to thrive, working together effectively
and safely, treating people fairly and with
respect, to contribute to the growth of
the Group. Biffa’s culture is underpinned by
our values.
The Company launched a new set of values
in the year, which were co-created with our
employee forum – the Biffa Involvement Group
(BIG). The new values were developed to reflect
the development of our business and capture
the essence of Biffa. Before the launch of the
newly developed values, they were reviewed
and approved by the Board. For further
information see page 50.
How the Board Monitors Culture
The Board plays a vital role in monitoring and
assessing the culture of the Group and its
alignment with purpose, values and strategy.
There are a number of areas that help inform
the Board.
Leading by Example - The Board, Group
Executive Team and senior management lead
by example, acting in accordance with the
Company’s values and therefore, promoting
the Group’s culture to our workforce.
See / page 108
Measurement - A number of our sustainability
KPIs, such as Lost Time Injury Rate and
employee engagement, allow trends and
changes in the culture of the Group to
be monitored. The Board receives reports
throughout the year on these KPIs.
See / pages 28-57
Risk Management - The Group dedicates
significant resources and focus to manage and
monitor risks via our Risk and Internal Audit
function. The Audit Committee monitors risk
management processes and controls on behalf
of the Board, receiving reports at each meeting
from the Risk and Internal Audit functions.
See / page 122
Alignment of Remuneration - Our annual
bonus schemes are directly linked to the
annual Group BBP targets which include the
annual employee engagement survey results
and the health & safety improvement targets. In
addition, behaviours are taken into account in
determining individual bonus outcomes.
See / pages 127-130
Employee Engagement - Employee
engagement is measured through the annual
survey, which provides valuable insight in
respect of engagement and culture. David
Martin, the designated Non-Executive Director
for workforce engagement, attended a number
of workforce events during the year on which
he provided feedback to the Board.
See / page 52
Whistleblowing - Mechanisms are in place
to facilitate the Company’s workforce and third
parties reporting matters of concern. The Audit
Committee, with delegated authority from
the Board, receives a report on whistleblowing
matters at each meeting from the Group
Counsel and Company Secretary and Head of
Risk and Internal Audit.
See / page 125
Workforce Policies and Practices
The Board is responsible for ensuring that our
workforce policies and practices are consistent
with the Company’s values and support its
long-term sustainable success.
Under the Matters Reserved to the Board, the
Board is responsible for approving any key
policies and these are reviewed annually.
The Board and its Committees also receive
periodic updates on workforce policies
andpractices:
Nomination Committee - the Committee
received an update on the Group’s diversity
and inclusion policies and initiatives and gave
consideration to the Company’s new suite of
‘family friendly policies’.
See / pages 113-115
Remuneration Committee - the Committee
received a report on the Group’s general pay
and conditions which included an update on
reward and benefits across the Group and the
Group’s reward policies.
See / page 127
Board – the Board reviewed and approved
a revised anti-bribery policy and gifts and
hospitality policy.
See / pages 100-101
Further information on our workforce
policies and practices can be found in the
Non-Financial Information Statement on
pages 84-88.
97
Biffa plc / Annual Report and Accounts 2022
Strategic Report
Financial
Statements
Corporate
Governance Report
Overview
Additional
Information
Newhurst ERF Site Visit
In April 2022, the Board visited the Newhurst Energy Recovery Facility in Leicestershire which
is in the final stages of construction. The Board received a presentation from management,
setting out the history of the development, corporate structure, financial data, health and
safety information and progress to date.
The Board had the opportunity to walk around the site, meeting employees from Biffa, and
its partner Covanta and viewing the tipping hall, boiler hall, waste bunker and turbine hall.
The Board were impressed with the scale and structure of the site and look forward to
returning when the site has been commissioned.
For more information /
biffa.co.uk/case-studies
Activities of the Board
Chief Financial Officer Reports. All matters
are given due consideration by the Board
and are reviewed at the appropriate point in
the regulatory and financial cycles. Flexibility
is retained in the programmes to include
additional items requested by the Board,
Committees or senior management. The key
activities of the Committees during the year,
can be found in the Committee Reports.
Directors are provided with papers at
least five days in advance of each Board or
Committee meeting, where possible, and
meeting packs are provided on a secure
Board portal. The Chairman has calls with
each of the Non-Executive Directors in
advance of each scheduled Board meeting
to discuss the papers and the business of
the meeting. Even if a Director is unable to
attend a meeting because of exceptional
circumstances, they will continue to receive
all the material for the meeting and have an
opportunity to have a briefing discussion
with the Chairman in advance. Feedback is
provided to the Directors unable to attend
on the decisions taken at the meeting.
Non-Executive Directors communicate
directly with senior management between
Board and Committee meetings, where
required. Members of the Group Executive
Team also present at the annual strategy
Board meeting and at other times during
the year on their areas of responsibility,
along with members of their teams. During
the year, the Chairman had weekly catch
ups with the Chief Executive Officer and
regular catch ups with the General Counsel
and Company Secretary and Chief Financial
Officer.
Meetings of the Non-Executive Directors,
without the presence of the Executive
Directors, are scheduled in the Board’s
annual programme. During the year, Non-
Executive Directors met on two occasions
without the Executive Directors. These
meetings provide the Non-Executive
Directors with the opportunity to share
experiences and discuss wider business
topics, fostering debate in Board and
Committee meetings and strengthening
working relationships.
How Governance Supports Strategy
Biffa has a clear strategy for growth and the
Board is responsible for delivering value
for our shareholders by setting the Group’s
strategy and overseeing its implementation
by the Group Executive Team and
management.
The Board carries out an annual strategy
review, which in FY22 was done in
December 2021. At this meeting the Board
received presentations from the Group
Executive Team on the strategies for the
business and on innovation. The Executive
Directors also presented the Group Strategy
Plan, which was approved by the Board. The
Board receives updates on strategy progress
at each scheduled Board meeting. Further
information on the Company’s strategy can
be found on page 28.
The key activities undertaken
by the Board during the year
are set out on pages 100-101.
The Board recognises the value
of positive relationships with
our key stakeholders and the
importance of these relationships
when delivering the Group’s
strategy and in day-to-day
business operations. The Board
considers the interests of the
Group’s key stakeholders in
its decision making. Further
information can be found in the
s172 statement on pages 108-109.
Board Meetings
The Board had seven scheduled meetings
during the year. Directors’ attendance at
scheduled Board meetings held during the
year is set out on page 90.
Additional unscheduled Board meetings
were held when circumstances required the
Board to meet at short notice. The Board also
approved a number of matters during the
year by written resolution.
Agendas for each scheduled Board
and Committee meeting are prepared
in advanced and are aligned with the
approved annual Board and Committee
programmes. For each scheduled Board
meeting there are a number of standing
items such as the Chief Executive Officer and
98
Biffa plc / Annual Report and Accounts 2022
Newhurst ERF Site Visit
In April 2022, the Board visited the Newhurst Energy Recovery Facility in Leicestershire which
is in the final stages of construction. The Board received a presentation from management,
setting out the history of the development, corporate structure, financial data, health and
safety information and progress to date.
The Board had the opportunity to walk around the site, meeting employees from Biffa, and
its partner Covanta and viewing the tipping hall, boiler hall, waste bunker and turbine hall.
The Board were impressed with the scale and structure of the site and look forward to
returning when the site has been commissioned.
For more information /
biffa.co.uk/case-studies
Statement on 2021 Annual General Meeting Resolution Votes Against
At the Company’s AGM held on 19 July 2021, the total votes i
n favour of the re-election of the Chairman, Ken Lever, were
below 80%.
As previously reported, the Company has extensively consulted
and engaged with major shareholders to better understand
concerns regarding the resolution to re-elect the Chairman. The
feedback received was that the votes against the re-election of
the Chairman were influenced by his board commitments not
meeting numerical overboarding guidelines and the Board not
meeting the gender diversity requirements of some shareholders
and proxy advisers.
Overboarding
Recognising the concerns of some shareholders, the Chairman
gave a commitment in June 2021 to review his board
appointments with a view to complying with numerical
overboarding guidelines by the time of the Company’s AGM
in 2022.
The Chairman stood down as a director of Blue Prism plc following
the delisting of that company in March 2022. In addition, the
Chairman has informed the Board that, following a series of
corporate actions, the principal shareholder of Rockwood
Strategic plc (Rockwood) has changed and that company is
no longer in run off. The new chair of Rockwood is reviewing
the composition of the Rockwood board but as the Chairman
is the only remaining director, and is therefore important for
the continuity of that board, he has agreed to remain on the
Rockwood board for a period of time until the new board
composition is settled. The work involved for a small AIM listed
investment company is substantially less than a fully listed
board role.
During the Chairman evaluation process, David Martin (Senior
Independent Director) discussed at length with other Board
members the Chairman’s time commitment. The Board remained
of the firm view that the Chairman devotes more than sufficient
time to his duties and is always available to give issues at hand the
time and attention they require. The Chairman has also confirmed
that if an event was to arise which required an additional time
commitment he would ensure that he was available.
Gender Diversity
At the time of the AGM in July 2021, the Board had two
female members (a total of 29%). Following the appointment
of Linda Morant to the Board on 1 December 2021, female
Board representation increased to 43%. The Company has now
exceeded its objective of reaching the Hampton-Alexander
Review target of one-third female representation by its AGM in
July 2022.
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Biffa plc / Annual Report and Accounts 2022
Strategic Report
Financial
Statements
Corporate
Governance Report
Overview
Additional
Information
Company Shop Group Site Visit
The Board were pleased to resume site visits in September 2021, following
relaxation of Covid-19 restrictions, with their visit to the Company Shop Group.
The day began with a site visit to the Community Shop in Athersley to see the
fantastic work the team are undertaking in the community. The Board had
an opportunity to meet employees and customers and see first hand how
Community Shop, as well as offering access to its members to deeply discounted
food, is providing its members with life-changing learning and development
programmes.
The Board went on to visit Company Shop Group’s headquarters and received
a presentation from management, walked around the distribution centre in
Tankersley and the store where members enjoy a unique way of shopping,
offering them surplus products from well-known brands at amazing prices. In
addition, the Board held a dinner with senior management, where David Salkeld,
non-executive director of Company Shop Group, was the pre-dinner speaker.
For more information /
biffa.co.uk/case-studies
Activities of the Board continued
Key Board Activities for FY22
Strategy Stakeholder
Board Strategy
• Considered and approved the Group Strategy Plan.
• Received progress updates from the Executive Directors on the Group’s Strategy Plan.
Business Transformation
• Received updates on the progress of the business transformation plan.
Acquisitions and Capital Investment
• Considered and approved the acquisition of the collections business and certain recycling assets of the Viridor Group.
• Received regular updates on the M&A pipeline.
• Received updates on M&A integration.
• Reviewed the planned capital expenditure required to fulfil the DRS contract.
Workforce and Culture Stakeholder
Workforce
• Received updates from David Martin, the designated Non-Executive Director for workforce engagement, and approved the
workforce engagement plan for FY23.
• Reviewed and approved the Group’s new values.
• Received an update from the Group HR Director on our people strategy and priorities for FY23.
Whistleblowing
• Received updates on whistleblowing matters (from the Audit Committee).
Business Performance Stakeholder
Operational Performance
• Received regular reports from the CEO on business performance, health & safety performance and people.
• Received operational performance reviews throughout the year.
• Received an update on IT security and governance.
• Received regular updates on the performance of CSG.
100
Biffa plc / Annual Report and Accounts 2022
Key to stakeholder groups
Employees
Customers
Investors
Suppliers
Government & Regulators
Environment & Communities
Finance and Risk Stakeholder
Financial Management
• Received regular reports from the CFO on financial performance across the Group.
• Received regular reports on investor relations.
• Approved two private placement issuances in July 2021 and February 2022.
Budget
• Reviewed and approved the budget for FY23.
Results and Regulatory Reporting
• On the recommendation of the Audit Committee, reviewed and approved the full-year results announcement for FY21,
half-year results announcement for FY22 and the September and March Pre-Close Trading Statements for FY22.
• On the recommendation of the Audit Committee, approved the going concern and long-term viability statements in the
FY22 half-year results and the FY21 Annual Report and Accounts.
Dividends
• On the recommendation of the Audit Committee, approved the re-establishment of the Company’s dividend policy and
the payment of an interim dividend for FY22.
Risk and Internal Control
• Considered and reviewed the Group’s principal risks and emerging risks.
• Received updates from the Audit Committee on current and emerging risks and internal control effectiveness.
• Particular focus was put on the assessment of the risk and internal control effectiveness in relation to the ongoing
landfill tax enquiry.
Governance, Compliance and Regulatory Stakeholder
Board Evaluation
• Approved the internally facilitated Board evaluation and received a presentation on the results.
• Received a progress update on the FY22 Board evaluation actions.
Modern Slavery
• Received an update on the progress made and actions for FY22 on modern slavery.
• Approved the Company’s 2021 Modern Slavery Statement.
Gender Pay Gap Report
• Following recommendation from the Remuneration Committee, approved the 2022 Gender Pay Gap Report.
Sustainability
• Undertook a deep dive on UK waste policy and the regulatory environment.
AGM
• Approved the notice of meeting for the 2021 AGM.
Governance
• On the recommendation of the Nomination Committee, approved the appointment of Linda Morant as a Non-Executive
Director and changes to the Board Committees.
• Received updates on material litigation matters.
• Approved an application to the Supreme Court for leave to appeal the EVP/fluff matter following a recommendation from
the EVP Committee.
• Received updates on shareholder engagement.
• Received updates at every meeting on the HMRC landfill tax enquiry. This led to extensive discussions with management
and external specialists and assessments of internal controls.
• Received updates on the possible offer from Energy Capital Partners.
• Received updates on Disclosure Committee meetings held to consider disclosures under MAR.
Policy and Procedures
• Reviewed and approved updates to Group policies throughout the year, including the Board Diversity and Inclusion Policy.
• Approved a revised Delegated Authorities Policy and Matrix.
101
Biffa plc / Annual Report and Accounts 2022
Strategic Report
Financial
Statements
Corporate
Governance Report
Overview
Additional
Information
Stakeholder Engagement
Engaging and listening
to our stakeholders
Stakeholder What matters to them How the Board engaged How our business engaged How we listened
Employees
We have a team of more than 10,000
talented and diverse colleagues who
support Biffa’s purpose of changing the
way people think about waste.
We pride ourselves on having an open
and honest relationship with our
workforce, empowering them to have
their say, whilst ensuring they remain
supported. We engage with each other
respectfully, encourage each other and
help make Biffa a fair, inclusive and fun
place to work.
• Pay and benefits.
• Communications.
• Development and career opportunities.
• Diversity and inclusion.
• Wellbeing, specifically mental health
support.
• Senior leader visibility.
• David Martin, our Non-Executive Director
for workforce engagement attended
various workforce events during the year,
and a presentation on the results of the
annual employee engagement survey.
See page 52 for more details and the
feedback that he gave to the Board.
• David Martin and Claire Miles, Chair of
the Remuneration Committee, attended
an employee forum during the year to
engage on executive renumeration.
• The Board received presentations from
the Group HR Director and her team on
a number of workforce related matters
including the Company’s new values
which were finalised following feedback
from the BIG employee forum.
• The Nomination Committee received a
presentation on diversity and inclusion in
September 2021.
• The Board met with senior leaders during
the year, through presentations at Board
and Committee meetings and the visits to
Company Shop Group in September 2021
and at Newhurst ERF in April 2022. See
page 98 and page 100 for details.
• All the Directors have access to our
employee app, Biffa Beat, giving
them the ability to view employee
feedback on announcements and other
communications.
• Our employee app, Biffa Beat, company intranet, online Q&A
service with our CEO and CEO vlogs.
• All employee and leadership calls with the Group Executive
Team which include the opportunity to ask questions. The all
employee calls are recorded and made available on Biffa Beat.
• BIG, our employee forum, designed to encourage two-way
direct and positive communications with our colleagues,
particularly those in operational roles.
• Printed and digital newsletters.
• Biffa Buzz - our annual engagement survey.
• Conferences and award events, including our ‘Diamonds Awards’
and leadership and manager conferences.
• Employee Resource Groups such as Women in Waste and Pride.
• Green little acts – see page 12.
• Working with WasteAid – see page 13.
• Increased Biffa minimum wage (see page 47).
• Continued our ShareSave scheme, allowing employees the
chance to buy shares in Biffa at a discounted rate and our Eco
Drive scheme as a tax efficient way to lease an environmentally
friendly electric car.
• Held our first in-person BIG employee forum meeting, which
allowed colleagues to meet with our senior team and Board
members and discuss what’s important to them (see page 52).
• Launched a new set of values, in collaboration BIG, our
employee forum.
• Published a training catalogue with opportunities to develop
and grow and promoted our Know How learning platform
for general training.
• Launched mentoring programme and feminine fit PPE
through the Women in Waste group.
• Launched a new suite of Family Friendly policies (see page 55)
and a Pride campaign, to bring awareness to the LGBTQI+
community.
• Enhanced our E.N.E.R.G.Y programme with various wellbeing
challenges and awareness days, including a real focus on
mental health (see page 51).
Customers
We care about our customers and their
needs. Every day we provide essential
services to a wide range of customers
across the UK from large corporates to
thousands of local businesses and to
local authorities. We focus on delivering
excellent services consistently as
promised every time. Our sustainable
approach, responsiveness to customer
needs and delivery makes us the first
choice for customers.
• Consistent, reliable, cost-effective services.
• Health and safety of our people and the
general public.
• Reduction in carbon emissions from
operations to reduced climate change
impact.
• The impact of proposed waste regulatory
changes on customer businesses.
• Innovation, including tools to provide
better insight into where their waste goes.
• Social value and in particular the work
we are doing with WasteAid to improve
waste infrastructure in developing
nations.
• Ability to self-serve online through
dedicated customer portal.
• Reduction in service cost by optimisation
of services.
• The Board receives updates at Board
meetings on customers through the
CEO’s report.
• The CEO and CFO engage with customers
during the year.
• Re-established ‘in person’ engagement with customers, in
addition to the continuation of virtual meetings.
• Workshops held through the year with key Biffa experts on
topics such as waste strategy creation, packaging surgeries,
supply chain audits, etc.
• ‘Waste walks’ with customers at their manufacturing sites to help
them identify opportunities for surplus redistribution.
• Customer attendance at various webinars, including our ESG
webinar and the virtual conference, which was in aid of the
COP26 summit.
• A return to site visits and on-site engagement as Covid-19
restrictions eased.
• Supported customers throughout the driver shortages ensuring
continuity of essential services.
• Identified sustainable packaging solutions with our customers
(see page 14).
• Continued to support corporate customers with their long-term
ambition to achieve 100% diversion from landfill target.
• Various waste segregation initiatives, including the launch of
Waste Munchers online game, designed to engage customers,
particularly SME’s, on where their waste goes.
• Developed the MyBiffa customer portal (which launched in early
FY23).
102
Biffa plc / Annual Report and Accounts 2022
Positive relationships with our stakeholders, who have an interest in our business and may be impacted by the decisions we make, are key to
our long-term success.
This section provides an overview of how our business and our Board engaged with our stakeholders during the year to understand what
matters to them and the outcomes of that engagement. You can read more about how our Board take into consideration stakeholder views
and other factors in their decision making in the s172 statement on pages 108-109.
Stakeholder What matters to them How the Board engaged How our business engaged How we listened
Employees
We have a team of more than 10,000
talented and diverse colleagues who
support Biffa’s purpose of changing the
way people think about waste.
We pride ourselves on having an open
and honest relationship with our
workforce, empowering them to have
their say, whilst ensuring they remain
supported. We engage with each other
respectfully, encourage each other and
help make Biffa a fair, inclusive and fun
place to work.
• Pay and benefits.
• Communications.
• Development and career opportunities.
• Diversity and inclusion.
• Wellbeing, specifically mental health
support.
• Senior leader visibility.
• David Martin, our Non-Executive Director
for workforce engagement attended
various workforce events during the year,
and a presentation on the results of the
annual employee engagement survey.
See page 52 for more details and the
feedback that he gave to the Board.
• David Martin and Claire Miles, Chair of
the Remuneration Committee, attended
an employee forum during the year to
engage on executive renumeration.
• The Board received presentations from
the Group HR Director and her team on
a number of workforce related matters
including the Company’s new values
which were finalised following feedback
from the BIG employee forum.
• The Nomination Committee received a
presentation on diversity and inclusion in
September 2021.
• The Board met with senior leaders during
the year, through presentations at Board
and Committee meetings and the visits to
Company Shop Group in September 2021
and at Newhurst ERF in April 2022. See
page 98 and page 100 for details.
• All the Directors have access to our
employee app, Biffa Beat, giving
them the ability to view employee
feedback on announcements and other
communications.
• Our employee app, Biffa Beat, company intranet, online Q&A
service with our CEO and CEO vlogs.
• All employee and leadership calls with the Group Executive
Team which include the opportunity to ask questions. The all
employee calls are recorded and made available on Biffa Beat.
• BIG, our employee forum, designed to encourage two-way
direct and positive communications with our colleagues,
particularly those in operational roles.
• Printed and digital newsletters.
• Biffa Buzz - our annual engagement survey.
• Conferences and award events, including our ‘Diamonds Awards’
and leadership and manager conferences.
• Employee Resource Groups such as Women in Waste and Pride.
• Green little acts – see page 12.
• Working with WasteAid – see page 13.
• Increased Biffa minimum wage (see page 47).
• Continued our ShareSave scheme, allowing employees the
chance to buy shares in Biffa at a discounted rate and our Eco
Drive scheme as a tax efficient way to lease an environmentally
friendly electric car.
• Held our first in-person BIG employee forum meeting, which
allowed colleagues to meet with our senior team and Board
members and discuss what’s important to them (see page 52).
• Launched a new set of values, in collaboration BIG, our
employee forum.
• Published a training catalogue with opportunities to develop
and grow and promoted our Know How learning platform
for general training.
• Launched mentoring programme and feminine fit PPE
through the Women in Waste group.
• Launched a new suite of Family Friendly policies (see page 55)
and a Pride campaign, to bring awareness to the LGBTQI+
community.
• Enhanced our E.N.E.R.G.Y programme with various wellbeing
challenges and awareness days, including a real focus on
mental health (see page 51).
Customers
We care about our customers and their
needs. Every day we provide essential
services to a wide range of customers
across the UK from large corporates to
thousands of local businesses and to
local authorities. We focus on delivering
excellent services consistently as
promised every time. Our sustainable
approach, responsiveness to customer
needs and delivery makes us the first
choice for customers.
• Consistent, reliable, cost-effective services.
• Health and safety of our people and the
general public.
• Reduction in carbon emissions from
operations to reduced climate change
impact.
• The impact of proposed waste regulatory
changes on customer businesses.
• Innovation, including tools to provide
better insight into where their waste goes.
• Social value and in particular the work
we are doing with WasteAid to improve
waste infrastructure in developing
nations.
• Ability to self-serve online through
dedicated customer portal.
• Reduction in service cost by optimisation
of services.
• The Board receives updates at Board
meetings on customers through the
CEO’s report.
• The CEO and CFO engage with customers
during the year.
• Re-established ‘in person’ engagement with customers, in
addition to the continuation of virtual meetings.
• Workshops held through the year with key Biffa experts on
topics such as waste strategy creation, packaging surgeries,
supply chain audits, etc.
• ‘Waste walks’ with customers at their manufacturing sites to help
them identify opportunities for surplus redistribution.
• Customer attendance at various webinars, including our ESG
webinar and the virtual conference, which was in aid of the
COP26 summit.
• A return to site visits and on-site engagement as Covid-19
restrictions eased.
• Supported customers throughout the driver shortages ensuring
continuity of essential services.
• Identified sustainable packaging solutions with our customers
(see page 14).
• Continued to support corporate customers with their long-term
ambition to achieve 100% diversion from landfill target.
• Various waste segregation initiatives, including the launch of
Waste Munchers online game, designed to engage customers,
particularly SME’s, on where their waste goes.
• Developed the MyBiffa customer portal (which launched in early
FY23).
103
Biffa plc / Annual Report and Accounts 2022
Strategic Report
Financial
Statements
Corporate
Governance Report
Overview
Additional
Information
Stakeholder Engagement continued
Stakeholder What matters to them How the Board engaged How our business engaged How we listened
Investors
As a FTSE-250 listed business we work
with our investors, shareholders, analysts,
lenders and rating agencies to ensure
they have a good understanding of
Biffa and help them to recognise us
as a strong, sustainable investment
opportunity.
• Financial and business performance,
including:
– recovery in volumes as restrictions
have been lifted
– cost inflation and the ability to offset
through pricing
– driver availability and other supply
chain challenges
– commodity prices
– CSG performance
• Progress in our strategic investment areas:
– Reduce – Company Shop’s financial
performance and what the impact
has been on the Group
– Recycle – Progress in our PET plant
development (including customer
acceptance at Seaham)
– Recover – Energy Recovery Facilities-
build progress
– Collect – completion and integration
of Viridor & Simply Waste acquisitions
and delivery of synergies, as well as
the M&A pipeline
• Progress against our sustainability strategy
objectives.
• Future capital allocation.
• Regulatory and legislative environment.
• Our Annual General Meeting was subject
to Covid-19 restrictions but shareholders
were given the opportunity to join the
meeting remotely and ask questions in
advance.
• Our Chairman and Senior Independent
Director met with our major shareholders
ahead of our AGM in July 2021.
• Claire Miles, our Remuneration
Committee Chair, wrote to our major
shareholders on her appointment as Chair
in September 2021 and followed up with
a number of calls.
• The CFO updated the Board on IR
activities at each meeting, including any
feedback received.
• Half and full year results virtual presentations and roadshows.
• Analyst calls and trading updates.
• Investor blast emails around key announcements.
• CEO, CFO and Head of Investor Relations have regular dialogue
with investors, including virtual 1:1s with shareholders and non-
holders, lenders and noteholders.
• Attended virtual conferences throughout the year.
• Investor site visits to Company Shop Group and our Polymers
business.
• Through the Company’s website, the principle medium through
which results and other news releases such as acquisitions,
contract wins and new strategic initiatives are published,
including key financial calendar information, details of live
webcasting services for key presentations and the source of past
key presentations and announcements.
• On-going reporting on capital committed in strategic investment
areas.
• Demonstration of our volume recovery and management of cost
inflation, driver availability and supply chain challenges.
• Held ESG Webinar for investors to provide further detail on our
Sustainability Strategy and progress against our targets.
Suppliers
Our suppliers play an important role
in helping our business deliver for our
customers. We form strong, sustainable
and trusted partnerships and look to
secure excellent value for money, whilst
minimising risk in our supply chain.
• Clarity around terms and conditions and
order process requirements to ensure
smooth and accurate payments within
agreed terms.
• Engagement with the Company and
opportunities to join external events.
• Sustainability strategy and reducing
carbon emissions
• Future strategy and growth of the
business.
• Long-term partnerships.
• The Sustainability Committee received
a presentation on the Group’s strategic
suppliers during the year.
• The Board receives updates on suppliers
through the CEO’s report.
• During the year, the CEO and CFO
engaged with suppliers as part of the
Group’s wider supplier relationship
program.
• Supplier surveys.
• Regular review meetings.
• Formal supplier relationship management programmes
and direct engagement looking at commercial, operational,
environmental, social and governance issues.
• Supplier score carding and balance of trade reviews.
• We have been standardising our supplier payment terms and
refreshed our general terms and conditions whilst making them
more accessible to both employees and suppliers to ensure
consistency across the supply base. Whilst Biffa’s standard terms
remain 60 days for large companies, we have been actively
pursuing a policy to bring micro and SME suppliers wherever
possible down to 30-day terms.
• Suppliers are invited to attend all large-scale events.
• Carbon emissions data is shared between suppliers and Biffa as
part of our Scope 3 emissions requirements.
• We share information around projected volumes and Biffa’s
growth strategy to give suppliers the best possible opportunity
to meet future supply demands, allowing them to make more
informed decisions around scaling up or scaling down their
businesses.
• Working with our suppliers to donate surplus stock (see page 15).
104
Biffa plc / Annual Report and Accounts 2022
Stakeholder What matters to them How the Board engaged How our business engaged How we listened
Investors
As a FTSE-250 listed business we work
with our investors, shareholders, analysts,
lenders and rating agencies to ensure
they have a good understanding of
Biffa and help them to recognise us
as a strong, sustainable investment
opportunity.
• Financial and business performance,
including:
– recovery in volumes as restrictions
have been lifted
– cost inflation and the ability to offset
through pricing
– driver availability and other supply
chain challenges
– commodity prices
– CSG performance
• Progress in our strategic investment areas:
– Reduce – Company Shop’s financial
performance and what the impact
has been on the Group
– Recycle – Progress in our PET plant
development (including customer
acceptance at Seaham)
– Recover – Energy Recovery Facilities-
build progress
– Collect – completion and integration
of Viridor & Simply Waste acquisitions
and delivery of synergies, as well as
the M&A pipeline
• Progress against our sustainability strategy
objectives.
• Future capital allocation.
• Regulatory and legislative environment.
• Our Annual General Meeting was subject
to Covid-19 restrictions but shareholders
were given the opportunity to join the
meeting remotely and ask questions in
advance.
• Our Chairman and Senior Independent
Director met with our major shareholders
ahead of our AGM in July 2021.
• Claire Miles, our Remuneration
Committee Chair, wrote to our major
shareholders on her appointment as Chair
in September 2021 and followed up with
a number of calls.
• The CFO updated the Board on IR
activities at each meeting, including any
feedback received.
• Half and full year results virtual presentations and roadshows.
• Analyst calls and trading updates.
• Investor blast emails around key announcements.
• CEO, CFO and Head of Investor Relations have regular dialogue
with investors, including virtual 1:1s with shareholders and non-
holders, lenders and noteholders.
• Attended virtual conferences throughout the year.
• Investor site visits to Company Shop Group and our Polymers
business.
• Through the Company’s website, the principle medium through
which results and other news releases such as acquisitions,
contract wins and new strategic initiatives are published,
including key financial calendar information, details of live
webcasting services for key presentations and the source of past
key presentations and announcements.
• On-going reporting on capital committed in strategic investment
areas.
• Demonstration of our volume recovery and management of cost
inflation, driver availability and supply chain challenges.
• Held ESG Webinar for investors to provide further detail on our
Sustainability Strategy and progress against our targets.
Suppliers
Our suppliers play an important role
in helping our business deliver for our
customers. We form strong, sustainable
and trusted partnerships and look to
secure excellent value for money, whilst
minimising risk in our supply chain.
• Clarity around terms and conditions and
order process requirements to ensure
smooth and accurate payments within
agreed terms.
• Engagement with the Company and
opportunities to join external events.
• Sustainability strategy and reducing
carbon emissions
• Future strategy and growth of the
business.
• Long-term partnerships.
• The Sustainability Committee received
a presentation on the Group’s strategic
suppliers during the year.
• The Board receives updates on suppliers
through the CEO’s report.
• During the year, the CEO and CFO
engaged with suppliers as part of the
Group’s wider supplier relationship
program.
• Supplier surveys.
• Regular review meetings.
• Formal supplier relationship management programmes
and direct engagement looking at commercial, operational,
environmental, social and governance issues.
• Supplier score carding and balance of trade reviews.
• We have been standardising our supplier payment terms and
refreshed our general terms and conditions whilst making them
more accessible to both employees and suppliers to ensure
consistency across the supply base. Whilst Biffa’s standard terms
remain 60 days for large companies, we have been actively
pursuing a policy to bring micro and SME suppliers wherever
possible down to 30-day terms.
• Suppliers are invited to attend all large-scale events.
• Carbon emissions data is shared between suppliers and Biffa as
part of our Scope 3 emissions requirements.
• We share information around projected volumes and Biffa’s
growth strategy to give suppliers the best possible opportunity
to meet future supply demands, allowing them to make more
informed decisions around scaling up or scaling down their
businesses.
• Working with our suppliers to donate surplus stock (see page 15).
105
Biffa plc / Annual Report and Accounts 2022
Strategic Report
Financial
Statements
Corporate
Governance Report
Overview
Additional
Information
Stakeholder Engagement continued
Stakeholder What matters to them How the Board engaged How our business engaged How we listened
Government and
Regulators
The UK waste sector’s policy framework
is devised by the UK Governments
(comprising England, Wales, Scotland
and Northern Ireland). As leaders in
the UK waste industry, we are working
closely with the UK Governments as
they develop their Resources and
Waste Strategies and climate change
prevention plans.
Our industry is regulated by the
Environment Agency (and equivalents
in the UK devolved nations), Local
Authorities and HMRC/ Revenue
Scotland. We work closely with our
regulators to keep them up to date of
our activities and strategic priorities.
• Consultation around new legislative
changes, including the new Environment
Act.
• The Environment Act also sets out
the framework for Extended Producer
Responsibility EPR (UK wide), Deposit
Return Schemes (DRS) (Scotland already
legislated for England Wales and Northern
Ireland considering) and Collections
Consistency in England.
• The Board received an update on UK
Waste Policy and regulatory engagement
in April 2021.
• The Sustainability Committee received
updates during the year on the UK
legislation including the Environment Act
and Resources and Waste Strategy.
• Participation in expert working groups, Government
consultations, waste sector liaison groups and councillor
training.
• Meeting with key Government figures including Kwasi
Kwarteng, Secretary of State at the Department of Business,
Energy and Industrial Strategy (BEIS), Jo Churchill Parliamentary
Under-Secretary for Department for Environment, Food and
Rural Affairs and Mark Pawsey, member of BEIS and Chair of the
All-Party Group for Packaging.
• Input to, and member of, industry working groups - the ongoing
dialogue enables Biffa to better understand the development of
the policy and regulations.
• Responses to statutory consultations and calls for evidence,
including DRS and Collections Consistency.
• Liaison over new national policy and regulation issues.
• Publication of Biffa “Reality Check” report series on website,
including latest report ‘From Waste Hierarchy to Carbon Hierarchy:
Biffa’s Blueprint for Waste Net Zero’.
Environment and
Communities
Sustainability is at the heart of our
business. We’re committed to changing
the way people think about waste and
doing the right things to protect our
planet, which includes minimising our
carbon footprint whilst delivering the
most environmental, social and financial
value from the resources we collect. We
are also proud to give something back to
the communities we serve and in doing
so create value for all our stakeholders.
• Tackling modern slavery, how we are
mitigating the risks to support local
communities.
• How we are bringing social value to our
communities through our operations.
• The processes we have in place to ensure
the health and safety of our people,
customers and communities.
• Biffa’s role in a circular economy (including
plastics recycling and consumer
behaviour).
• Biodiversity, restoring former landfill sites
to enable new species to be introduced
and maintaining diverse and functioning
ecosystems.
• Food waste, Biffa’s actions to dispose of or
avoid food waste through Company Shop
Group operations.
• Energy recovery, as a means of diverting
waste from landfill and providing base
load localised energy sources.
• Carbon emissions from Biffa’s operation,
to prevent climate change impacts on the
environment.
• Community relations, how Biffa engages
with local communities and investment in
those communities.
• Leadership and governance, including
transparency in sustainability reporting.
• Ongoing management of local
environmental impacts e.g., odour.
• The Board receives updates at every
meeting on health & safety.
• The Sustainability Committee receives
updates at every meeting on how the
Group is progressing with the Company’s
sustainability targets.
• The Board received an update and
approved the Company’s modern slavery
statement in September 2021.
• The Board undertook a site visit of
Company Shop Group in September
2021.
• Attend parish council and local liaison meetings.
• Invite community members to our sites (outside of Covid-19
restrictions).
• Participate in volunteering and fundraising activities.
• Regular newsletters, website articles, blogs and social media
updates.
• Educating school children on waste and recycling.
• Engaged with Jobcentre Plus to attract candidates from our
diverse communities.
• Direct contributions through community, sponsorship and
fundraising.
• Continued investment in UK circular economy infrastructure.
• Local project funding through Biffa Award scheme.
• Review of scope 3 carbon emissions as part of our commitment
to the Science Based Targets initiative and our commitment to
achieving net zero emissions by no later than 2050.
• Social value delivered through Company Shop Group’s
Community Shop.
• Helping young people into employment through the
Government’s Kickstart scheme.
• Biodiversity campaigns to promote and provide habitats for
pollinating species.
• Established relationships with Homeless.co.uk and Simon
Community Scotland.
106
Biffa plc / Annual Report and Accounts 2022
Stakeholder What matters to them How the Board engaged How our business engaged How we listened
Government and
Regulators
The UK waste sector’s policy framework
is devised by the UK Governments
(comprising England, Wales, Scotland
and Northern Ireland). As leaders in
the UK waste industry, we are working
closely with the UK Governments as
they develop their Resources and
Waste Strategies and climate change
prevention plans.
Our industry is regulated by the
Environment Agency (and equivalents
in the UK devolved nations), Local
Authorities and HMRC/ Revenue
Scotland. We work closely with our
regulators to keep them up to date of
our activities and strategic priorities.
• Consultation around new legislative
changes, including the new Environment
Act.
• The Environment Act also sets out
the framework for Extended Producer
Responsibility EPR (UK wide), Deposit
Return Schemes (DRS) (Scotland already
legislated for England Wales and Northern
Ireland considering) and Collections
Consistency in England.
• The Board received an update on UK
Waste Policy and regulatory engagement
in April 2021.
• The Sustainability Committee received
updates during the year on the UK
legislation including the Environment Act
and Resources and Waste Strategy.
• Participation in expert working groups, Government
consultations, waste sector liaison groups and councillor
training.
• Meeting with key Government figures including Kwasi
Kwarteng, Secretary of State at the Department of Business,
Energy and Industrial Strategy (BEIS), Jo Churchill Parliamentary
Under-Secretary for Department for Environment, Food and
Rural Affairs and Mark Pawsey, member of BEIS and Chair of the
All-Party Group for Packaging.
• Input to, and member of, industry working groups - the ongoing
dialogue enables Biffa to better understand the development of
the policy and regulations.
• Responses to statutory consultations and calls for evidence,
including DRS and Collections Consistency.
• Liaison over new national policy and regulation issues.
• Publication of Biffa “Reality Check” report series on website,
including latest report ‘From Waste Hierarchy to Carbon Hierarchy:
Biffa’s Blueprint for Waste Net Zero’.
Environment and
Communities
Sustainability is at the heart of our
business. We’re committed to changing
the way people think about waste and
doing the right things to protect our
planet, which includes minimising our
carbon footprint whilst delivering the
most environmental, social and financial
value from the resources we collect. We
are also proud to give something back to
the communities we serve and in doing
so create value for all our stakeholders.
• Tackling modern slavery, how we are
mitigating the risks to support local
communities.
• How we are bringing social value to our
communities through our operations.
• The processes we have in place to ensure
the health and safety of our people,
customers and communities.
• Biffa’s role in a circular economy (including
plastics recycling and consumer
behaviour).
• Biodiversity, restoring former landfill sites
to enable new species to be introduced
and maintaining diverse and functioning
ecosystems.
• Food waste, Biffa’s actions to dispose of or
avoid food waste through Company Shop
Group operations.
• Energy recovery, as a means of diverting
waste from landfill and providing base
load localised energy sources.
• Carbon emissions from Biffa’s operation,
to prevent climate change impacts on the
environment.
• Community relations, how Biffa engages
with local communities and investment in
those communities.
• Leadership and governance, including
transparency in sustainability reporting.
• Ongoing management of local
environmental impacts e.g., odour.
• The Board receives updates at every
meeting on health & safety.
• The Sustainability Committee receives
updates at every meeting on how the
Group is progressing with the Company’s
sustainability targets.
• The Board received an update and
approved the Company’s modern slavery
statement in September 2021.
• The Board undertook a site visit of
Company Shop Group in September
2021.
• Attend parish council and local liaison meetings.
• Invite community members to our sites (outside of Covid-19
restrictions).
• Participate in volunteering and fundraising activities.
• Regular newsletters, website articles, blogs and social media
updates.
• Educating school children on waste and recycling.
• Engaged with Jobcentre Plus to attract candidates from our
diverse communities.
• Direct contributions through community, sponsorship and
fundraising.
• Continued investment in UK circular economy infrastructure.
• Local project funding through Biffa Award scheme.
• Review of scope 3 carbon emissions as part of our commitment
to the Science Based Targets initiative and our commitment to
achieving net zero emissions by no later than 2050.
• Social value delivered through Company Shop Group’s
Community Shop.
• Helping young people into employment through the
Government’s Kickstart scheme.
• Biodiversity campaigns to promote and provide habitats for
pollinating species.
• Established relationships with Homeless.co.uk and Simon
Community Scotland.
107
Biffa plc / Annual Report and Accounts 2022
Strategic Report
Financial
Statements
Corporate
Governance Report
Overview
Additional
Information
Discharging Directors’ Duties
Further information on how s172 has been applied by the Directors can be found throughout
the Annual Report:
s172 duties Read more Pages
Consequences of decisions
in the long-term
Our Sustainable Business Model 08-09
Principal Risks and Uncertainties 76-83
Viability Statement and Going Concern 89
Board Activities 100-101
Interests of employees Non-Financial Information Statement 84-88
Caring for our people, supporting our
communities
47-57
Employee Engagement 52
Diversity and Inclusion 54
Culture and Values 97
Fostering business
relationships with suppliers,
customers and others
Operating Review 66-75
Impact of operations on
the community and the
environment
Sustainability Performance 34-35
TCFD Disclosures 38-46
Sustainability Committee Report 116-117
Maintaining high standards
of business conduct
Non-Financial Information Statement 84-88
Culture and Values 97
Whistleblowing 55
Anti-fraud, Bribery and Corruption 53
Modern Slavery 56
Acting fairly between
members
Shareholder engagement 104
Voting Rights 142
How the Directors Discharge their
Section 172 Duties
The Directors have a duty under s172 of the
Companies Act 2006 (s172) to promote the
success of the Company for the benefit of
its members. In doing so, they must have
regard to the interests of our employees,
the business relationships with our suppliers
and customers, the impact of our operations
on the community and the environment
and the desirability of the Company
maintaining a reputation for high standards of
businessconduct.
To be able to fulfil their s172 duty when
making decisions, it is essential that the
Directors understand what matters to the
Company’s stakeholders. Details of our key
stakeholder groups and how the business
and the Board have engaged with them
during the year are set out on pages 102-107.
Much of the stakeholder engagement at Biffa
is carried out at a business level. The Board
receives details of stakeholder engagement
and their interests through presentations
from the Executive Directors and senior
management and the Board papers. All Board
papers for principal Board decisions contain a
section on s172 and stakeholder interests.
A key responsibility of the Board Sustainability
Committee is overseeing stakeholder
engagement on behalf of the Board. Further
details are set out in the Sustainability
Committee Report on page 117.
In addition, the Directors also engage
directly with our investors and our
employees. Employee engagement is
primarily conducted through David Martin,
our nominated Non-Executive Director
for Workforce Engagement (see page 52).
Site visits and Board dinners also provide
an opportunity for direct engagement
with employees. For further information
see pages98 and page 100.
Examples of some of the principal decisions
that the Board has taken during the year and
how s172 considerations have been factored
into the Board’s decision making are set
outopposite.
How the Board fulfil their s172 duties
Board training
Each of the Directors is aware of their directors’ duties and has received training on s172
Board information
All Board papers for principal Board decisions
contain a section on s172 and stakeholder
interests
Our Board directly and indirectly engages with
our stakeholders. Read more on pages 102-107
Board strategic discussion
s.172 factors are considered
in the Board’s discussions on
strategy, including how they
underpin the Company’s long-
term success
The Company’s open and
honest culture helps ensure
there is proper consideration
of the impact of Board
decisions on our stakeholders
The Board considers the
quality of information it has
received and seeks assurance
where appropriate
Board decision
Outcomes of Board decisions are assessed
and further engagement with stakeholders
is undertaken where appropriate
As a result of the Board’s engagement, the
necessary actions are taken
108
Biffa plc / Annual Report and Accounts 2022
Board Decision Making
Examples of principal decisions of the Board
Acquisition of Viridor’s collections
business and certain recycling assets
During the year, the Board considered
and approved the significant opportunity
to acquire Viridor’s collections business
and certain recycling assets. The
acquisition supports Biffa’s strategic areas
of ‘reduce’ and ‘recycle’ and long-term
sustainabilitystrategy.
Link to stakeholder groups
Board Discussion and s172 Considerations
• The long-term financial benefits to the Group from post synergy returns and the significant
earnings enhancement that would benefit the Company’s investors, along with the how
the acquisition would support the Group’s sustainability strategy benefitting a wide range of
stakeholders.
• How the acquisition would be perceived by the Group’s workforce and the uncertainty it might
bring to both existing and new staff during the integration period. They further considered
the positive impact the increased number of stable job roles and opportunities would have on
those employees following the acquisition.
• The combination of the businesses provides a wider, integrated service offering to Biffa’s
customers and a broader Group customer base and supply requirement.
• The acquisition would have a positive impact on the environment and local communities
following the integration of the businesses with reduced road congestion and CO
2
emissions.
See page 18.
Dividend
Due to the Group’s strong recovery from
the Covid-19 pandemic, in November
2021 the Board approved re-instating
dividends and paying an interim dividend
for the year.
Link to stakeholder groups
Board Discussion and s172 Considerations
• The importance of dividends for the long-term success of the Company.
• The likely views of the Company’s investors with dividend payments being an important
element of the Group’s investment case and is in line with investor expectations.
• The benefit to those employees who participate in the Company’s share schemes or hold
shares through private pensions or other investments.
See page 60.
Private placement loan notes issuance
The Board approved the issuance by the
Company of £150m loan notes in August
2021 to maintain adequate funding
headroom following the acquisition of
Viridor. This was followed in February
2022 by the issuance of £195m loan
notes, the funds of which were used to
reduce the drawdown on the Company’s
revolving credit facility and provide
additional headroom for future growth in
thebusiness.
Link to stakeholder groups
Board Discussion and s172 Considerations
• The benefits to the long-term success of the Group of 7-12-year monies, diversifying the
Company’s source of debt and reducing exposure to variable interest borrowing in an
environment of increasing interest rates.
• The funding is linked to the Group’s sustainability-linked finance framework, aligning the Group’s
funding strategy with the Sustainability Strategy which will bring benefit to a broad range of
stakeholders
• The additional headroom for future growth in the business supporting the Group’s investment
areas and bringing benefits to stakeholders.
See page 62.
Key to stakeholder groups
Employees Customers Investors Suppliers Government & Regulators Environment & Communities
109
Biffa plc / Annual Report and Accounts 2022
Strategic Report
Financial
Statements
Corporate
Governance Report
Overview
Additional
Information
Division of Responsibilities
The Board members have clearly defined roles and responsibilities, which are set out below. They also have a range of skills, knowledge and
experience that is relevant to the successful operation of the Board (see the biographies on pages 92-93 and Board Composition and Skills table
on page 115).
Independence of the Non-Executive
Directors
The Nomination Committee, on behalf of
the Board, reviews the independence of
the Non-Executive Directors annually and
has confirmed to the Board that it considers
each of the Non-Executive Directors to be
independent in accordance with the Code.
Time Commitment
All Non-Executive Directors are required
to devote sufficient time to meet their
Board responsibilities and demonstrate
commitment to their role. During the year,
the Nomination Committee considered the
time commitment of all the Non-Executive
Directors and were satisfied that the required
time commitment from each of them
remains appropriate.
Additional Appointments
All Directors are required to consult with the
Chairman and obtain Board approval before
taking on any additional appointments.
Executive Directors are not permitted to
take on more than one non-executive
directorship of a FTSE 100 company or
other significant appointment. As part of
the selection process for any new Board
candidates, any significant external time
commitments are considered before an
appointment is agreed. Further information
on the appointment process of new
Directors can be found on page 112.
Roles and Responsibilities
Chairman – Ken Lever
• Leads the Board and is responsible for its overall effectiveness.
• Facilitates constructive Board relations and the effective
contribution of all Non-Executive Directors.
• Promotes a culture of openness and debate.
• Engages with stakeholders and ensures their views are understood
and considered appropriately in Board decision making.
• Sets the agenda and drives Board effectiveness.
• Ensures that the Board receives accurate, timely and clear
information.
Senior Independent Director – David Martin
• Provides a sounding board for the Chairman.
• Serves as an intermediary for the other Directors and shareholders,
where necessary.
• Leads the annual appraisal and review of the Chairman’s
performance.
Non-Executive Directors - Carol Chesney, David Martin,
Claire Miles and Linda Morant
• Responsible for bringing an external perspective.
• Provide sound judgement and objectivity to the Board’s
deliberations and decision making.
• Support and constructively challenge the Executive Directors using
their broad range of experience and expertise.
Independent Non-Executive Director for Workforce
Engagement – David Martin
• Responsible for helping to ensure the views and concerns of the
workforce are taken into account by the Board and its Committees.
Chief Executive Ocer – Michael Topham
• Responsible for the day-to-day running of the Group’s businesses.
• Responsible for the development and implementation of the
strategy and the Group’s overall performance.
• Facilitates effective two-way communication between the Board,
the business, the workforce and other stakeholders.
• Leads the Group Executive Team.
• Represents the Company externally to all stakeholders.
Chief Financial Ocer – Richard Pike
• Supports the Chief Executive Officer in developing and
implementing strategy.
• Oversees the day-to-day financial activities of the Group.
• Responsible for the preparation and integrity of financial reporting.
• Ensures the maintenance of effective internal control and risk
management procedures.
• Oversees the Company’s relationship with its investors.
Company Secretary - Sarah Parsons
• Supports the Board to ensure that it has the policies, processes,
information, time and resources it needs in order to function
effectively and efficiently.
• Advises the Board on all governance matters.
• Supports the Chairman and the Chief Executive Officer in the
delivery of the corporate governance agenda.
• Facilitates the Directors’ inductions programmes and assists with
professional development.
• Provides advice, services and support to all Directors, as needed.
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Composition, Succession and Evaluation
Board Evaluation
As required by the Code, there is an annual
evaluation of the performance of the Board,
its Committees, the Chairman and individual
Directors. The evaluation helps to identify
areas for improvement and informs training
plans for the Directors.
There was an externally facilitated Board
and Committee evaluation in FY21 and
therefore the Board agreed for FY22 that
the evaluation should be conducted by the
Company Secretary by way of an online
questionnaire.
FY22 Board Evaluation
All Directors, regular meeting attendees
and the Company Secretary were invited to
complete separate Board and Committee
questionnaires covering all aspects of
Board and Committee performance,
whichincluded:
• Board/Committee composition.
• Conduct of meetings.
• Corporate strategy, purpose, values and
culture.
• Transactions and approvals.
• Risk management and internal controls.
• Measuring and monitoring performance.
• Stakeholders.
Additional questions were included to assess
progress with the areas of focus that were
identified from the FY21 externally facilitated
Board and Committee evaluation.
The participants were asked to score 29
statements on a scale of 1 to 5 and provide
written comments, including areas for
improvement.
FY22 Board and Committee
Evaluation Findings
The results of the Board and Committee
evaluations were presented to the Board for
discussion at its meeting in March 2022.
The overall assessment is that the Board
continues to operate effectively and has
performed well during the year, with the
overall scoring up from FY20, which is when
the last internally facilitated evaluation took
place.
The review of the Committees confirmed
that they continue to operate effectively,
with no significant matters raised.
The Board agreed that, with input from the
Company Secretary, the Chairman and Chairs
of each of the Committees should identify
any actions for the Board and Committees for
FY23. Further information on the actions for
FY23 will be provided in the Annual Report
and Accounts 2023.
In addition to the review of the Board and
its Committees, the Chairman reviewed the
performance of each Director and the Senior
Independent Director led a review of the
performance of the Chairman. It was agreed
that each Director continues to contribute
effectively.
Update on FY21 Board Evaluation Outcomes
The FY21 Board performance evaluation was externally facilitated by Claire Chalmers and James Littlefair of Claire Chalmers Limited and is
described in further detail in the Annual Report and Accounts 2021 on page 95.
The evaluation identified a number of areas of focus for FY22 with good progress made in all these areas during the year.
Focus Area Actions during FY22
Increasing the Board’s awareness of customers, and,
suppliers as well as potential regulatory changes and the
regulatory relationship.
The Board received presentations on the regulatory relationship and
landscape and customers during the year at Sustainability Committee
meetings. A presentation on customers has been included in the FY23
Sustainability Committee programme.
Making more room for performance review in the
Boardagenda.
A post-investment review for acquisitions by the Company was presented
to the Board during the year. Business reviews were also completed for the
Specialist Services Industrial and Company Shop Group businesses.
Continuing to improve the quality and timeliness of Board
papers to include ensuring thorough s172 compliance.
Progress was made during the year on consistency of Board and
Committee papers. Timeliness of papers was also improved overall.
Continuing focus on succession, development and talent
to maximise potential across the business.
A talent and succession review was presented to the Nomination
Committee during the year. The Board also had dinner with a number of
senior leaders.
Greater use of external contributors at Board meetings or
as pre-dinner speakers to increase Board knowledge and
awareness of relevant business matters.
David Salkeld, Non-Executive Director of Company Shop Group, was a pre-
dinner speaker at a Board dinner during the year.
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Strategic Report
Financial
Statements
Corporate
Governance Report
Overview
Additional
Information
Composition, Succession and Evaluation continued
Conicts of Interest
Under the Company’s Articles of Association,
the Board may authorise any actual or
potential conflicts of interest and impose
limits or conditions as appropriate. The Board
has a detailed process for the management
of conflicts of interest which is monitored
by the Nomination Committee on its behalf.
The Directors are required to disclose any
conflicts of interest on appointment and
then as they arise for consideration by the
Board.
Following the annual review in January 2022,
the Nomination Committee, on behalf of
the Board, noted that there were no current
conflicts of interest and each Director
confirmed that there were no new conflicts
of interest to report.
Board Appointments Process
The Board has a formal and transparent
procedure for the appointment of new
Directors to the Board which it has
delegated to the Nomination Committee.
This process includes taking into account
the annual Board composition review by
the Nomination Committee to ensure that
any new appointments complement or
address any identified gaps in Board skills,
knowledge, experience or diversity.
The Nomination Committee ensures
that the selection process is rigorous
and transparent and, if appropriate, it will
appoint a professional external search
firm. Candidates from a wide range of
backgrounds that meet the role specification
will be considered and all appointments will
be made entirely on merit, with due regard
to the benefits of all aspects of diversity.
Training and Development
During the year, the Board received
a corporate governance update on
remuneration matters from FIT, our external
Remuneration Advisor, and corporate
governance updates from an audit and risk
perspective from the External Auditor.
In addition, the Directors undertake their
own training and development which has
included during the year topical updates
on corporate governance, technology,
sustainability, and cyber security matters.
Site Visits
In order to facilitate greater understanding
and awareness of our business and to
meet management, visits to key sites
are incorporated into the annual Board
programme. During these visits, the
Directors receive briefing sessions from
local management, allowing them to
ask questions, learn about the business
and spend time with different teams and
individuals to observe and experience
first-hand how the culture and values
are embedded across the Group. Further
information on the Board’s site visits during
the year can be found on page 98 and
page 100.
Appointment of Linda Morant
During the selection and appointment
process undertaken in 2021 for the
appointment of Claire Miles (see the
Annual Report and Accounts 2021 for
details), the Nomination Committee
was made aware of Linda Morant as a
potential candidate.
The selection and appointment process
was undertaken by professional exter-
nal search firm, Spencer Stuart. Spencer
Stuart has no other connections to the
Company or any individual director.
Linda was included in the comprehen-
sive interview process, however, due to
Linda’s availability at that time, the Com-
mittee agreed that her appointment to
the Board should be considered, if an
additional Non-Executive Director posi-
tion became available later in the year.
In September 2021, the Committee
were made aware of Michael Averill’s
intention to retire from the Board on 31
December 2021 and following a thor-
ough due diligence, and referencing
process, the Committee recommended
the appointment of Linda to the Board
as a Non-Executive Director, Chair of the
Sustainability Committee and member
of the Nomination Committee with
effect from 1 December 2021.
Directors’ Induction
On their appointment to the Board, all new
Directors receive a comprehensive and
tailored induction programme coordinated
by the Company Secretary.
For Claire and Linda this included:
• A presentation on their duties as
a director of a UK premium listed
company.
• Introductory meetings with the
other Directors, the Group Executive
Team members and Heads of Group
Functions.
• Access to the Board portal which
includes a comprehensive resources
section with key Board documents and
Group information.
• Visits to the Group’s key sites and
meetings with local teams and the
opportunity to join I&C and Municipal
collection rounds.
In addition, Claire prepared for her
appointment as Remuneration Committee
Chair with a series of meetings with the
Company’s remuneration advisers, FIT, and
the Group HR Director.
Linda undertook a number of meetings
with the Corporate Affairs Director to discuss
sustainability matters to assist with her new
role as Sustainability Committee Chair.
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Additional
Information
Nomination Committee Report
Nomination
Committee Report
I am pleased to present the Nomination Committee (Committee)
Report on behalf of the Board for the year.
As outlined in my statement on page 91, there have been a number of changes to the
composition of the Board and its Committees during the year.
In April 2021, we welcomed Claire Miles to the Board as a Non-Executive Director.
Details of Claire’s appointment process can be found on page 94 of the 2021 Annual
Report and Accounts.
In September 2021, Michael Averill announced that he would retire from the Board in
December 2021, following his decision to relocate to Australia.
Linda Morant was appointed as a Non-Executive Director to the Board and Chair of
the Sustainability Committee with effect from 1 December 2021. The Committee led
the process for Linda’s appointment during the year. Further details can be found
on page 112.
In addition, Claire Miles was appointed Chair of the Remuneration Committee with
effect from 7 September 2021 and a member of the Nomination Committee and
Sustainability Committee as of 6 September 2021 and the Audit Committee as of 1
January 2022.
During the year, the Committee focused on the Group’s diversity and inclusion policies
and initiatives, including the revision of its Board Diversity and Inclusion Policy. Further
information on this can be found on page 115.
The Committee monitored succession planning at Board and Group Executive level
and continued to recognise the importance of developing our people through a
diverse talent pipeline. The Committee received an update on key activities undertaken
including an update on the outcomes of the talent review of the Group’s senior
leadership team. The Committee was pleased to see that the Company has a capable
and highly experienced senior leadership group, however it was noted that further
investment in the talent pipeline was needed to ensure the Group has the resources to
lead and support growth.
During the year, an evaluation of the Board and its Committees was undertaken in
accordance with the Committee’s Terms of Reference. Further information can be
found on page 111.
Our priority areas for the coming year will be to continue to focus on succession
planning and to ensure we have a diverse talent pipeline with the right capabilities
across the Group.
Ken Lever
Chair of Nomination Committee
“The Committee is
pleased to see that the
Company has a capable
and highly experienced
senior leadership group.”
Ken Lever
Chair of Nomination Committee
Meetings held
2
Overall attendance
100%
Members and attendance
Member Attendance
Ken Lever (Chair) 100%
Michael Averill 100%
Carol Chesney 100%
David Martin 100%
Claire Miles 100%
Linda Morant 100%
1 Retired from the Committee on 31 December 2021.
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Biffa plc / Annual Report and Accounts 2022
Strategic Report
Financial
Statements
Corporate
Governance Report
Overview
Nomination Committee Report continued
Membership of the Committee and
Attendance
The Committee, under the chairmanship of
Ken Lever, currently comprises all of the Non-
Executive Directors who are all independent.
The Company Secretary attends all the
Committee meetings as Secretary to the
Committee and, by invitation, they are also
attended by the Chief Executive Officer, the
Chief Financial Officer and the Group HR
Director. Additional attendees are invited at
the Committee’s request.
The Committee held two scheduled
meetings during the year. Attendance at
those meetings is shown on page 113.
Role and Responsibilities of the
Committee
The role of the Committee is to lead the
process for Board appointments, ensure that
plans are in place for orderly succession to
both the Board and senior management
positions, and oversee the development of a
diverse pipeline for succession to ensure that
the Group has the best talent to perform
effectively now and in the future.
The Committee’s responsibilities are set out
in its Terms of Reference and include:
• Reviewing the structure, size and
composition (including the skills,
knowledge, experience and diversity) of
the Board and making recommendations
to the Board with regard to any changes.
• Succession planning for the Board and
senior management.
• Leading the process for Board
appointments and making
recommendations to the Board.
• Assessing whether Directors can commit
sufficient time to fulfil their responsibilities.
• Taking an active role in setting diversity
objectives and strategies for the
Company as a whole and monitoring the
impact of diversity initiatives.
Board Composition and Skills
The Committee annually reviews the
composition of the Board and each of the
Director’s skills, experience and knowledge,
taking into account tenure and diversity.
The Committee considers that, following
the recent Board and Committee changes,
the current Board membership provides
the right mix of skills, knowledge and
experience. Information on each of the
Directors’ skills, experience and knowledge is
set out opposite.
Succession Planning
During the year, the Committee reviewed
the succession plans for the Board, the
Group Executive Team and the senior
management talent pipeline.
The Committee takes an active interest
in the quality and development of talent
and capabilities within Biffa, ensuring that
appropriate opportunities are in place to
develop high-performing individuals.
These opportunities include the Biffa
Advanced Leadership Programme which
is targeted at developing the capability of
talented managers who have the potential
to reach senior leadership roles.
In addtion, during the year, the Committee
received an update on the Company’s first
Graduate Programme with 12 graduates
being recruited onto the 12-month
development programme; the Company’s
support of the Government’s Kickstart
scheme; and the driver recruitment
challenges and the work undertaken to
establish a new Group driver recruitment
service, as well as implementing a broad
range of initiatives to attract and retain
our drivers.
The Committee remains focussed on
all aspects of talent attraction and
management. Capability at all levels of the
organisation is a key enabler of continued
positive performance at Biffa.
During the year, the Board had an
opportunity to meet high performing
individuals during site visits, meetings and
Board dinners. In September 2021, the
Board met senior management from the
Company Shop Group at the site visit and
Board dinner, and in April 2022 the Board
met senior management at their visit to the
Newhurst ERF. The Board is looking forward
to having further opportunities to meet
high-performing individuals during FY23.
Activities of the Committee
During the year, the Committee’s key activities were as follows:
• Led the appointment process for Linda Morant.
• Recommended to the Board the membership changes to the Audit Committee,
Remuneration Committee and Sustainability Committee.
• Received an update on diversity and inclusion for the Group.
• Recommended a revised Board Diversity and Inclusion Policy for approval by the Board.
• Reviewed the structure, diversity, size and composition of the Board including
considering Board succession planning.
• Reviewed succession plans for the Executive Directors, Group Executive Team and
senior leaders.
• Received an update on the talent review of the senior leadership team including an
update on the Biffa Advanced Leadership Programme.
• Reviewed Non-Executive Directors’ independence and time commitments and
Board conflicts of interest.
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Biffa plc / Annual Report and Accounts 2022
Additional
Information
Board Composition and Skills
Board Skills, Knowledge and Experience
Carol
Chesney
Ken
Lever
David
Martin
Linda
Morant
Claire
Miles
Richard
Pike
Michael
Topham
Independence
Functional background: Operations
Functional background: Finance
Functional background: Technology
CEO and leadership experience
Waste sector
Logistics/networks
M&A/restructuring
Governance and regulatory
International
Stakeholder/IR/PR
Technology/e-commerce
Business evolution/strategy development
People
Sustainability
Diversity and Inclusion
The Board recognises that having a
diverse, highly talented and skilled group
of people at all levels within the Group is
fundamental to the success of the business.
It fully supports the Company’s policy on
diversity and inclusion and during the
year received a detailed presentation on
the activities that have been undertaken
and the progress against its objectives in
relation to this. Further information on the
Company’s Diversity Policy for employees
can be found in the Non-Financial
Information Statement on page 85.
As reported last year, the Board is actively
aware of the need for greater gender
and ethnic diversity on the Board and
published its first Board Diversity and
Inclusion Policy in November 2020, setting
itself the objective to meet the Hampton-
Alexander Review targets by July 2022 and
the Parker Review target by the end of
2024. Following the changes to the Board
during the year, those objectives have
been met. See below for further details on
our progress against the Board Diversity
and Inclusion Policy objectives.
In January 2022, the Committee reviewed
and recommended to the Board a revised
Board Diversity and Inclusion Policy which
included updated objectives. The Policy
is available on the Company’s website
www.biffa.co.uk/investors/shareholder-
information/corporate-governance.
Our Progress against the Board Diversity and Inclusion Policy Objectives
Policy Objective Progress
Support the recommendations set out in the Hampton-
Alexander Review with regard to gender diversity and
maintain at least one third women on the Board
At the beginning of the year, there were two women on the Board,
which amounted to 29% of the Board. With the changes to the Board
during the year, there are now three women on the Board which
amounts to 43% of the Board.
Following the appointment of Maxine Mayhew, Chief Operating
Officer, Collections and Specialist Services in April 2022, there are now
four women in the Group Executive Team out of a total of nine, which
amounts to 44%.
Support the recommendations of the Parker Review on
ethnic diversity and maintain at least one Director from an
ethnic minority background on the Board.
With the changes to the Board during the year, there is one Board
member from an ethnic minority background.
Board Gender Diversity¹
43%
Women on the Board
Male – 4
Female – 3
Group Executive Gender Diversity¹
44%
Women on the Group Executive
Male – 5
Female – 4
1 As at 5 August 2022
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Strategic Report
Financial
Statements
Corporate
Governance Report
Overview
Sustainability Committee Report
Sustainability
Committee Report
I am pleased to present the second annual report of Biffa’s
Sustainability Committee (Committee) and the first report since I
became Chair of the Committee on 1 December 2021.
As a leader in UK sustainable waste management, sustainability is at the heart of
everything we do at Biffa. The Committee oversees, on behalf of the Board, the
delivery of the Company’s sustainability strategy and response to climate change, as
well as broader stakeholder engagement. The Committee ensures that the Directors
give clear focus and challenge to the Company’s sustainability strategy and targets
and understands the actions required for the Group to achieve its targets and make
progress towards Net Zero.
I was delighted to take over from our Chairman as Chair of the Committee and would
like to thank him for his work with the Committee since it was established in November
2020. I am a passionate advocate for sustainability, constantly developing my
knowledge in this space and understanding the role of digital technologies supporting
companies’ ability to reach their sustainability goals.
Earlier this year, we completed our first effectiveness evaluation for the Committee
and I will be reviewing the results, alongside the Committee’s Terms of Reference, to
consider whether there are any enhancements that should be made to the Committee.
Our focus for FY23 will be to continue to monitor the progress of our ambitious
sustainability strategy against our targets and the Company’s progress to Net Zero
and, look at where we can further deliver social value through our operations. More
information can be found on pages 32-35.
Linda Morant
Chair of Sustainability Committee
“Sustainability is at the
heart of everything we
do at Biffa.”
Linda Morant
Chair of Sustainability Committee
Meetings held
2
Overall attendance
100%
Members and attendance
Member Attendance
Linda Morant (Chair)
1
100%
Michael Averill 100%
Carol Chesney 100%
Ken Lever 100%
David Martin 100%
Claire Miles 100%
1 Appointed 1 December 2021.
2 Retired from the Committee on 31 December 2021.
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Biffa plc / Annual Report and Accounts 2022
Additional
Information
Membership of the Committee and
Attendance
The Committee is comprised of all the Non-
Executive Directors and the Chairman.
The Assistant Company Secretary attends
Committee meetings as Secretary to the
Committee. The meetings are also attended
by the Chief Executive Officer, the Chief
Financial Officer, the Corporate Affairs
Director, the General Counsel and Company
Secretary and the Group Human Resources
Director.
The Committee met twice during the year
and the attendance at those meetings is
shown opposite.
Role and Responsibilities of the
Committee
The role of the Committee to oversee,
on behalf of the Board, the Company’s
sustainability strategy and response
to climate change. The Committee’s
responsibilities are set out in its Terms of
Reference and include:
• Reviewing and recommending the
annual Sustainability Report and the
sustainability sections of the Annual
Report and Accounts (including the
Task Force on Climate-related Financial
Disclosures) to the Board.
• Monitoring progress and reviewing the
Group’s sustainability strategy targets.
• Reviewing, and receiving feedback on,
stakeholder engagement activities on
behalf of the Board.
• Reviewing the Group’s sustainability
ratings and accreditations.
• Reviewing the Company’s sustainability
reporting requirements and changes to
Government’s strategy, policies and laws
impacting sustainability.
Progress against the Sustainability
Strategy and Targets
The Committee reviewed at each
meeting the Group’s progress against
the sustainability strategy and targets.
Further information can be found in the
Company’s Sustainability Report at
www.biffa.co.uk/sustainability/sustainability
Reporting Frameworks
The Group reports under several
frameworks to provide a complete picture
of our progress and activities and to allow
comparison with our peers and other
companies.
This includes the Task Force on Climate-
Related Financial Disclosures (TCFD), the
Sustainability Accounting Standards Board
(SASB), the Global Reporting Initiative
(GRI) and we have also committed to the
Science Based Targets initiative (SBTi).
Our sustainability strategy targets are
closely aligned to the UN’s Sustainable
Development Goals (SDGs).
Sustainability-Linked Finance
Framework
In December 2021, the Committee oversaw
the publication of the Company’s first
Sustainability-Linked Finance Framework,
which aligns the Group’s funding with the
its Sustainability Strategy. Two performance
targets underpin the basis of the framework,
both of which form an integral part of Biffa’s
Sustainability Strategy:
• Reducing scope 1 and 2 GHG emissions
by 50% by 2030.
• Tripling Biffa Polymers’ plastics recycling
capacity by 2025.
The framework was established in alignment
with the International Capital Market
Association’s guidelines, with reference to
the sustainability-linked bond principles and
the Loan Market Association’s sustainability
linked loan principles.
To ensure the framework aligns to best
practice, it has been independently
reviewed by S&P. The framework is
available to download on the Company’s
website: https://www.biffa.co.uk/investors/
sustainability/sustainability-linked-finance-
framework
Stakeholder Engagement
Stakeholder engagement is key to the
Company’s long-term success. During
the year, the Committee received an
update on the work being undertaken on
supplier engagement, in particular how the
Company is developing long-term strategic
alignment with its suppliers to encourage
innovation and improve operational
performance and communication. Further
information on our suppliers can be found
on page 15.
Activities of the Committee
During the year, the Committee’s key activities were:
• Reviewed progress against the sustainability strategy targets.
• Received an update on the Company’s journey to Net Zero.
• Received an update on the Sustainability-Linked Finance Framework.
• Approved and recommended to the Board the Sustainability Report 2021.
• Approved and recommended to the Board the stakeholder engagement section
and sustainability section (including the Company’s first Task Force on Climate-
related Financial Disclosures) of the Annual Report and Accounts 2021.
• Received a presentation on the Group’s strategic suppliers and engagement.
• Received an update on the Resources and Waste Strategy and environmental
legislative changes.
• Received an update on the Group’s alternative fuels strategy.
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Biffa plc / Annual Report and Accounts 2022
Strategic Report
Financial
Statements
Corporate
Governance Report
Overview
Audit Committee Report
Audit
Committee Report
I am pleased to present this year’s Audit Committee (Committee)
Report. The Report outlines how the Committee discharged its
responsibilities over the past year and the key areas it considered in
doing so.
The Committee has provided financial oversight and stewardship of our financial
reporting and has continued to monitor the implementation of the business strategy
and its impact on the Group’s internal control and risk management framework.
A key focus for the Committee this year has been a review of the continuing use of
alternative performance measures in the Group’s financial reporting and impairment
testing. Management have recommended their continued use with enhancements to
ensure that reporting is balanced, and the Committee are supportive of this approach.
An additional focus for the Committee has been a review of the controls and
financial reporting with respect to the HMRC landfill tax enquiry. The Committee has
reviewed and are supportive of the judgements and estimates management has made
in arriving at their conclusions. The Committee has approved the provision recognised,
the contingent liability disclosed and the ongoing landfill tax-related controls
framework.
The Committee are cognisant of the proposals for the reform of UK corporate reporting
and audit regime and received various updates during the year, to assess the potential
impact this may have on the future work of the Committee and to enable areas of
focus to be planned accordingly. In anticipation of such reform, an external high-level
assessment of the Group’s internal control over financial reporting environment was
undertaken to assess its maturity. For further information, see page 123.
Carol Chesney
Chair of Audit Committee
“A key focus of the
Committee has been a
review of the continuing
use of alternative
performance measures
in the Group’s financial
reporting.”
Carol Chesney
Chair of Audit Committee
Meetings held
4
Overall attendance
94%
Members and attendance
Member Attendance
Carol Chesney (Chair) 100%
Michael Averill 100%
David Martin 75%
Claire Miles 100%
1 Retired from the Committee on 31 December 2021.
2 David Martin was unable to attend the rescheduled
meeting in November 2021 due to an unavoidable
prior commitment.
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Biffa plc / Annual Report and Accounts 2022
Additional
Information
Activities of the Committee
During the year, the Committee’s key activities were as follows:
Key areas Activities during the year
Financial Reporting • Reviewed the Annual Report and Accounts FY21, confirming they were fair, balanced and
understandable, the significant judgements and estimates, going concern statement and viability
statement.
• Reviewed the half-year accounts for FY22, including the significant judgements and estimates.
• Reviewed the External Auditor’s report on the full-year audit for FY21 and the half-year audit for FY22.
• Reviewed the full-year results announcement for FY21, half-year results announcement for FY22 and
the September and March Pre-Close Trading Statements.
• Reviewed the use of alternative performance measures and confirmed support for their continuing
use with enhancements.
• Reviewed the provision, contingent liability and supplementary disclosures relating to the ongoing
HMRC landfill tax enquiry.
External Audit • Reviewed the External Auditor’s independence, objectivity and effectiveness.
• Considered the re-appointment of the External Auditor, External Auditor fees and terms of
engagement.
• Reviewed the Non-Audit Services Policy and the External Auditor’s non-audit services and fees.
Risk and Internal Control • Reviewed the Group’s principal risks and emerging risks with a particular focus on the risk of non-
compliance with landfill tax guidance.
• Reviewed the effectiveness of the Group’s risk management and internal control systems at half-year
and full-year. Increased scrutiny was placed upon the controls designed to ensure compliance with
landfill tax guidance.
• Considered recommendations for control improvements highlighted by the External Auditor.
• Reviewed the risk management and internal control disclosures in the half-year and full-year
accounts.
• Received updates on the implementation of the key control framework.
Internal Audit • Reviewed and approved the annual Internal Audit plan for FY23.
• Reviewed Internal Audit effectiveness including resourcing.
• Approved the Internal Audit Charter.
• Considered the bribery risk review and recommendations.
• Reviewed internal audits performed on certain areas of the landfill sub-division in previous years.
• Monitored delivery of the FY22 Internal Audit plan and reviewed various Internal Audit reports (see
page 124 for more details).
Other Areas • Reviewed the results of the annual evaluation of the effectiveness of the Committee.
• Received an update on tax matters for the Group and reviewed and recommended the Group’s
annual tax strategy to the Board.
• Received updates on treasury matters.
• Reviewed the related parties policy and list.
• Reviewed the internal control over financial reporting maturity results and received a presentation
on UK corporate reform from the External Auditor.
• Received updates on material litigation and whistleblowing matters.
• Recommended to the Board the re-establishment of dividend payments and the payment of an
interim dividend for FY22.
• Reviewed the proposals for renewal of the Group’s insurance programme for FY23.
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Biffa plc / Annual Report and Accounts 2022
Strategic Report
Financial
Statements
Corporate
Governance Report
Overview
Signicant Financial Judgements and Estimates Considered
Significant financial judgements and estimates considered by the
Committee in relation to the Annual Report and Accounts FY22
How these issues were addressed by the
Committee
Landfill
Accounting
The Committee reviewed the valuation of the
landfill provisions and assets, the level of such landfill
provision and the extent of the depreciation of such
assets. It being noted that the responsibility for a
landfill site extends beyond the cessation of land filling
operations until the Group has fulfilled its aftercare and
restoration obligations which is estimated to be up to
60 years post closure of the site.
(See Note 19 on pages 195-197 for further details on
landfill provision).
The Committee considered the Group Landfill Capital
and Provisioning Policy which includes the accounting
methodology and the two key estimates being the
gross cost and discount rates applied.
The Committee determined that with the
combination of external third-party reports and
guidance, and the Group’s experience in providing for
these estimated costs, the current landfill accounting
treatment and level of provisioning were appropriate.
Asset Impairment
Review (Company Shop
Group Goodwill)
The Group carries different classes of intangible assets
on its balance sheet which include goodwill, landfill
gas rights, the Biffa brand, customer contracts and a
small proportion of the development costs associated
with the Group-wide IT system replacement
programme.
The Group’s assessment of the carrying value of
goodwill and the other intangible assets is dependent
on the disaggregation of the operating segments and
assumptions of future cash flows, including both short
and long-term growth rates.
It was decided that there were indicators of
impairment on the goodwill recognised on the
acquisition of Company Shop Group, due to its trading
underperformance since acquisition. A full impairment
assessment was performed at the half year and as a
result an impairment of £25.0m was recognised. A
further impairment assessment was performed at year
end, with no further issues noted.
Additional impairment assessments were carried out
on the goodwill allocated to the remaining cash-
generating units.
(See Note 1 on page 175 for further details on the
Company Shop Group goodwill impairment.)
The Committee reviewed and discussed
management’s report on the impairment review and
considered the External Auditor’s audit report.
After due consideration, the Committee concluded
that it was satisfied with the impairment recognised.
Details of the key assumptions and judgements used
are set out in Note 1 to the Financial Statements.
Audit Committee Report continued
120
Biffa plc / Annual Report and Accounts 2022
Additional
Information
Significant financial judgements and estimates considered by the
Committee in relation to the Annual Report and Accounts FY22
How these issues were addressed by the
Committee
Onerous Contract
Provision
The Group operates a broad portfolio of complex
contracts, especially in the Municipal and Resources
& Energy businesses. The accounting for certain
contracts may be underpinned by assumptions or
judgements made by management in respect of the
outcome of future events.
No new onerous contract provisions or releases have
been recognised in the year.
(See Note 1 on page 174 for further details on onerous
contracts.)
The Committee reviewed management’s judgements
and estimates used to determine onerous contracts
and any required provision for future losses.
In addition, the External Auditor’s audit report was
taken into consideration.
The Committee concluded that it was satisfied
by management’s assessment and the approach
adopted.
HMRC Landfill Tax
Enquiry
The Group has historically been involved in a number
of disputes with HMRC with regards to the application
of landfill tax. The Group is currently the subject of
an enquiry primarily relating to the interpretation of
the qualifying fines regime set out in in the landfill tax
guidance. HMRC also raised concerns, based on its
analysis of the Group’s data, over the potential conduct
of the Group and specific customers which may have
led to the incorrect rate of landfill tax being paid.
There is a range of potential outcomes to the enquiry
which is expected to continue for some time.
Significant estimation has been applied in calculating
the provision recognised, which represents the Group’s
best estimate of the potential liability.
Significant judgement has been applied in the
allocation of respective probabilities to different
outcomes and the disclosure of contingent liabilities.
See Note 1 on page 175 for further details on the
HMRC landfill tax enquiry.
The Committee, alongside detailed discussions with
management and external independent specialists,
reviewed management’s reports on the current
status and potential outcomes of the enquiry. After
due consideration, the Committee agreed with
the judgements made, the provision recognised
and the associated disclosures included in the
financial statements.
Business
Combinations on Viridor
acquisition
The Group completed two acquisitions in the year
– Green Circle and Viridor. In accordance with IFRS 3
‘Business Combinations’ management are required
to identify the fair value of the assets and liabilities
acquired including intangible assets such as customer
lists and goodwill recognised on acquisition.
(See Note 1 on page 175 for further details on business
combinations).
The Committee reviewed management’s approach
to the assessment of fair values and considered the
External Auditors testing of these.
It was concluded that the Committee was satisfied
with management’s assessment at the year end.
121
Biffa plc / Annual Report and Accounts 2022
Strategic Report
Financial
Statements
Corporate
Governance Report
Overview
Membership of the Committee and
Attendance
David Martin and Claire Miles are Committee
members, alongside Carol Chesney as Chair,
and all are independent. Claire Miles joined
the Committee on 1 January 2022 following
Michael Averill’s retirement from the Board.
Carol Chesney and David Martin both hold
a professional accounting qualification,
and the Board considers their financial
experience to be recent and relevant.
The Company Secretary attends all the
Committee meetings as Secretary to the
Committee and, by invitation, meetings are
also attended by other Board members, the
External Audit Partner, the Head of Risk and
Internal Audit and the Director of Group
Finance. The Committee met with the
External Audit Partner and the Head of Risk
and Internal Audit without management
present after each scheduled meeting and
the Chair maintains regular dialogue with
the External Audit Partners and the Head of
Risk and Internal Audit throughout the year.
The Committee held four scheduled
meetings during the year. Attendance at
those meetings is shown on page 118.
Role and Responsibilities of the
Committee
The role of the Committee is to assist the
Board in fulfilling its oversight responsibilities
by monitoring and reviewing the integrity
of the Group’s financial reporting and the
effectiveness of the Internal and External
Audit functions and risk management
framework and system of internal control.
The Committee reports to the Board on its
activities and makes recommendations, all
of which have been accepted by the Board
during the period under review.
The Committee’s responsibilities are set out
in its Terms of Reference and include:
• Monitoring the integrity of the financial
statements of the Company.
• Reviewing and reporting to the Board on
significant financial reporting issues and
judgements.
• Reviewing the adequacy and
effectiveness of the Company’s internal
controls and risk management system.
• Monitoring and reviewing the
effectiveness of the Internal Audit
function,
• Overseeing the relationship with the
External Auditor.
Financial Reporting
One of the Committee’s principal
responsibilities is to review and report to the
Board on the quality and appropriateness of
the Group’s Financial Statements, including
the half-year accounts and the Annual
Report and Accounts, with a particular
focuson:
• The suitability of accounting policies.
• The effectiveness of internal control.
• The appropriateness of underlying
assumptions, judgements and estimates
made by management.
• Key audit matters identified by the
External Auditor.
• Compliance with relevant accounting
standards and other regulatory financial
reporting requirements including
theCode.
• Advising the Board on whether the
Annual Report and Accounts are fair,
balanced and understandable and
provide the information necessary
for shareholders to assess the Group’s
position and performance, business
model andstrategy.
Additional focus was placed on assessing
the impact of the HMRC landfill tax enquiry
on the Group’s Financial Statements. This
includes the provision recognised, the
contingent liability disclosed and the
associated significant judgements and
estimates disclosure.
In making its assessment, the Committee
reviews reports from the Chief Financial
Officer and members of the Finance
team and the External Auditor. Through
discussions and detailed written reports,
the Committee is able to understand and
assess the significant judgements and
estimates and how they are being recorded
and disclosed in the Group’s Financial
Statements.
The significant financial judgements and
estimates considered in relation to the
Annual Report and Accounts FY22 are
detailed in the table on pages 120-121.
Risk Management
The Board has overall responsibility for
setting the Group’s risk appetite and
ensuring that there is an effective risk
management framework. The Board
delegates responsibility for review of risk
management and the effectiveness of
internal control to the Committee.
The Chief Executive Officer has overall
accountability for the control and
management of the risks faced by the Group
and, working with the Group Executive
Team, has established processes to monitor:
• Strategic plan achievement, through
a regular review of progress towards
strategic objectives.
• Financial performance, within a
comprehensive financial planning
and accounting framework, including
budgeting and forecasting, financial
reporting, analysing variances
against plan and taking appropriate
management action.
• Capital investment and asset
management.
• Performance, with detailed
appraisal, authorisation and post-
investmentreviews.
• The identification, evaluation and
management of the principal and
emerging risks facing the Group.
• The maintenance of appropriate
insurance cover to insure Group risks.
Audit Committee Report continued
122
Biffa plc / Annual Report and Accounts 2022
Additional
Information
On behalf of the Board, the Committee has
reviewed the work done by management
on the assessment of the Group’s principal
and emerging risks. A comprehensive
review of the principal risks was completed
in November 2021 for our half-year
reporting and this exercise, which included
an assessment of emerging risks, was
undertaken again in February 2022 and with
the Board in April 2022.
The review of the principal risks considers
the likelihood of the risks materialising and
the potential impact, in terms of both the
inherent risks, before any mitigating actions,
and the residual risks, after considering
mitigating actions and controls. The
emerging risks reviewed by management
and the Committee included risks relating to
environmental, social and governance, post-
pandemic talent and use of alternative fuels.
Particular focus was put on assessing the
impact of the HMRC landfill tax enquiry
on both the likelihood and impact of the
principal risks, and the necessary mitigating
actions required to manage this increased risk.
Further details of the Group’s risk
management and internal control systems
and principal and emerging risks are
included in the Strategic Report on
pages 76-83.
Risk Appetite
The Company’s approach to risk appetite has
been developed in line with the Code.
Management assess the appetite for risk,
which the Board considers and agrees. The
Group categorises these risks into four areas:
investment risk, commercial contract risk,
commodity and other disposal risk, and
insured categories of risk. This assessment
includes the associated mitigations or
compensating returns.
By clarifying the type and level of risk it
is willing to take in order to achieve its
strategic objectives, the Company aims to
support consistent, risk-informed decision
making across the Group.
The Company’s risk appetite has been
incorporated into the risk management
framework and the Committee monitors
whether the Group is operating within that
appetite through a review of a series of
agreed metrics and a review of the principal
and emerging risks.
Internal Control
The Committee reviews the Group’s internal
control systems, including their design and
operating effectiveness, and supports the
Board in carrying out an annual review of
their effectiveness.
The following is taken into account by the
Committee as part ot its review:
• Reports from management, the
Internal Audit function, including
the implementation of Internal Audit
recommendations, and the External
Auditor (including the External Audit
management letter).
• Responses by the Biffa leadership
team to the twice-yearly compliance
questionnaire and management
declarations from the Group Executive
Team on the effectiveness of key controls
and the management of significant risks
within their areas of responsibility.
• The results of the quarterly self-
certification by management
confirming that key controls have been
operatingeffectively.
The review considered all material controls
in accordance with Financial Reporting
Council guidance. Following this review,
where deficiencies have been noted in
the design or implementation of controls,
either by management, Internal Audit or the
External Auditor, the Committee ensures
that appropriate action is taken to resolve
any weaknesses in the control environment.
Any new or changes to key controls will be
incorporated into the key control framework
and therefore subject to independent
review by the Internal Audit function. The
Board and the Committee will continue
to monitor and review the internal control
environment.
The Committee performed a review of
controls designed to mitigate the risk
of non-compliance with landfill tax, as a
number of updates have been made in this
area due to the HMRC landfill tax enquiry.
In addition to the processes to control and
monitor risks, as described on pages 76-83,
other key features of the Group’s internal
control and risk management systems
include:
• Well defined policies and procedures
communicated across the Group.
• Clear levels of accountability and
delegation of authority, approved by
theBoard.
• A key controls framework, in respect
of operational and financial processes,
that requires a quarterly self-certification
by management, confirming that
key internal controls within their
area of responsibility have been
operating effectively, and are subject
to independent review by the Internal
Audit function.
• A risk management and internal
audit function whose work spans the
wholeGroup.
• A whistleblowing process which
allows for concerns to be reported
anonymously, where required, through
an independent and confidential
helpline. The Committee receives a
whistleblowing report at each meeting.
During FY22 an internal controls over
financial reporting health-check was
completed in preparation for the proposed
reforms as set out in the BEIS White Paper
‘Restoring Trust in Audit and Corporate
Governance’. Overall, the assessment found
that the maturity of the Group’s current
internal controls over financial reporting is
developing. A key area of focus for FY23 will
be to continue to strengthen the Company’s
financial reporting controlenvironment.
The system of internal control is designed
to manage, rather than eliminate, the risk of
failure to achieve business objectives and it
must be recognised that it can only provide
reasonable and not absolute assurance
against material misstatement or loss.
Biffa plc / Annual Report and Accounts 2022
Strategic Report
Financial
Statements
Corporate
Governance Report
Overview
123
Internal Audit
The Company’s Internal Audit function is
led by the Head of Risk and Internal Audit.
It focuses on performing a programme
of reviews of processes and controls
implemented across the Group. Internal
Audit findings are presented to the relevant
management head, the General Counsel
and Company Secretary and the Chief
Financial Officer for review. The Committee is
responsible for agreeing and overseeing the
work of the Internal Auditfunction.
The Committee reviews the effectiveness
of the Internal Audit function, reviews
and approves the scope of the Internal
Audit annual plan and assesses the quality
of Internal Audit reports, along with
management’s actions, and their timeliness,
relating to findings and the closure of
recommended actions.
As reported in the Annual Report and
Accounts 2021, the Committee agreed
additional resources for the Internal Audit
function in FY21. These resources joined the
function during FY22.
The Committee reviews the effectiveness
of the Internal Audit function and considers
any stakeholder feedback on the quality of
Internal Audit’s work.
In order to safeguard the independence of
the Internal Audit function, the Head of Risk
and Internal Audit is given the opportunity
to meet with the Committee without the
Executive Directors or other members of
management present. The Head of Risk
and Internal Audit also meets with the
Committee Chair ahead of each meeting
and otherwise when needed.
During the year, the Internal Audit function
has undertaken reviews in accordance with
the agreed Internal Audit plan, including
those related to tendering and supplier
selection, the Newhurst and Protos Energy
Recovery Facilities, data management,
robotic process automation, order to cash,
industrial control systems (SCADA) and a
series of physical site reviews across the
business. An additional area of focus has
been both recent and historical internal
audits performed on the landfill sub-division.
These site reviews, which incorporated,
depots, transfer stations, landfill, rail hubs
and the Polymers sites, assessed the
adequacy of the financial, commercial,
operational and compliance controls,
including health & safety and environment.
External Auditor
Deloitte LLP was appointed as the External
Auditor of the Company on 23 August 2016.
The Company’s lead Audit Partner is Peter
Gallimore who was appointed to the role in
September 2021.
The Company confirms it is in compliance
with the requirements of the Statutory
Audit Services for Large Companies Market
Investigation (Mandatory Use of Competitive
Tender Processes and Audit Responsibilities)
Order 2014, which relates to the frequency
and governance of external audit tenders
and the setting of a policy on the provision
of non-audit services.
The Company intends to conduct a tender
process in line with the regulations by no
later than 2026.
The Committee reviewed the External
Auditor’s effectiveness during the year. In
carrying out its assessment it considered:
• Feedback from the Chief Financial Officer
and his team who monitor the External
Auditor’s performance, behaviour and
effectiveness during the exercise of its
duties.
• All key External Auditor plans and reports.
• The regular engagement with the
External Auditor during Committee
meetings and ad hoc meetings,
including meetings without any member
of management being present.
• The Committee Chair having discussions
with the lead Audit Partner ahead of
each Committee meeting.
• The External Audit effectiveness
review conducted by the Head of
Risk and Internal Audit which was
presented to the Committee at the
September meeting. This contained
the results of an external audit process
effectiveness review questionnaire that
was completed by the Directors and
key members of management and
staff who were involved in the external
auditprocess.
• The independence and objectivity of the
External Auditor.
Having completed this review, the
Committee concluded that the audit
process, independence and quality of the
External Auditor is satisfactory.
The Committee has made a
recommendation to the Board to re-
appoint Deloitte LLP as the Company’s
External Auditor for the FY23 financial
year. Accordingly, a resolution proposing
its re-appointment will be tabled at the
Company’s AGM in 2022.
Audit Committee Report continued
124
Biffa plc / Annual Report and Accounts 2022
Additional
Information
External Auditor’s Independence and
Non-Audit Services
To preserve objectivity and independence,
the Committee has a policy on the
provision of non-audit services which
restricts the work and fees available to the
External Auditor which is reviewed by the
Committeeannually.
The policy specifies certain activities which
the External Auditor may not undertake such
as tax, consulting, valuation or corporate
services (other than reporting accounting
arrangements). Permitted services are set
out in a whitelist and the fees are capped at
70% of the average audit fees paid in the last
three years.
The policy requires prior Committee
approval for any non-audit services work
permitted under the policy whose value
exceeds £50,000, or where it will cause the
cumulative fees for the year to exceed 10%
of the amount of the prior year’s audit fee,
or where the cumulative fees for the year
already exceed 70% of the average of the
external audit fees paid in the last three
years. Prior approval of the Chief Financial
Officer is required for any non-audit services
work permitted under the policy whose
value exceeds £10,000.
Non-audit fees are monitored by the
Committee and the Committee is satisfied
that all non-audit work undertaken this
year was in line with the policy and did
not detract from the objectivity and
independence of the External Auditor.
The External Auditor confirms its
independence at least annually. The fees
paid to Deloitte LLP in respect of non-audit
services during the year related to the
review of interim Financial Statements and
governance compliance certificates and
totalled £104,000, representing 8.5% of the
total audit fee (FY21: £126,600 and 10.9%).
Whistleblowing
The Group has established procedures in
place for our workforce and third parties
to report, in confidence, any concerns
they may have. Our workforce can
raise their concerns through their line
manager, senior management or through
Safecall, an independent, confidential,
whistleblowinghelpline.
The Board has overall responsibility for
monitoring the Group’s whistleblowing
arrangements under the Code. It has
delegated this to the Committee which
updates the Board on a regular basis on
all significant whistleblowing matters.
The Committee receives a report on
whistleblowing cases at each meeting and
considers lessons to be learned and how our
processes can be updated and improved.
During the year, the Whistleblowing
Policy was reviewed and no changes
were proposed, following the last review
in FY21. The Committee is satisfied that
the Whistleblowing Policy is effective
and facilitates the proportionate and
independent investigation of reported
matters and allows appropriate follow-up
action to be taken. Further details on the
Group’s Whistleblowing Policy can be found
on page 84.
125
Biffa plc / Annual Report and Accounts 2022
Strategic Report
Financial
Statements
Corporate
Governance Report
Overview
Remuneration Committee Report
Remuneration
Committee Report
Following my appointment as Chair of the Remuneration Committee
in September 2021, I am pleased to introduce the Directors’
Remuneration Report for 2022. I would like to thank my former
colleague Michael Averill for his hard work and dedication as the
previous Chair since the Company’s IPO.
The whole Board is grateful to our shareholders for the continued support received on
remuneration matters at the Company’s 2021 AGM where our Directors’ Remuneration
Report was approved by 97.5% of our shareholders.
The Directors’ Remuneration Report comprises two sections:
• The Directors’ Annual Report on Remuneration, which sets out payments and
awards made to the Directors for 2021/22 and how the Policy will operate for
2022/23.
• The Directors’ Remuneration Policy, which provides a summary of the
Remuneration Policy for which shareholder approval was obtained at the
2020 AGM and which will continue to apply without amendment for the
forthcoming year.
As no changes are proposed to the existing Policy, only one remuneration resolution
will be tabled at the 2022 AGM, namely the advisory shareholder vote on the Directors’
Annual Report on Remuneration.
The Committee’s priorities for FY23 will be to review the Directors’ Remuneration Policy
and consider whether any revisions are required when it is renewed at the 2023 AGM;
and monitor developments in market best practice.
Claire Miles
Chair of Remuneration Committee
“The whole Board
is grateful to our
shareholders for
the continued
support received on
remuneration matters.”
Claire Miles
Chair of Remuneration Committee
Meetings held
4
Overall attendance
100%
Members and attendance
Member Attendance
Claire Miles (Chair) 100%
Michael Averill 100%
David Martin 100%
Carol Chesney 100%
1 Appointed 7 September 2021.
2 Stepped down 6 September 2021.
Membership of the Committee
and Attendance
David Martin and Carol Chesney are
Committee members, alongside Claire Miles
as Chair, and all are independent Non-
Executive Directors.
Claire Miles was appointed Chair of the
Committee with effect from 7 September
2021. Michael Averill stepped down from
his role as Chair on 6 September 2021 and
continued as a member of the Committee
until 31December 2021.
The Company Secretary attends all the
Committee meetings as Secretary to the
Committee and, by invitation, they are also
attended by other Board members, the
Group HR Director and external professional
advisers for all or part of any meeting as and
when appropriate and necessary.
The Committee held four scheduled
meetings during the year. Attendance at
those meetings is shown opposite.
Role and Responsibilities
of the Committee
The role of the Committee is to establish
a formal and transparent procedure for
developing policy on remuneration in
accordance with the Code. It sets the
remuneration of the Chairman, the Executive
Directors and senior management with
126
Biffa plc / Annual Report and Accounts 2022
due account taken of all relevant factors
such as, individual and Group performance
and remuneration payable by companies
of a comparable size and complexity and,
in relation to the Executive Directors, the
remuneration of, and remuneration policies
applying to, the Group’s employees.
The Committee reports to the Board on its
activities and makes recommendations,
all of which have been accepted under the
period of review.
The Committee’s responsibilities are set out
in its Terms of Reference and include:
• Reviewing the ongoing appropriateness
and relevance of the Directors’
Remuneration Policy.
• Having responsibility for setting
and authorising all remuneration
arrangements.
• Ensuring remuneration schemes
promote alignment with long-term
shareholder interests.
• Reviewing material remuneration related
policies applicable to the workforce.
Advisers
FIT Remuneration Consultants LLP
(FIT), signatories to the Remuneration
Consultants Group’s Code of Conduct,
are the Committee’s appointed adviser.
FIT provides advice to the Committee on
matters relating to executive remuneration
and all-employee share awards. During the
year, FIT provided no other services to the
Company and, accordingly, the Committee
was satisfied that the advice provided by FIT
was objective and independent. FIT’s fees
in respect of FY22 were £65,000 plus VAT,
charged on the basis of the firm’s standard
terms of business for adviceprovided.
Wider Workforce Pay
The Committee is periodically updated on
wider employee matters such as information
on our wider workforce pay and conditions,
our CEO to employee pay ratio, our gender
pay statistics and our diversity initiatives.
The Committee has reviewed these
elements and is satisfied that the executive
remuneration structure remains appropriate.
Stakeholder Engagement
David Martin, our Senior Independent
Director, has Board responsibility for
workforce engagement and engages with
employees on a range of matters. During
the year David and Claire Miles attended the
BIG employee forum, which was open to the
wider employee population explaining the
role of the Board. As part of this employee
engagement, there was the opportunity
for employees to ask questions and provide
feedback on the strategy of the Company,
including how this links to remuneration.
The Company uses several initiatives
to obtain insights from the broader
employee population, including the annual
engagement survey. See page 52 for further
details on employee engagement.
The Committee has ensured that the
Directors’ Remuneration Policy and practices
are consistent with the six factors set out in
Provision 40 of the Code:
Clarity – Our Directors’ Remuneration
Policy is well understood by our senior
management team and has been clearly
articulated to our shareholders and
representative bodies (both on an ongoing
basis and during consultation when
changes are being made).
Simplicity – The Committee is mindful of the
need to avoid overly complex remuneration
structures which can be misunderstood and
deliver unintended outcomes. Therefore,
a key objective of the Committee is to
ensure that our Directors’ Remuneration
Policy and practices are straightforward to
communicate andoperate.
Risk – Our Directors’ Remuneration
Policy has been designed to ensure that
inappropriate risk-taking is discouraged and
will not be rewarded via (i) the balanced use
of both annual incentives, and long-term
incentives which employ a blend of financial,
non-financial and shareholder return targets;
(ii) the significant role played by shares in our
incentive plans including the deferral under
the annual bonus share and the holding
period under the Performance Share Plan
(PSP) (together with in employment and
post cessation shareholding guidelines); and
(iii) malus/clawback provisions within all our
incentive plans.
Predictability – Our incentive plans are
subject to individual caps, with our share
plans also subject to market standard
dilution limits. Examples of the range of
outcomes under the Policy are shown
within the scenario charts. The use of shares
within our incentive plans means that actual
pay outcomes are highly aligned to the
experience of our shareholders.
Proportionality – There is a clear link
between individual awards, delivery of
strategy and our long-term performance.
In addition, the significant role played by
incentive-based pay, together with the
structure of the Executive Directors’ service
contracts, ensures that poor performance is
not rewarded.
Activities of the Committee During the Year
During the year, the Committee’s key activities were:
• Approved the Directors’ Remuneration Report and the Directors’ Remuneration
Policy for the 2021 Annual Report.
• Approved the grant and vesting of the PSPawards.
• Oversaw the grant in FY22 under the all-employee Sharesave Plan.
• Approved an update on Group employee pay and conditions and employee
shareplans.
• Reviewed and recommended the Gender Pay Gap report for FY22 to the Board for
approval.
• Reviewed and agreed an increase to the Executive Director and Group Executive
Team base salary levels from 1 April 2022.
• Received an update on the AGM season voting outcomes and market
developments.
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Strategic Report
Financial
Statements
Corporate
Governance Report
Overview
Additional
Information
Alignment to culture – Our executive
pay policies are fully aligned to the Group’s
culture through the use of metrics in both
the annual bonus plan and PSP awards
that measure how we perform against key
targets and objectives within the Group
Balanced Business Plan.
Pay and Performance
Biffa has had a year of strong recovery,
with the majority of operations returning
to normal levels. The Group has delivered
a strong set of financial results, which
include increasing statutory revenues by
39% compared with the previous year and
24% above FY20. Along with the growth
from recovery, the Group made a series
of earnings enhancing acquisitions and
investments. Adjusted profit before tax
increased significantly year on year and
this record result was also over 5% above
FY20 levels.
As a result, in respect of the financial targets
for the Executive Directors’ FY22 annual
bonus, the actual operating profit was
£71.4m and the free cash flow result was
£39.5m. In addition, the majority of the
strategic/personal performance targets
were either partially met or were met in full.
As such, bonus awards of 115% of salary
for Michael Topham and 97% of salary for
Richard Pike were awarded in cash (there
will be no deferral in shares given that both
Executive Directors have met the 200% of
salary share ownership guidelines).
See pages 132-133.
Remuneration Committee Report continued
The above awards under the annual bonus
have been calculated and awarded in
recognition of the successful year that the
Group has had in delivering both its financial
and non-financial targets. The Committee is
mindful of and has given due consideration
to the HMRC landfill tax enquiry and
the provision that has been made
within Adjusting items, including taking
independent advice from its advisers and
seeking the views of the whole Board. The
Committee notes that the enquiry is still at
an early stage, and that no formal demands
for payment of tax have been made. In the
event that the enquiry results in a material
liability at a future date, the Committee
will consider the implications for Executive
remuneration at that time.
The 2019 PSP award is subject to adjusted
EPS performance to 25 March 2022 and TSR
performance. The estimated overall payout
for the award is 50% of maximum.
The Committee considers that the
Remuneration Policy operated as intended
during FY22 and that remuneration
outcomes are consistent with the Group
performance. The Committee determined
that no discretion needed to be applied for
the above remuneration outcomes.
Remuneration for FY23
Looking forward into FY23, we have given
consideration to actions on pay matters
which we regard as appropriate and
designed to support shareholders’ interests
over the long term.
Remuneration for FY23
Base salaries:
The Executive Directors received a salary increase of 5% effective 1 April 2022, in line with those applied to
thewider workforce.
Pensions:
Pension provision for current Executive Directors (20% of salary for the CEO and 15% of salary for the CFO) remains
unchanged, although will be aligned to those available across the workforce from 1 January 2023.
Annual bonus:
Annual bonus potential for the CEO and CFO continued to be set at 130% and 110% of salary. 70% of the bonus
will be based on financial targets with the remainder based on strategic/personal objectives.
The 2022 PSP award levels will be
maintained at the 175% of salary level (for
both the CEO and CFO) which is no more
than the median level for the FTSE 250
and therefore the Committee will consider
whether this is a more appropriate ongoing
grant level as part of the policy review
next year.
Due to the increase in share price over the
last year, it is anticipated that the 2022 PSP
awards will be over a lesser number of shares
than the 2020 and 2021 awards.
The Committee will also consider the
inclusion of ESG targets within the
Company’s incentive arrangements as part
of the review of the Directors’ Remuneration
Policy during the year.
Long-term Incentives
As outlined above, the CEO and CFO will
receive a PSP award of up to 175% of salary.
A two-year holding period applies.
Vesting will continue to be dependent on
performance against adjusted EPS (50%)
andTSR (50%) performance.
As confirmed in our Policy, the Committee
has the ability to adjust the formulaic
outcomes from performance conditions
where appropriate and the Committee
will ensure that outcomes reflect Group
and executive performance as well as
the experience of shareholders and
otherstakeholders.
128
Biffa plc / Annual Report and Accounts 2022
Additional
Information
Directors’ Annual Report on Remuneration
FY22 Remuneration
The following section provides details of how the Directors were paid during the financial year to 25 March 2022.
Single Total Figure Table (audited)
The remuneration for the Executive and Non–Executive Directors who performed qualifying services during the year is detailed below
(withprior year comparatives).
Directors Salary/Fees
Taxable
benefits Bonus
Long-term
incentives
3, 4
Pension
Total
Remuneration
Total fixed
remuneration
Total variable
remuneration
Executive Directors
Michael Topham 2022 £503,700 £10,819 £580,006 £606,405 £100,740 £1,801,670 £615,259 £1,186,411
2021 £445,500 £9,683 £0 £365,625 £99,000 £919,808 £554,183 £365,625
Richard Pike 2022 £330,700 £43,429 £322,214 £331,787 £49,605 £1,077,735 £423,734 £654,001
2021 £292,500 £18,952 £0 £199,881 £48,750 £560,083 £360,202 £199,881
Non–Executive Directors
Ken Lever 2022 £200,000 – – – – £200,000 £200,000 –
2021 £162,000 – – – – £162,000 £162,000 –
David Martin 2022 £75,000 – – – – £75,000 £75,000 –
2021 £60,300 – – – – £60,300 £60,300 –
Carol Chesney 2022 £65,000 – – – – £65,000 £65,000 –
2021 £51,300 – – – – £51,300 £51,300 –
Claire Miles 2022 £60,692 – – – – £60,692 £60,692 –
2021 – – – – – – – –
Linda Morant 2022 £21,667 – – – – £21,667 £21,667 –
2021 – – – – – – – –
Michael Averill 2022 £48,750 – – – – £48,750 £48,750 –
2021 £51,300 – – – – £51,300 £51,300 -
Gab Barbaro 2022 – – – – – – – –
2021 £17,180 – – – – £17,180 £17,180 –
1 Taxable benefits received comprised car allowance, holiday cash, private family medical insurance, the intrinsic value of Sharesave options granted during the year and for Richard Pike a housing
allowance of £20,000 is included.
2 The bonus is paid in cash, as sufficient shares to satisfy the share ownership guidelines are held by both the Executive Directors.
3 The estimated outturn for the 2019 PSP which vests in 2022 is 50% and the vesting share price has been estimated at 337.3 pence, based on the three-month average share price ending 25 March
2022. The grant share price for the awards was 206.5 pence and accordingly the relevant figures are reflective of an increase of 63% in the Company’s share price comparing the award prices to the
estimated vesting price. No discretion has been applied to the outturn or exercised in respect of share price appreciation. For further information see page 133.
4 In July 2021, the Committee confirmed that the 2018 PSP awards would vest as to 43.6%. The long-term incentive figures in the 2021 comparatives have therefore been updated to reflect this and the
actual share prices on vesting (338.1 pence and 354.7 pence) rather than the three-month average used in the 2021 Annual Report (247.7 pence).
5 Total fixed remuneration is the aggregate of the base salary, pensions and benefits elements, and total variable remuneration is the aggregate of the bonus and long term incentive elements.
6 Claire Miles was appointed to the Board with effect from 1 April 2021.
7 Linda Morant was appointed to the Board with effect from 1 December 2021.
8 Michael Averill stepped down from the Board with effect from 31 December 2021
9 Gab Barbaro stepped down from the Board with effect from 9 September 2020.
The aggregate emoluments (being salary/fees, bonuses, benefits and pension allowances) of all Directors for the year ended 25 March 2022
was £1,510,102 (2021: £1,256,465). The aggregate value of vested long-term incentives of all the Directors for the year ended 25 March 2022 was
£938,192 (2021:£565,506).
FY22 Annual Bonus (audited)
The Executive Directors’ annual bonus targets were set at the beginning of the financial year. As a result of strong adjusted financial
performance, the Group exceeded the threshold operating profit and free cash flow targets set by the Board for the purposes of awarding the
FY22 annual bonuses of the Executive Directors.
More particularly, the profit before tax and cash flow bonus targets (as adjusted appropriately for acquisitions made during the year) were as follows:
Threshold
£m
Target
£m
Maximum
£m
Actual
£m
Max. Payout
(of total bonus
potential)
Actual
Payout
Adjusted Profit Before tax – £68.8 £72.24 £71.4
2
50.0% 90%
Adjusted Free Cash Flow £31.23 £34.70 £38.17 £39.5
3
20.0% 100%
Total – 70.0% 65%
1 No payment was payable for below target performance.
2 Adjusted Profit Before Tax excluding certain provision releases and profit on disposal of fixed assets.
3 Adjusted Free Cash Flow excluding discretionary capital expenditure.
129
Biffa plc / Annual Report and Accounts 2022
Strategic Report
Financial
Statements
Corporate
Governance Report
Overview
Directors’ Annual Report on Remuneration continued
In respect of the personal performance targets set for each Executive Director, these personal performance targets were set against a range of
strategic targets. Details of the measures and actual performance against these measures, to the extent they are not commercially sensitive, are
shown below.
Personal Performance Targets
Measure Target Performance
Maximum
Potential
Actual
Payout
1. Safer Together
Reduce LTI rate to 0.21
Rate was reduced compared with prior year but
target was missed
6% 4%
EE wellbeing index score improved
Results improved to 64%
(increaseof1%onlastyear)
Serious RTA’s reduced (by at least 10%) Reduction by 20%
2. Value People
Increase EE score up and 3% above
UKaverage
Improved to 61% on a like for like comparison.
Remains 3% above UK average
6% 5%
EE D&I index score improved 78% result which was consistent with last year
Improved diversity of senior team Met Hampton Alexander targets (up8%to36%)
3. Customer First
I&C SME churn less than 9% Met
6% 5%
I&C new business of £30m including
£3mnewsales from digital skips
Exceeded
2 Municipal contracts won or extended 3 significant contracts
4. Protect our Planet
CAR scores reduced by 5% Reduced by 7%
6% 5%
25% increase in waste by rail Actual 26% - Increase from 507kt to 683kt.
+56% (18,000) tonnes sold by
Company Shop
Actual 20% increase
Develop electric vehicle roll out plan
Plan and fleet de-carbonisation project ontrack
(66 new BEV in fleet)
5. Grow Sustainably
Complete at least £25m of
acquisitions in I&C
The completion of the Viridor
acquisition at c.£100m
6% 6%
Grow profit back to pre-Covid levels EBIT of £96.6m compared with£90.5m in FY20
I&C organic growth and market share gain Actual of 3-4% growth
Newhurst and Protos ERF Progressing to plan
Replace back-office systems
Two significant systems upgrades
progressingtoplan
On the basis of the above performance, the Committee determined that payment of 23% for the CEO and 23% for the CFO of the maximum
30% of this part of the bonus was proportionate and reasonable in the circumstances. This performance resulted in the following performance
assessment for the year:
Weightings Outcomes
CEO Michael Topham Richard Pike
Financial performance (% of potential) 70% 65.1% 65.1%
Strategic performance (% of potential) 30% 23.5% 23.5%
Total performance outcome (% of potential) 88.6% 88.6%
Total performance outcome (% of salary) 115.1% 97.4%
130
Biffa plc / Annual Report and Accounts 2022
Additional
Information
Vesting of Long-Term Incentive Awards (audited)
The PSP awards granted in 2019 are partly subject to EPS performance to the year ended 25 March 2022 and partly based on TSR performance
to the third anniversary of the grant date. The performance conditions attached to this award and performance against these conditions is
asfollows:
(i) Adjusted EPS targets as to 50% of the award, and (ii) relative TSR targets as to the remaining 50% of the award. The details of these targets are
shown in the tables below:
Adjusted EPS for 2021/22 financial year (50% of award) Portion of award vesting
Below 24p 0%
24p 25%
24p to 28p Pro-rata on straight-line basis between 25% and 100%
Above 28p 100%
Actual performance 19.7p
Vesting level 0%
Biffa’s TSR ranking vs the FTSE 250 (excluding financial services companies and
investment trusts) (50% of award) Portion of award vesting
Below median 0%
Median 25%
Between median and upper quartile Pro-rata on straight-line basis between 25% and 100%
Upper quartile 100%
Actual performance To be confirmed at end of performance period
Vesting level (estimated) 100%
1 TSR (calculated based on Biffa plc share price movements, plus dividends reinvested into Biffa plc shares on the relevant ex-dividend dates, over the performance period) is measured over the period
from the date of grant to the third anniversary.
Based on the estimated vesting percentage above, details of the shares under award and their estimated value (based on the three-month
average share price to 25 March 2022 of 337.3 pence per share) are as follows:
Executive
Maximum
number
of shares
Number
of shares
to vest
Number
of shares
to lapse
Estimated
value at
vesting £
Face value
of awards
vesting
Impact of
share price
on vesting
Michael Topham 359,564 179,782 179,782 £606,405 £371,250 £235,155
Richard Pike 196,731 98,365 98,366 £331,787 £203,125 £128,662
1 Based on the three-month average share price to 25 March 2022.
2 Based on the number of shares vesting multiplied by the share price at the date of grant (206.5 pence).
3 The grant share price for the award was 206.5 pence and accordingly the relevant figures are reflective of an increase of 63% in the Company’s share price comparing the award price to the estimated
vesting price.
The award also receive the value of dividend equivalents.
EVP Awards (audited)
As previously disclosed, prior to the Company’s admission to the London Stock Exchange, Michael Topham, along with other members of the
management team, was granted an EVP Return Letter by WasteHoldco 1 Limited (the parent company of the Biffa Group of companies at that
time) in connection with a dispute with HMRC regarding the payment of landfill tax for certain of its operations in the UK (EVP Dispute).
The EVP Return Letters were granted in recompense for the diminution in value of interest in the Group resulting from the EVP Dispute which
was linked to incentive arrangements in existence prior to Admission, full details of which appear below in Note 31, on page 208 of the
Financial Statements. As part of the proceedings, the Company was required to pay HMRC approximately £63m shortly following Admission
(the EVP Paid Amount). The Company was advised by HMRC in November 2017 that the remaining penalty interest of £8.7m, payable on the
EVP Paid Amount, was no longer due (EVP Interest).
HMRC was successful in its appeal at the Court of Appeal hearing held in March 2021. The Company made an application to the Supreme Court
to appeal the Court of Appeal decision and heard in May 2022 that it had been unsuccessful. The Supreme Court order refusing permission to
appeal is a final, non-appealable and binding decision and therefore the EVP Dispute has been irrevocably settled in favour of HMRC.
131
Biffa plc / Annual Report and Accounts 2022
Strategic Report
Financial
Statements
Corporate
Governance Report
Overview
As the EVP Dispute has been irrevocably settled in favour of HMRC, then there will be no EVP Paid Amount returned to the Company save for
the EVP Interest. Subject to the Group receiving a net reduction in the tax liability of the Group (after taking into account of any increase in the
tax liability arising in respect of any profit and loss account credits in WasteHoldco 1 Limited in respect of the EVP preference shares granted to
certain shareholders prior to Admission (the Tax Deduction)), the EVP Return Letter will be cancelled and Michael Topham will be entitled to a
cash payment equal to a percentage of the Tax Deduction (less any amounts which the Group is required to pay in respect of costs incurred by
HMRC or penalties or other associated costs of the EVP dispute) subject to a maximum payment, and a payment in respect of the EVP Interest
(less tax and social security contributions):
Director
% of Tax
Deduction
Maximum Tax
Deduction Cash
Payment
EVP Interest
Payable
Total Max
Payment
Michael Topham 2.366 £236,559 £185,226 £421,785
Once the Group is satisfied that the Tax Deduction is no longer open to challenge from HMRC, the Group will proceed to cancel the EVP Return
Letters and make a cash payment to Michael Topham as outlined above. This is not currently expected to be until FY25.
Statement of Directors’ Shareholding and Share Interests (audited)
For each Director, the total number of Directors’ interests in shares at 25 March 2022 was as follows:
Michael
Topham
Richard
Pike
Ken
Lever
David
Martin
Carol
Chesney
Claire
Miles
Linda
Morant
Michael
Averill
Number of Ordinary shares
held as at 25 March 2022
881,353 397,302 65,277 30,000 10,000 7,000 – 76,340
Number of Ordinary shares
held as at 26 March 2021
1,075,384 461,982 65,277 30,000 10,000 – – 76,340
1 Number of shares held includes 284 shares in respect of the Biffa Share Incentive Plans SIP Award for Michael Topham and 128 shares for Richard Pike.
2 Interests are shown as at date of stepping down from the Board (31 December 2021).
The shareholdings above include those held by Directors and their respective connected persons. There were no changes in the current
Directors’ interests in shares between 25 March 2022 and 5 August 2022. Under the share ownership guidelines, the Executive Directors
are required to build and maintain a shareholding equivalent to at least 200% of salary. At the 2022 year-end, both Michael Topham and
RichardPike complied with this requirement.
Long-Term Incentive Awards Granted in the Year (audited)
The following PSP conditional share awards were granted in 2021:
Director Date of grant
Basis of award
(% of salary)
Face value
of awards at grant
Number of shares
under award Date of vesting
Michael Topham 14 June 21 175% £881,475 299,821 17 June 24
Richard Pike 14 June 21 175% £578,725 196,845 17 June 24
1 Based on the three-day average share price of 294 pence per share to 11 June 2021.
The details of these targets are shown in the table below:
Adjusted EPS for 2023/24 financial year (50% of award) Portion of award vesting
Below 21.2p 0%
21.2p 25%
21.2p to 25.2p Pro-rata on straight-line basis between 25% and 100%
Above 25.2p 100%
Biffa’s TSR ranking vs the FTSE 250 (excluding financial services companies
andinvestment trusts) (50% of award) Portion of award vesting
Below Median 0%
Median 25%
Between Median and Upper Quartile Pro-rata on straight-line basis between 25% and 100%
Upper quartile 100%
1 TSR (calculated based on Biffa plc share price movements, plus dividends reinvested into Biffa plc shares on the relevant ex-dividend dates, over the performance period) is measured over the period
from the date of grant to the third anniversary.
DSP Awards Granted in the Year (audited)
No awards were granted under the DSP in 2022.
Directors’ Annual Report on Remuneration continued
132
Biffa plc / Annual Report and Accounts 2022
210
200
190
180
170
160
150
140
130
120
110
100
90
80
October 2016 March 2017 March 2018 March 2019 March 2020 March 2021 March 2022
Bia FTSE 250 Excl. Investment TrustsSource: Datastream (a Renitiv product)
Total shareholder return (rebased 100)
Additional
Information
Outstanding Share Plan Awards (audited)
Details of all outstanding share awards made to Executive Directors are set out below:
Director
Award
type
Exercise Price
(£) Grant date
Interest at
26/03/21
Awards
granted in
theyear
Awards lapsed
in the year
Awards vested
in the year
Interest at
25/03/22
Date of
vesting/
Exercise
period
Michael Topham PSP 0 02-Jul-18 131,048 – 70,182 60,866 – 01-Jul-21
PSP 0 01-Oct-18 97,029 – 51,962 45,067 – 01-Oct-21
PSP 0 01-Jul-19 359,564 – – – 359,564 03-Aug-22
PSP 0 01-Jul-20 368,669 – – – 368,669 03-Jul-23
PSP 0 14-Jun-21 – 299,821 – – 299,821 14-Jun-24
SIP 0 21-Nov-16 155 – – – 155 See Note 4
SIP 0 07-Dec-20 128 – – – 128 See Note 5
SAYE 1.90 07-Dec-20 1,894 – – – 1,894 01-Feb-24
SAYE 2.88 17-Dec-21 – 625 – – 625 01-Feb-25
Richard Pike PSP 0 01-Oct-18 121,330 – 64,977 56,353 – 01-Oct-21
PSP 0 01-Jul-19 196,731 – – – 196,731 03-Aug-22
PSP 0 01-Jul-20 201,713 – – – 201,713 03-Jul-23
PSP 0 14-Jun-21 – 196,845 – – 196,845 14-Jun-24
SIP 0 07-Dec-20 128 – – – 128 See Note 5
SAYE 1.81 12-Jul-19 1,988 – – – 1,988 01-Oct-22
SAYE 2.88 17-Dec-21 – 625 – – 625 01-Feb-25
1 Performance targets for the 2019 PSP awards are presented above.
2 Performance targets for the 2020 PSP awards are presented in last year’s Directors Remuneration Report.
3 Performance targets for the 2021 PSP awards are detailed above.
4 Award of free shares under the Biffa plc SIP 2016. The awards were granted on 21 November 2016 and are subject to the normal terms of an HMRC SIP.
5 Award of free shares under the Biffa plc SIP 2016. The awards were granted on 7 December 2020 and are subject to the normal terms of an HMRC SIP.
6 Awards granted under the Sharesave Scheme. Awards are based on a three-year savings contract.
The aggregate gains by all Directors during FY22 from share plan awards was £565,506 (2020/21: £1,142,005). The market price of the shares
at the end of the financial year was 330.5 pence; the highest and lowest share price during the financial year were 266 pence and 416 pence
respectively.
Payments to Past Directors (audited)
There were no payments to past Directors in the financial year 2021/22 (2020/21 : nil).
Payments for Loss of Oce (audited)
No payments were made to any Director in respect of loss of office in the financial year FY22 (FY21 : nil).
Review of Past Performance and CEO Remuneration Table (unaudited)
The graph below shows the TSR of the Company and the FTSE 250 Index (excluding Investment Trusts) over the period from Admission to 25 March
2022. This is considered an appropriate comparator for Biffa, and this aligns with the use of the FTSE 250 in the TSR performance measure for the PSP.
Bia TSR vs FTSE 250 since Admission
133
Biffa plc / Annual Report and Accounts 2022
Strategic Report
Financial
Statements
Corporate
Governance Report
Overview
The table below details certain elements of the CEO’s remuneration since Admission.
Single figure
of total
remuneration
Annual bonus
pay-out as % of
maximum
Long-term
incentive
vesting rates as
% of maximum
2021/22 £1,801,670 89% 50%
2020/21 £919,808 – 43.6%
2019/20 £1,491,496 75.9% 100.0%
2018/19 £1,819,483 82.4% 72.8%
2017/18 £1,220,437 90.1% –
2016/17 £10,681,021 94.5% –
1 It should be noted that £9,507,310 of the above amount relates to the bonus paid under the Management Incentive Plan which was in place from 2013 until the Company’s Admission and was
therefore ‘one-off’ in nature.
Annual change in remuneration of each Director compared to employees (unaudited)
The table below presents the year-on-year percentage change in remuneration for each Director and for all Group employees. The salary/
fees were subject to a temporary 20% reduction between 1 April 2020 and 30 September 2020 as part of the introduction of Covid-19 related
exceptional remuneration measures. The percentage increases between 2021 and 2022 shown in the table below therefore reflect a return to
pre pandemic levels of fees and salary for the Directors:
% change from 2021 to 2022 % change from 2020 to 2021
Salary/fee %
change
Annual bonus %
change
Taxable benefits
% change
Salary/fee %
change
Annual bonus %
change
Taxable benefits
% change
Executive Directors
Michael Topham
13.1% 100.0% 8.6% -10.0% -100.0% 2.7%
Richard Pike 13.1% 100.0% 127.5% -10.0% -100.0% 51.5%
Non-Executive Directors
Ken Lever
23.5% n/a n/a -10.0% n/a n/a
David Martin 24.4% n/a n/a -10.0% n/a n/a
Carol Chesney 26.7% n/a n/a -10.0% n/a n/a
Claire Miles
1
n/a n/a n/a n/a n/a n/a
Linda Morant
1
n/a n/a n/a n/a n/a n/a
Michael Averill
2
-5.0% n/a n/a -10.0% n/a n/a
Gab Barbaro³ n/a n/a n/a -65.6% n/a n/a
All employees
4
4.7% 17.3% 3.7% -0.1% -50.4% 3.0%
1 Claire Miles and Linda Morant were appointed to the Board during the year.
2 Michael Averill stepped down from the Board with effect from 31 December 2021, the salary/fee % change reflects the pro-rated payment up to and including this date.
3 Gab Barbaro stepped down from the Board with effect from 9 September 2020; the salary/fee % change reflects the pro-rated payment up to and including this date.
4 All employees includes all employees of Biffa Group
CEO to Employee Pay Ratio
The table below shows how the CEO’s single figure remuneration (as taken from the single figure remuneration table on page 129) compares to
the equivalent single figure remuneration for full-time equivalent UK employees, ranked at the 25th, 50th and 75th percentile. The calculations
for the relevant representative employees were performed as at 25 March 2022.
Year Method
25th percentile
pay ratio
Median
pay ratio
75th percentile
pay ratio
2021/22 A 86:1 67:1 52:1
2020/21 A 38:1 30:1 24:1
2019/20 A 80:1 61:1 49:1
The relevant regulations provide three options which may be used to calculate the pay for the employees at the 25th percentile, median
and 75th percentile. We have used Option A, following guidance that this is the preferred approach of some proxy advisors and institutional
shareholders. Option A captures all relevant pay and benefits for all employees in line with the single figure for remuneration calculated for
Executive Directors.
Directors’ Annual Report on Remuneration continued
134
Biffa plc / Annual Report and Accounts 2022
Additional
Information
The ratios shown are representative of the FTSE 25th percentile, median and 75th percentile pay for UK employees within the Group during
2021/22. Full year pay data for the 2021/22 financial year has been used to calculate the ratios.
The pay for part-time employees has been grossed-up to one FTE.
The Committee has reviewed the employee data and believes the median pay ratio to be consistent with the pay, reward and progression
policies for the Company’s UK employees over the period.
The Chief Executive Officer’s pay is based on the single figure of remuneration set out on page 129 of this report. Because a large portion of the
Chief Executive Officer’s pay is variable, the pay ratio is heavily dependent on the outcomes of variable pay plans and, in the case of long-term
share-based awards, share price movements.
The total pay and benefits and the salary component of total pay and benefits for the employee at each of the 25th percentile, the median and
the 75th percentile are shown below:
Salary Total pay and benefits
Year
25th percentile
pay ratio
Median
pay ratio
75th percentile
pay ratio
25th percentile
pay ratio
Median
pay ratio
75th percentile
pay ratio
2021/22 £20,080 £27,048 £33,461 £20,959 £27,048 £34,799
Relative Importance of Spend on Pay (unaudited)
The table below details the change in total employee pay between financial years 2020/21 and 2021/22 as detailed in Note 5 to the Financial
Statements, compared with distributions to shareholders by way of dividend, share buy-backs or any other significant distributions or payments.
These figures have been calculated in line with those in the audited Financial Statements.
%
change
2021/22
£’000
2020/21
£’000
Total gross employee pay 22.1% £314.7m £257.7m
Distributions to shareholders 100% £6.7m £0m
Statement of Shareholder Voting (unaudited)
The table below shows the advisory vote on the 2020/21 Directors’ Remuneration Report at the AGM held on 19 July 2021 and the binding vote
on the Directors’ Remuneration Policy at the AGM held on 16 July 2020:
AGM resolution Votes for % Votes against Votes withheld
Remuneration Policy (2020 AGM) 212,372,302 96.97 6,639,109 8,129,897
Remuneration Report (2021 AGM) 221,012,084 97.52 5,619,131 5,171,361
Implementation of Policy for 2022/23 (unaudited information)
Base salary
Base salaries are as follows:
Director 1 April 2022 % Increase
Michael Topham £529,000 5%
Richard Pike £347,300 5%
The Executive Directors received a salary increase in line with those applied to the wider workforce.
Benets in Kind and Pension Provision
Benefits will be paid in line with the Directors’ Remuneration Policy.
Pension provision for Michael Topham and for Richard Pike will remain at 20% and 15% of base salary respectively. Contributions may be made
as cash supplements in full or in part. These levels will be aligned to the wider workforce rate (currently 4% of salary) from 1 January 2023.
135
Biffa plc / Annual Report and Accounts 2022
Strategic Report
Financial
Statements
Corporate
Governance Report
Overview
Annual Bonus
The annual bonus will continue to be based on a maximum of 130% of salary for the Chief Executive Officer and 110% of salary for the
ChiefFinancial Officer. 33% of any bonus earned will be deferred into shares for three years to the extent that the Chief Executive Officer
andChief Financial Officer do not satisfy the Share Ownership Guidelines on the bonus payment date.
70% of the bonus will be payable by reference to performance against financial targets (up to 50% will be payable based on a sliding scale of
challenging Adjusted Profit Before Tax targets and up to 20% will be payable based on a sliding scale of challenging Adjusted Free Cash Flow
targets). 30% of the bonus will be payable based on performance against a number of strategic/personal objectives relating to the delivery of
strategy, Health and Safety measures and employee engagement.
In addition, no bonus will be payable unless the Committee is satisfied that the Company’s adjusted performance warrants it and bonus
payments will also be subject to the Committee considering that the proposed bonus amounts, calculated by reference to performance
against the targets, appropriately reflect the Company’s overall performance and shareholders’ experience. If the Committee does not believe
this to be the case, it may adjust the bonus outturn accordingly.
Due to issues of commercial sensitivity, we do not believe it is in shareholders’ interests to disclose any further details of these targets on a
prospective basis. However, the Company is committed to adhering to principles of transparency and will, therefore, provide appropriate and
relevant levels of disclosure of bonus targets and performance against these targets for the 2022/23 bonus in next year’s report.
PSP Awards
As set out in the Chair’s Statement on page 128, a PSP award will be made in 2022 to Michael Topham as Chief Executive Officer and Richard
Pike as Chief Financial Officer, of shares worth 175% of salary.
It is currently envisaged that the performance conditions will be a mix of EPS (50% of award) and relative TSR (50% of award). These are
measures which encourage the generation of sustainable long term returns to shareholders.
Adjusted EPS for 2024/25 financial year (50% of award) Portion of award vesting
Below 24.8p 0%
24.8p 25%
24.8p to 27.8p Pro-rata on straight-line basis between 25% and 100%
Above 27.8p 100%
Biffa’s TSR ranking vs the constituents of the FTSE 250 (excluding financial services
companies and investment trusts) (50% of award) Portion of award vesting
Below Median 0%
Median 25%
Between Median and Upper Quartile Pro-rata on straight-line basis between 25% and 100%
Upper Quartile 100%
1 TSR (calculated based on Biffa plc share price movements, plus dividends reinvested into Biffa plc shares on the relevant ex-dividend dates, over the performance period) is measured over a
3-yearperiod.
The 2022 PSP awards will be subject to a 2-year post vesting holding period.
Chairman and Non-Executive Director Fees
Ken Lever is entitled to a fee of £200,000 p.a. as Chairman (with no additional fee payable for chairing the Nomination Committee).
The Non-Executive Directors are entitled to a fee of £55,000 p.a., with an additional fee of £10,000 p.a. for each of the Senior Independent
Director, Chairs of the Audit Committee and Remuneration Committee and £10,000 p.a. to the designated Non-Executive Director for
workforceengagement.
The fees for 2022/23 remain unchanged from the previous year.
We trust that you find this Report to be informative and transparent, and we hope to receive your support for the Directors’ Annual Report on
Remuneration at our forthcoming AGM.
This report was reviewed and approved by the Board on 5 August 2022 and signed on its behalf by order of the Board.
Claire Miles
Chair, Remuneration Committee
5 August 2022
Directors’ Annual Report on Remuneration continued
136
Biffa plc / Annual Report and Accounts 2022
Additional
Information
A summary of the main sections of the Directors’ Remuneration Policy, which was approved by shareholders at the 2020 AGM, is shown below.
Certain details have been updated to reflect the implementation of the policy in 2022/23. The Policy as approved by our shareholders can be
found within our 2020 Annual Report and Accounts which are available on our website at www.biffa.co.uk/investors.
Directors’ Remuneration Policy Table
Executive Directors
Element and purpose Base salary
The core element of pay, reflecting the individual’s position within the Company and experience.
Policy and operation Base salaries will be reviewed as appropriate, but typically not more than annually. In reviewing base salaries, the
Committee will consider the performance of the Company and individual, any changes in responsibilities or scope
of the role, as well as pay practices in relevant comparator companies of a broadly similar size and complexity.
Maximum It is anticipated that any salary increases will generally be in line with those awarded to salaried employees.
That said, in certain circumstances (including, but not limited to, changes in role and responsibilities, market
levels, individual and Company performance) higher increases may be made. However, no incumbent Executive
Director’s salary will increase more than an average of 10% p.a. over the duration of this Policy.
Performance measures n/a
Element and purpose Benefits in kind
To provide market-competitive benefits valued by recipients.
Policy and operation The Executive Directors may receive benefits in kind including car allowance, fuel allowance, private family medical
insurance and such other market competitive benefits as the Committee considers appropriate.
Maximum Benefits may be provided up to an aggregate value of £50,000 for each Executive Director (or such higher amount
as the Committee considers appropriate).
Performance measures n/a
Element and purpose Pension
To provide retirement benefits.
Policy and operation The Executive Directors will receive a defined contribution provision (or cash supplement).
Maximum The maximum employer’s contribution (or cash supplement) is 20% of salary. Pension contributions for new
Executive Director appointments will be aligned with the pension benefits available to the wider workforce.
Current contributions are 20% of salary for the Chief Executive Officer and 15% of salary for the Chief Financial
Officer. These levels will be aligned to the wider workforce rate (currently 4% of salary) from 1 January 2023.
Performance measures n/a
Element and purpose Annual bonus
To motivate Executive Directors and incentivise the delivery of business strategy over a one-year operating cycle.
Policy and operation Annual bonus plan levels and the appropriateness of measures are reviewed annually to ensure they continue to
support our strategy.
Once set, performance measures and targets will generally remain unchanged for the year, except to reflect
events (e.g. corporate acquisitions, other major transactions) where the Committee considers it to be necessary in
its opinion to make appropriate adjustments.
The Committee retains the flexibility to pay annual bonus outcomes in cash and/or deferred shares (which may
allow for dividend roll-up). For current Executive Directors, one-third of any bonus earned will be deferred into
shares for three years to the extent that the Executive Director does not at the bonus payment date already hold
sufficient shares to satisfy the share ownership guidelines as may apply from time to time. For newly appointed
Executive Director appointments, one-third of any bonus will be deferred into shares for three years.
Clawback and malus provisions apply as explained in more detail in the notes to this Policy table.
Maximum The maximum annual bonus opportunity is 130% of base salary.
For 2022/23, the maximum opportunity will be 130% of salary for the CEO and 110% of salary for the CFO.
Performance measures Bonuses will be payable subject to the achievement of performance conditions which will be set by
theCommittee.
The targets may be financial and/or personal and strategic, with the majority based on financial targets. It is
anticipated that the financial targets will have a significant profit-based element. Where a sliding scale of targets
is used, attaining the threshold level of performance for any measure will not typically produce a pay-out of more
than 20% of the maximum portion of overall annual bonus attributable to that measure, with a sliding scale to full
payout for maximum performance. Bonus payments will also be subject to the Committee considering that the
proposed bonus amounts, calculated by reference to performance against the targets, appropriately reflect the
Company’s overall performance and shareholders’ experience. If the Committee does not believe this to be the
case, it may adjust the bonus outturn accordingly.
Directors’ Remuneration Policy
137
Biffa plc / Annual Report and Accounts 2022
Strategic Report
Financial
Statements
Corporate
Governance Report
Overview
continued
Element and purpose Performance Share Plan (PSP)
To motivate Executive Directors and incentivise the delivery of sustained performance over the long term, and to
promote alignment with shareholders’ interests.
Policy and operation Awards under the PSP may be granted as nil/nominal cost options or conditional awards which vest to the extent
performance conditions are satisfied over a period normally of at least three years.
Awards will vest at the end of the specified vesting period at the discretion of the Committee and for awards
granted after 10 July 2019, Executive Directors will be required to retain shares vesting under the PSP (net of tax)
until the fifth anniversary of grant.
The PSP rules allow that the number of shares subject to vested PSP awards may be increased to reflect the value
of dividends that would have been paid in respect of any record dates falling between the grant of awards and
the expiry of any vesting period/holding period.
Clawback and malus provisions apply as explained in more detail in the notes to this Policy table.
Maximum Awards under the PSP may be granted as nil/nominal cost options or conditional awards which vest to the extent
Normal maximum PSP opportunity of 150% of base salary and exceptional limit of 250% of salary.
For 2022/23, the maximum award levels to the CEO and CFO will be 175% of salary.
Performance measures The Committee may impose such conditions as it considers appropriate for each grant which must be satisfied
before any award will vest. This currently includes EPS and TSR measures.
All awards made to Executive Directors will be subject to performance conditions which measure performance
over a period normally of at least than three years.
No more than 25% of awards vest for attaining the threshold level of performance. The Committee also has a
standard power to apply its judgement to adjust the formulaic outcome of all PSP performance measures to take
account of any circumstances (including the performance of the Company, any individual or business) should it
consider that to be appropriate.
A two-year holding period applies to awards.
Element and purpose Share ownership guidelines
To promote stewardship and to further align the interests of Executive Directors with those of shareholders.
Policy and operation The share ownership guidelines encourage Executive Directors to build or maintain (as appropriate) a
shareholding in the Company.
If any Executive Director does not meet the guidelines, they will be expected to retain up to 50% of the net of
tax number of shares vesting under any of the Company’s discretionary share incentive arrangements (including
any deferred bonus shares) until the guideline is met after which they are expected to retain these levels as a
minimum. These restrictions do not apply to shares acquired through purchase.
Executive Directors will be required to maintain a shareholding in the Company for a two-year period after
stepping down from that position, being 200% of salary or the Executive Directors’ actual relevant shareholding at
leaving this position if lower.
The Executive Directors’ actual relevant shareholding will include shares vesting under any of the Company’s
discretionary share incentive arrangements (including any deferred bonus shares) from awards granted after the
date the Policy was adopted but excludes shares acquired through purchase and the release of shares under share
incentive plans where the grant occurred prior to the adoption of the Policy.
Maximum No less than 200% of base salary for any Executive Director.
Performance measures n/a
Directors’ Remuneration Policy continued
138
Biffa plc / Annual Report and Accounts 2022
Additional
Information
Chairman and Non-Executive Directors
Element and purpose Chairman and Non-Executive Director fees
To enable the Company to recruit and retain Company Chairs and Non-Executive Directors of the highest calibre,
at the appropriate cost.
The fees paid to the Chairman and Non-Executive Directors aim to be competitive with other fully listed
companies of equivalent size and complexity.
Policy and operation The fees payable to the Non-Executive Directors are determined by the Board, with the Chairman’s fees
determined by the Committee. No Director participates in decisions regarding their own fees.
The Chairman and Non-Executive Directors do not participate in any new cash or share incentive plans
sinceAdmission.
The Chairman and Non-Executive Directors are entitled to benefits relating to travel and office support and such
other benefits as may be considered appropriate.
The Chairman is paid a single fee for the role, although he will be entitled to an additional fee if he is required to
perform any specific and additional services.
Non-Executive Directors receive a base fee for the role. Additional fees are paid for acting as Senior Independent
Director, Chairs of the Audit, Remuneration or other Board Committee and to the designated Non-Executive
Director for workforce engagement to reflect the additional time commitment. They will be entitled to an
additional fee if they are required to perform any specific and additional services.
Maximum Fees are paid monthly in cash.
The aggregate fees and any benefits of the Chairman and Non-Executive Directors will not exceed the limit
from time to time prescribed within the Company’s Articles of Association for such fees (currently £5,000,000 p.a.
inaggregate).
Any increases in fee levels made will be appropriately disclosed.
Performance measures n/a
The full Policy also includes further information on:
• Remuneration Policy on recruitment.
• Service contracts.
• Remuneration Policy on termination.
• External appointments.
• Statement of consideration of employment conditions elsewhere in the Company.
• Differences between the Directors’ Remuneration Policy and the Policy on Remuneration for other employees.
• Statement of consideration of shareholders’ views.
139
Biffa plc / Annual Report and Accounts 2022
Strategic Report
Financial
Statements
Corporate
Governance Report
Overview
3,000
2,750
2,500
2,250
2,000
1,750
1,500
1,250
1,000
750
500
250
0
Michael Topham
Chief Executive Ocer
Richard Pike
Chief Financial Ocer
Minimum On-target Maximum Maximum
with share
price growth
Minimum On-target Maximum Maximum
with share
price growth
£’000
£625
£1,269
£2,701
£2,238
£433
£814
£1,423
£1,727
100%
100%
49%
53%
28%
19%
33%
18%
28%
30%
27%
43%
31% 25%
17%
34%
42%
23%
25%
22%
35%
18%
Share price growth LTIP Annual Bonus Fixed pay (salary, benets, pension)
Illustrations of the application of the Directors’ Remuneration Policy
The charts below show how the Directors’ Remuneration Policy will be applied for Executive Directors for the 2022/23 financial year using the
following assumptions:
Minimum • Consists of base salary, benefits and pension.
• Base salary is the salary to be paid in the 2022/23 financial year.
• Benefits are based on estimated values for the 2022/23 financial year.
• Pension is measured as the defined contribution or cash allowance in lieu of initial Company contributions of
20% of salary for the Chief Executive Officer and 15% for the Chief Financial Officer that will revert to the wider
workforce rate (currently 4% of salary) from 1 January 2023.
Base salary Benefits Pension Total fixed
Michael Topham £529,000 £11,000 £84,640 £624,640
Richard Pike £347,300 £43,000 £42,718 £433,018
Target Based on what the Executive Director would receive if performance was on-target (excluding share price
appreciation and dividends):
• Annual bonus: consists of the on-target bonus (60% of maximum opportunity used for illustrative purposes).
• Long term incentive plan (LTIP): consists of the threshold level of vesting (25% vesting) under the PSP.
Maximum Based on the maximum remuneration receivable (excluding share price appreciation and dividends):
• Annual bonus: consists of maximum bonus of 130% of base salary for the Chief Executive Officer and 110% of
base salary for the Chief Financial Officer.
• LTIP: consists of the proposed 2022 face value of awards (175% of base salary for the Chief Executive Officer and
175% of base salary for the Chief Financial Officer) under the PSP.
Maximum with 50%
share price growth
• As the maximum scenario plus the value resulting from share price growth of 50% from the PSP award.
Directors’ Remuneration Policy continued
140
Biffa plc / Annual Report and Accounts 2022
Directors’ Report
Annual General Meeting
The Company’s AGM will be held at 11:00am
on Friday 23 September 2022 at Linklaters
LLP, 1 Silk Street, London EC2Y 8HQ.
The Notice of the AGM will be available on
the Company’s website at www.biffa.co.uk/
investors.
Articles of Association
The Company’s Articles of Association
mayonly be amended by a special
resolution at a general meeting of the
shareholders and can be found on our
website www.biffa.co.uk.
Branches
The Company does not have any branches
outside of the UK.
Change of Control
The Group has in place a £350m multi-
currency revolving credit facility (RCF)
with a syndicate of 10 banks expiring in
March 2025, with an extension of one
year, to March 2026, on 84% of the facility.
Under the terms of the RCF and private
placement, if there is a change of control of
the Company then any lender may request
that its commitment be cancelled and all
other outstanding amounts be repaid to
that lender. The Company is not aware of
any other significant agreements to which
it is party that take effect, alter or terminate
upon a change of control of the Company
following a takeover bid.
There are no agreements between the
Company and the Directors or employees
of the Group providing for compensation
for loss of office or employment following a
takeover bid.
Charitable Donations
During the year, the Company made
charitable donations of £175,000, including
£100,000 to WasteAid. Further details can be
found on page 57.
Company Registration
Biffa plc is a company incorporated in
England and Wales with company number
10336040.
Corporate Governance
Arrangements
During the year ended 25 March 2022, we
have applied the principles of the Code.
Our Compliance Statement for the year
is on page 90. Further details on how we
have applied the Code can be found in
the Corporate Governance section on
pages 90-143. The Code can be found in
the Corporate Governance section of the
Financial Reporting Council’s website:
www.frc.org.uk.
This Directors’ Report sets out the information required to be disclosed by the Company in compliance with the Act, the UK Listing Rules and
the Financial Conduct Authority’s Disclosure and Transparency Rules (DTR). It forms part of the management report as required under the DTR,
along with the Strategic Report (pages 01-89) and other sections of this Annual Report and Accounts including the Corporate Governance
Report (pages 90-143) all of which are incorporated by reference, as outlined in the table below.
Information Reported in Pages
Acquisitions and disposals Strategic Report 17-19
Business model Strategic Report 08-09
Corporate Governance framework Corporate Governance Report 96
Community and charitable giving Strategic Report 57
Customer and supplier engagement Strategic Report 14-15
Directors’ conflicts of interest Corporate Governance Report 112
Directors’ share interests and remuneration Directors’ Report on Remuneration 132
Director training and development Corporate Governance Report 112
Diversity, equality and inclusion Strategic Report 54
Employee engagement Strategic Report 52
Employees with disabilities Strategic Report 85
Financial instruments Financial Statements (Note 17) 190
Future developments and strategic priorities Strategic Report 17-19
Going concern statement Strategic Report 89
Greenhouse gas emissions Strategic Report 45
Principal risks and risk management Strategic Report 76-83
Modern Slavery Statement Strategic Report 56
Non-Financial Information Strategic Report 84-88
Results Consolidated Income Statement 157
Risk management and Internal Control Corporate Governance Report 122-123
Section 172 Statement Strategic Report 11
Stakeholder engagement Strategic Report 102-107
Statement of Directors’ Responsibilities Directors’ Report 144
Viability statement Strategic Report 89
141
Biffa plc / Annual Report and Accounts 2022
Strategic Report
Financial
Statements
Corporate
Governance Report
Overview
Additional
Information
Directors
Details of the Directors who served during
the year are set out on pages 92-93. Claire
Miles was appointed as a Director of the
Company on 1 April 2021. Michael Averill
resigned as a Director of the Company on
31 December 2021 and Linda Morant was
appointed as a Director of the Company on
1 December 2021.
The Company’s Articles of Association
provide that all Directors will stand for re-
election every three years but in compliance
with the Code all Directors at the AGM will
retire and present themselves for re-election
to the Board.
The business of the Company is managed
by the Board, which may exercise all the
powers of the Company subject to its
Articles of Association and the Act.
Directors’ Indemnities and Insurance
The Company’s Articles of Association
provide for the Directors and officers of the
Company to be appropriately indemnified
subject to the provisions of the Companies
Act 2006. In addition, the Group maintains
liability insurance for its Directors and
officers. Neither the Company’s indemnity
nor insurance covers claims arising from
dishonesty or fraud.
Dividend
Dividends have been reinstated for FY22.
During the year an interim dividend of
2.20 pence per share was paid (2021: nil).
The Board is recommending a final dividend
of 4.49 pence per share for the year ended
25 March 2022 (2021: nil). The final dividend
will be payable on 10 October 2022 to
shareholders on the register at the close
of business on 26 August 2022.
External Auditor
So far as each Director is aware, there is no
relevant information of which the External
Auditor is unaware. Each Director has taken
all steps that ought to have been taken
as a Director to make themselves aware
of any relevant audit information and to
establish that Deloitte LLP are aware of that
information.
As detailed on page 124, the Audit
Committee recommended, and the
Board approved, the proposal that the
current External Auditor, Deloitte LLP, be
re-appointed as External Auditor of the
Company at the AGM. Resolutions to
re-appoint Deloitte LLP as the Company’s
External Auditor until the conclusion of the
AGM in 2023 and to authorise the Directors
to determine their remuneration will be
proposed to shareholders at the AGM.
Political Donations
No political donations have been made
during the financial year.
Post Balance Sheet Events
The Group has been engaged in a dispute
with HMRC concerning historical Landfill
Tax. Further details on the outcome of the
Group’s request of leave to appeal can be
found in Note 31 on page 208.
Powers for the Company issuing or
buying back its shares
The Company was authorised by
shareholders at the 2021 AGM to purchase
in the market shares in the Company up to
an aggregate nominal amount of £1,018,692.
No shares were allotted or purchased under
this authority during the year.
Share Capital
The Company’s issued share capital as at
the date of this Report is composed of a
single class of 305,910,826 ordinary shares
of 1 pence each: each share carries the
right to one vote at general meetings of
theCompany.
In addition, the Company issued and allotted
297,502, 1,209 and 10,364 ordinary shares in
the Company under the terms of the Biffa
Sharesave Plan 2016 at a price of 198 pence,
190 pence and 158 pence, respectively.
Details of the Company’s issued share capital
during the year, are shown in Note 22 on
page 199.
The Company may vary the rights attaching
to its shares by special resolution, subject to
the Articles of Association and applicable
laws and regulations.
The Articles of Association contain
provisions governing the ownership and
transfer of shares. There are no restrictions
on the transfer of shares beyond those
required by applicable law under the
Articles of Association or insider trading
laws. In accordance with the Company’s
share dealing policy, the Directors and
certain employees are required to seek prior
approval of the Company before dealing in
its shares.
The Company is not aware of any
agreements between shareholders that may
result in restrictions on the transfer of shares
and/or voting rights.
On 5 August 2022, the Biffa plc Share
Incentive Plan 2016 held 1,178,564 shares
and the Biffa PSP plan held 1,858,454
shares in the Employee Benefit Trust. The
right to receive any dividend has been
waived by the Trustee of the EBT over the
entire holding of the trust and by Wealth
Nominees Limited in respect of all Biffa plc
shares in their custodian account.
Employees who participate in the SIP and
whose shares remain in the Plan’s trust give
directions to the Trustee to vote on their
behalf by way of a Form of Direction.
Directors’ Report continued
142
Biffa plc / Annual Report and Accounts 2022
Substantial Shareholdings
The table below shows the holdings in the Company’s ordinary shares that had been notified to the Company under the Disclosure and
Transparency Rules (DTR 5). The information below was correct at the date of notification. It should be noted that these holdings may
have changed since the Company was notified. However, notification of any change is not required until an applicable threshold
is crossed.
As at 25 March 2022 As at 2 August2022
Shareholder Direct/Indirect
Number of
shares held
Holding of issued
share capital % Direct/Indirect
Number of
shares held
Holding of issued
share capital %
Global Alpha Capital
Management Indirect 35,868,875 11.73 Indirect 37,955,641 12.41
Lansdowne Partners Indirect 27,532,538 9.00 n/a n/a n/a
Columbia
Threadneedle
Investments n/a n/a n/a Indirect 14,879,967 4.86
BlackRock, Inc Indirect 17,289,542 5.65 Indirect 14,855,463 4.86
Flat Footed Indirect 14,168,080 4.63 Indirect 15,017,296 4.91
Legal & General
Investment
Management Indirect 12,571,302 4.11 Indirect 11,994,401 3.92
BMO Global Asset
Management (UK) Indirect 11,116,222 3.63 n/a n/a n/a
Soros Fund
Management Indirect 10,805,010 3.53 Indirect 10,319,796 3.37
Vanguard Group Indirect 9,869,709 3.23 Indirect 9,927,326 3.25
Fidelity International Indirect 9,470,148 3.10 Indirect 14,445,451 4.72
Fidelity
Management &
Research Indirect 9,429,927 3.08 Indirect 10,631,069 3.48
On behalf of the Board.
Sarah Parsons
Company Secretary Biffa plc
5 August 2022
Registered in England and Wales No.
10336040
143
Biffa plc / Annual Report and Accounts 2022
Strategic Report
Financial
Statements
Corporate
Governance Report
Overview
Additional
Information
Statement of Directors’ Responsibilities
in respect of the Annual Report and Accounts
The Directors are responsible for
preparing the Annual Report and
the Group and Company Financial
Statements in accordance with
applicable law and regulations.
Company law requires the Directors to
prepare Financial Statements for each
financial year. Under that law, the Directors
are required to prepare the Group Financial
Statements in accordance with International
Accounting Standards in conformity with
the requirements of the Companies Act
2006 and International Financial Reporting
Standards (IFRSs). The Financial Statements
also comply with the IFRSs as issued by the
IASB.
The Directors have also chosen to prepare
the parent company financial statements
in accordance with the Financial Reporting
Standard 101 Reduced Disclosure
Framework. Under company law, the
Directors must not approve the Financial
Statements unless they are satisfied that
they give a true and fair view of the state of
affairs of the Group and Company and of
their profit or loss for that period.
In preparing the parent company Financial
Statements, the Directors are required to:
• Select suitable accounting policies and
then apply them consistently.
• Make judgements and accounting
estimates that are reasonable and
prudent.
• State whether the Financial Reporting
Standard 101 Reduced Disclosure
Framework has been followed, subject
to any material departures disclosed and
explained in the financial statements.
• Prepare the Financial Statements on
the going concern basis unless it is
inappropriate to presume that the
Company will continue in business.
In preparing the Group Financial Statements,
International Accounting Standard 1 requires
that Directors:
• Properly select and apply accounting
policies.
• Present information, including
accounting policies, in a manner that
provides relevant, reliable, comparable
and understandable information.
• Provide additional disclosures
when compliance with the specific
requirements in IFRS Standards are
insufficient to enable users to understand
the impact of particular transactions,
other events and conditions on the
entity’s financial position and financial
performance.
• Make an assessment of the Company’s
ability to continue as a going concern.
The Directors are responsible for keeping
adequate accounting records that
are sufficient to show and explain the
Company’s transactions and disclose with
reasonable accuracy at any time the financial
position of the Company and enable them
to ensure that its Financial Statements
comply with the Companies Act 2006. They
are also responsible for safeguarding the
assets of the Company and hence for taking
reasonable steps for the prevention and
detection of fraud and other irregularities.
The Directors are responsible for the
maintenance and integrity of the corporate
and financial information included on the
Company’s website. Legislation in the United
Kingdom governing the preparation and
dissemination of Financial Statements may
differ from legislation in other jurisdictions.
Directors’ Responsibility Statement
We confirm that to the best of our
knowledge:
• The Financial Statements, prepared in
accordance with the relevant financial
reporting framework, give a true and
fair view of the assets, liabilities, financial
position and profit or loss of the
Company and the undertakings included
in the consolidation taken as a whole.
• The Strategic Report includes a fair
review of the development and
performance of the business and
the position of the Company and
the undertakings included in the
consolidation taken as a whole, together
with a description of the principal risks
and uncertainties that they face.
• The Annual Report and Financial
Statements, taken as a whole, are fair,
balanced and understandable and
provide the information necessary for
shareholders to assess the Company’s
performance, business model and
strategy.
This responsibility statement was approved
by the Board of Directors on 5 August 2022
and is signed on its behalf by:
By order of the Board
Ken Lever
Chairman
5 August 2022
144
Biffa plc / Annual Report and Accounts 2022
Independent Auditor’s Report to the members of Biffa plc
145
Strategic Report
Financial
Statements
Corporate
Governance Report
Overview
Biffa plc / Annual Report and Accounts 2022
Additional
Information
Report on the audit of the financial statements
1. Opinion
In our opinion:
• the financial statements of Biffa plc (the ‘parent company’) and its subsidiaries (the ‘Group’) give a true and fair view of the state of the Group’s and
of the parent company’s affairs as at 25 March 2022 and of the Group’s profit for the 52 week period then ended;
• the Group financial statements have been properly prepared in accordance with United Kingdom adopted international accounting standards
and International Financial Reporting Standards (IFRSs) as issued by the International Accounting Standards Board (IASB);
• the parent company financial statements have been properly prepared in accordance with United Kingdom Generally Accepted Accounting
Practice, including Financial Reporting Standard 101 “Reduced Disclosure Framework”; and
• the financial statements have been prepared in accordance with the requirements of the Companies Act 2006.
We have audited the financial statements which comprise:
• the consolidated income statement;
• the consolidated statement of comprehensive income;
• the consolidated and parent company financial positions;
• the consolidated and parent company statements of changes in equity;
• the consolidated cash flow statement;
• the accounting policies; and
• the related Notes 1 to 35 for the consolidated financial statements and Notes 1 to 12 of the parent company financial statements.
The financial reporting framework that has been applied in the preparation of the Group financial statements is applicable law and United Kingdom
adopted international accounting standards and IFRSs as issued by the IASB. The financial reporting framework that has been applied in the preparation
of the parent company financial statements is applicable law and United Kingdom Accounting Standards, including FRS 101 “Reduced Disclosure
Framework” (United Kingdom Generally Accepted Accounting Practice).
2. Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those
standards are further described in the auditor’s responsibilities for the audit of the financial statements section of our report.
We are independent of the Group and the parent company in accordance with the ethical requirements that are relevant to our audit of the financial
statements in the UK, including the Financial Reporting Council’s (the ‘FRC’s’) Ethical Standard as applied to listed public interest entities, and we have
fulfilled our other ethical responsibilities in accordance with these requirements. The non-audit services provided to the Group and parent company for
the year are disclosed in Note 6 to the financial statements. We confirm that we have not provided any non-audit services prohibited by the FRC’s Ethical
Standard to the Group or the parent company.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
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3. Summary of our audit approach
Key audit matters The key audit matters that we identified in the current year were:
• Landfill accounting
• Onerous contract provisions
• Impairment of goodwill in relation to Company Shop Group
• Valuation of specified intangibles as a result of the Viridor business combination
• HMRC landfill tax enquiry
Within this report, key audit matters are identified as follows:
Newly identified
Increased level of risk
Similar level of risk
Decreased level of risk
Materiality The materiality that we used for the Group financial statements was £5 million which was determined on the basis of revenue
and adjusted EBITDA. Materiality equates to 0.3% of Group revenue and 2.6% of adjusted EBITDA.
Scoping The Group is organised into three divisions, within which there are eight components. We performed a full scope audit on five
components, audit of specified balances on one component and desktop procedures on the remaining two components.
We performed the balance sheet procedures centrally at Group level for all components. The full scope and audit of specified
balances scope components account for 90.8% (2021: 98.0%) of Group revenue and 96.0% (2021: 97.0%) of net assets.
Significant changes
in our approach
In the current year we revised our scoping approach to align to the newly created divisional structure of the Group.
We have removed the classification and presentation of adjusting items as a key audit matter this year as they are no longer
disclosed on the face of financial statements. In addition, retirement benefit obligations are no longer considered to be a
key audit matter this year as the effort and volume of audit work has reduced substantially given that the implementation of
Guaranteed Minimum Pensions (“GMP”) equalisations, reduced judgement over the recognition of certain defined benefit
schemes and other one-off items in previous years that are no longer applicable.
This year we have included three new key audit matters:
• Impairment of Goodwill specific to Company Shop Group
In the prior year we identified an impairment indicator in relation to Poplars AD cash generating unit (CGU) and Landfill
gas CGU. However, this year the impairment risk has been identified in the Company Shop Group (CSG) as it exhibited
impairment indicators and therefore became the focus of the impairment key audit matter.
• Valuation of specified intangibles as a result of the Viridor acquisition
We identified the valuation of specified intangibles as a new key audit matter in the current year due to the level of
judgement involved in respect of key assumptions underpinning the customer and IFRIC 12 intangible valuations.
• HMRC landfill tax enquiry
We identified a key audit matter in relation to HMRC’s concerns over Biffa’s compliance with landfill tax collection
obligations. Given the uncertainty over the application of the requirements, the level of management judgement involved
and the size of the potential liability, we identified the completeness and accuracy of provisions, and associated contingent
liability disclosures, as a key audit matter.
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4. Conclusions relating to going concern
In auditing the financial statements, we have concluded that the directors’ use of the going concern basis of accounting in the preparation of the
financial statements is appropriate.
Our evaluation of the directors’ assessment of the Group’s and parent company’s ability to continue to adopt the going concern basis of accounting
included the following procedures:
• held discussions with management to understand the Group’s process in respect of its going concern assessment;
• reviewed the reasonableness of assumptions applied by management in preparing its FY23 budget and FY24 plan;
• performed an analysis on the Group’s results against budget to assess historical accuracy;
• assessed the level of headroom available to the Group from its loan facilities and evaluated the risk of breaching covenants;
• challenged management’s reasonable worst-case analysis and whether it is appropriately plausible but severe, and performed sensitivity analysis on
key variables;
• assessed the appropriateness of considerations and assumptions regarding the impact of the HMRC landfill tax enquiry and the Group’s ability to
settle a potential liability in the going concern period;
• evaluated the additional external funding facilities accessible to the Group;
• obtained and performed analysis on post year end results and benchmarked this against management’s forecasts;
• assessed the disclosure in Note 1 to the financial statements about whether the directors considered it appropriate to adopt the going concern basis
of accounting in preparing the financial statements; and
• assessed the going concern impact of the potential transaction disclosed in the post balance sheet events Note (Note 35) regarding the possible
offer from Energy Capital Partners to acquire Biffa’s entire share capital.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively,
may cast significant doubt on the Group’s and parent company’s ability to continue as a going concern for a period of at least twelve months from when
the financial statements are authorised for issue.
In relation to the reporting on how the Group has applied the UK Corporate Governance Code, we have nothing material to add or draw attention to in
relation to the directors’ statement in the financial statements about whether the directors considered it appropriate to adopt the going concern basis of
accounting.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.
5. Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial statements of the
current period and include the most significant assessed risks of material misstatement (whether or not due to fraud) that we identified. These matters
included those which had the greatest effect on: the overall audit strategy, the allocation of resources in the audit; and directing the efforts of the
engagement team.
These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not
provide a separate opinion on these matters.
5.1. Landfill accounting
Key audit matter
description
As at 25 March 2022 the Group holds a landfill restoration and aftercare provision of £73.9 million (26 March 2021: £71.0 million).
The Group operates a number of landfill sites in the UK. A significant cost of owning and operating a landfill site in the UK arises
after the land filling operation ceases due to the constructive and legal obligation to restore sites and then to care for them until
it can be demonstrated that they present no ongoing risk to the environment. The liabilities extend until the waste is considered
to be inert, which is generally assumed to be up to 60 years following closure of the site. The Group holds provisions for such
long-term obligations through its provisions for restoration. The level of costs expected are uncertain and can vary significantly
from site to site. Biffa uses internal experts to help determine the total expenditure required to remediate sites.
As these provisions arise in connection with an asset, under IAS 16 “Property, Plant and Equipment” the costs are capitalised and
depreciated over the remaining life of the associated asset.
The key audit matter arises from a number of estimation uncertainties which exist in relation to the level of the provision
and depreciation required of associated assets. These include the appropriateness of the total cost and void data as well as
the accuracy of the underlying calculations, with the key variables being gross cost assumptions utilised in determining the
provision cost, void data, inflation and the discount rates applied to the cashflow forecasts.
The associated disclosure is included in Note 19. The Audit Committee has included their assessment of this risk on page 120
and is included within the key sources of estimation uncertainty in Note 1. For specifics of the Group’s accounting policy please
see page 174.
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5.1. Landfill accounting continued
How the scope of our
audit responded to
the key audit matter
Our audit response focused on assessing and challenging the underlying data and key judgements used in determining the
provision.
We tested the relevant controls surrounding the landfill asset and provision.
We assessed and challenged the assumptions and judgements in the calculations with reference to market and historical data,
this included inflation and discount rates applied in the forecast cash flows. We also engaged with a specialist to review the
appropriateness of the discount rate applied.
We evaluated gross cost estimates from management’s experts and challenged on the key developments during the year that
would give rise to a material impact.
Furthermore, we performed an assessment of the reasonableness of the gross cost estimates used by management, by
performing a retrospective review of the costs incurred in comparison to those originally estimated. We also considered any
changes in relation to regulations and climate change.
We assessed the disclosure within Note 19 to the accounts to evaluate whether it is in accordance with the requirements of
IAS 37 “Provisions, Contingent Liabilities, and Contingent Assets”.
Key observations Based on the work performed as outlined above we conclude the assumptions to be appropriate and we concur with
management that the level of landfill provision is reasonable.
5.2. Onerous contract provisions
Key audit matter
description
In the period ending 25 March 2022, the provision against onerous contracts decreased to £20.4 million (2021: £20.5 million).
The process to estimate the forecast results of the contracts is complex, and the Group therefore needs to make operational
and financial assumptions to estimate future losses over the remaining life of the associated contracts. The onerous contract
provision is determined by reference to forecast margins, and as such revenue and cost inputs are the key drivers of the
balance. The key risk has therefore been identified as to whether costs will increase at a rate that cannot be matched by
revenue indexation per the contract.
There is a risk that the provision recognised in respect of these contracts does not appropriately cover the unavoidable future
losses against the contract as required under IAS 37 “Provisions, Contingent Liabilities and Contingent Assets”.
We have identified a key audit matter in respect of the judgements applied in the assessment of unavoidable future cash flows,
particularly in relation to key estimation areas such as future inflation, fuel, and commodity prices applied within the forecasts,
and the discount rates applied to the forecast contract loss.
The associated disclosure is included in Note 19. The Audit Committee has included their assessment of this risk on page 121
and is included within the key sources of estimation uncertainty in Note 1. For specifics of the Group’s accounting policy please
see page 174.
How the scope of our
audit responded to
the key audit matter
We obtained an understanding of relevant controls in place to identify contracts which may be onerous and determine
whether the potential liability is appropriately accounted for and disclosed in the Group’s financial statements.
We assessed the forecast assumptions around inflation, fuel prices and commodity values against external market data. We
also liaised with audit specialists to assess the reasonableness of the discount rate applied.
We also analysed forecast future performance against historic contract results, and where appropriate, bridged any expected
improvement in performance to specific one-off events in the year and considered whether they would reoccur.
We evaluated the approach adopted in the models and tested the models for arithmetical accuracy along with reviewing
publicly available external information and considered the impact of assumptions applied.
We assessed the disclosures in Note 19 to evaluate whether it is in accordance with the requirements of IAS 37 “Provisions,
Contingent Liabilities, and Contingent Assets”.
Key observations Based on the work performed as outlined above we consider the assumptions adopted to be appropriate and we are satisfied
that the level of provision recognised by management is in accordance with IAS 37 “Provisions, Contingent Liabilities, and
Contingent Assets”.
5. Key audit matters continued
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5.3. Impairment of Goodwill (Company Shop Group)
Key audit matter
description
As at 25 March 2022 the Group held non-current assets of £1,324.2 million (26 March 2021: £1,162.5 million) of which
£40.6 million relates to Company Shop Group (“CSG”) goodwill which could be at further risk of impairment. The directors
are required to assess the carrying value of these assets and perform a full impairment review in accordance with the
requirements of IAS 36 ‘Impairment of Assets’ on an annual basis, or more frequently if an indicator of impairment exists.
During 2022, an indicator of impairment was identified for the CSG cash generating unit (“CGU”) as CSG business performance
was not in line with forecasts. The recoverable amounts used in the impairment assessment was calculated on a Value in Use
basis (“VIU”). Following an impairment test, an impairment charge of £25 million was recorded as at half year.
We identified a key audit matter in relation to the CSG CGU within the Specialist Services operating division based on the low
level of headroom and sensitivity to the inputs. The key audit matter was identified in relation to the key areas of estimation
uncertainty in the assumptions. These include the revenue growth, gross margin, discount rate and the cashflows assumed
from the terminal value.
The associated disclosure is included in Note 10. The Audit Committee has included their assessment of this risk on page 120
and is included within the key sources of estimation uncertainty in Note 1. For specifics of the Group’s accounting policy please
see page 175.
How the scope of our
audit responded to
the key audit matter
We obtained an understanding of relevant controls over the Group’s impairment testing process.
We considered the reasonableness of the impairment model through testing the appropriateness of inputs including
consideration of the terminal value of cash flows and engaged a fair value specialist as part of our input testing procedures.
We involved our valuation specialists, with the relevant knowledge and expertise, to determine an acceptable range of discount
rates utilising market comparable information and comparing them against the rates used.
We further evaluated the revenue growth and gross margin improvements assumed within the cashflow forecasts with
reference to recent performance, gross margin trend analysis and consideration of initiatives that have been put in place.
We assessed the disclosure within Note 1 and Note 10 to evaluate whether it is in accordance with IAS 36 “Impairment of Assets”.
In particular, we assessed the appropriateness of the disclosure as to what reasonably possible change in a key assumption
would cause the CGU’s carrying amount to exceed its recoverable amount.
Key observations Based on the work performed as outlined above we consider that the assumptions applied in the impairment models,
when taken in aggregate, are within our acceptable range. We consider management’s disclosure of the reasonably possible
scenarios to be appropriate as it identifies the value of the applicable key assumptions and the value by which the key
assumptions must change to reduce headroom to nil. Refer to Note 1 and Note 10 of the financial statements where the
sensitivity disclosure is provided.
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5.4. Valuation of specified intangibles as a result of the Viridor business combination
Key audit matter
description
During the year Biffa Plc acquired Syracuse Waste Limited and its subsidiaries from Viridor for a cash consideration of £130.8
million funded from the Group’s existing cash and debt facilities. In accordance with IFRS 3 “Business Combinations”, the
identifiable assets and the liabilities were recognised at their fair value on acquisition.
A number of significant judgements were required to estimate future revenues and margins within the cashflows used to
estimate the valuation of the identified intangibles. This includes judgements involved in the valuation of the associated
IFRIC 12 asset, along with intangible assets identified specific to customers in the Industrial and Collection (I&C) segment.
The key assumptions that feed into the customer relationships intangible valuation are the revenue forecasts, attrition rate,
earnings before interest and tax (EBIT) margin and the discount rate.
Due to the significance of the judgements around valuation of intangible assets, we have determined this represents a key
audit matter.
The associated disclosure is included in Note 9. The Audit Committee has included their assessment of this risk on page 121
and is included within the key sources of estimation uncertainty in Note 1. For specifics of the Group’s accounting policy
please see page 175.
How the scope of our
audit responded to
the key audit matter
We obtained an understanding of the relevant controls around the determination of the purchase price allocation (“PPA”) of
the acquisition.
We evaluated the acquisition balance sheet and fair value adjustments including challenging the identification and
valuation of intangible assets and the assessment of useful economic life of the customer relationship intangible, the
reasonableness of the internal forecasts upon which this asset is based and profitability pertaining to this intangible using
our specialists and benchmarking.
We assessed the appropriateness and classification of recognising an intangible asset in accordance with IFRIC 12 Service
Concession Arrangements.
We engaged a valuation specialist in assessing the appropriateness and the application of the methodology applied to
value the customer relationship intangible and in assessing the customer attrition rates and the discount rates.
We assessed the disclosure within Note 9 to evaluate whether it is in accordance with the requirements of IFRS 3
“Business combinations”.
Key observations Based on the work performed as outlined above, we are satisfied that the assumptions used to value the intangible assets,
when taken in aggregate, lie within a reasonable range.
We are satisfied that the acquired businesses have been appropriately accounted for in accordance with IFRS 3
“Business Combinations”.
5. Key audit matters continued
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5.5. HMRC landfill tax enquiry
Key audit matter
description
As set out in Note 1, Biffa is currently subject to an HMRC enquiry in respect of its compliance with landfill tax (“LFT”)
collection obligations. Through this process to date, HMRC have contested the Group’s compliance with HMRC Excise Notice
LFT 1 (“LFT1”), which sets out the requirements for an LFT registered landfill operator for the inspection and testing of certain
materials deposited at landfill sites.
HMRC has raised concerns over the manner and extent to which Biffa has complied with these requirements, asserted that
specific amounts of LFT may be considered due, and concerns over the conduct of Biffa and its specific customers in relation
to materials entering landfill and associated tax due.
As HMRC has not yet concluded its enquiry into these matters, given the size of the potential liability indicated by the
protective assessments issued to date by HMRC and the level of management judgement involved, we have identified the
completeness and accuracy of provisions and contingent liabilities associated with this enquiry, and the Group’s related
disclosures, as a key audit matter.
The enquiry commenced in February 2020, but following the receipt of further correspondence from HMRC in February
2022, the Group has conducted additional analysis, with the support of third party legal and technical advice, and re-
assessed its position regarding potential amounts owed relating to landfill tax.
Given the stage of the investigation, management judgement is required in respect of the assessment of the probability of
an outflow of funds, the assessment of the value of elements which are considered probable, and disclosure of contingent
liabilities within the financial statements.
Whilst the HMRC enquiry has not concluded, a provision of £20 million (FY21: £3.0 million) has been recognised relating to
the specific amounts asserted by HMRC to date, as disclosed in Note 19.
Additionally, in light of the fact that HMRC has yet to conclude its enquiry and the general issues raised in respect of LFT1
compliance and Biffa/customer conduct, a contingent liability reflecting the range of potential outcomes for Biffa’s potential
additional liability for the relevant period has been disclosed in Note 29. This could be up to approximately £154 million
(being the total amount of protective assessments issued to date by HMRC, excluding amounts provided for), plus related
costs, interest and penalties where applicable.
Given the significant level of estimation uncertainty, the directors have included further information in the key sources of
estimation uncertainty disclosure in Note 1 on pages 175-176. The Audit Committee has included their assessment of this
risk on page 121.
How the scope of our
audit responded to
the key audit matter
As part of our audit procedures, we obtained an understanding of the relevant controls in respect of landfill tax collection
and the inputs and assumptions of estimation of tax provisioning.
We engaged internal forensic specialists in evaluating the scope and findings of the Group’s internal analysis which was itself
supported by legal and forensic advisers, reading the reports and findings to date, considering contradictory evidence and
challenging as to whether wider implications of the findings have been appropriately incorporated, specifically considering
the risk of contagion.
We also involved internal tax specialists in understanding the requirements of LFT 1, the application by the Group, analogous
legal precedent and potential exposure.
We assessed the competence, capabilities and objectivity of the legal and forensic advisers used in the Group’s investigation;
For completeness, we reviewed correspondence between the Group, HMRC and the Group’s external legal advisers and
obtained direct correspondence from and made direct inquiries of the Group’s external legal adviser with regard to the
status of claims to date and their views. When making direct inquiries of HMRC, we sought to understand the status of their
investigation and to corroborate areas of inquiry as the investigation progresses.
Additionally, we brought additional resource onto the team, including at partner and director level, who supported in
challenging the findings arising from the Group’s investigation, in particular in relation to the completeness and accuracy of
provisions and contingent liabilities arising from the Group’s internal analysis.
We evaluated the completeness of the provisions and contingent liabilities through review of board minutes and board
correspondence, internal audit reports and other supporting and contradictory evidence.
Lastly, we also challenged the appropriateness of the disclosures included in the financial statements relating to the
investigation and challenged management and the directors on the impact on the completeness of their going concern
assessment and disclosure relating to this matter.
Key observations We concluded that the provision of £20 million recognised in relation to specific amounts asserted by HMRC in their
investigation to date, including amounts for any applicable interest and related costs was reasonable.
In respect of the broader concerns HMRC has raised about certain aspects of Biffa’s compliance with the qualifying fines
regime set out in LFT1, we concluded that given the stage of investigations by HMRC an outflow of economic benefits was
not probable, and that the associated contingent liability disclosures were appropriate.
The disclosures highlight that the directors’ estimates reflect significant levels of uncertainty in respect of the status of the
HMRC investigation, as set out in the key sources of estimation uncertainty in Note 1 of the financial statements.
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6. Our application of materiality
6.1. Materiality
We define materiality as the magnitude of misstatement in the financial statements that makes it probable that the economic decisions of a reasonably
knowledgeable person would be changed or influenced. We use materiality both in planning the scope of our audit work and in evaluating the results
of our work.
Based on our professional judgement, we determined materiality for the financial statements as a whole as follows:
Group financial statements Parent company financial statements
Materiality £5 million (2021: £3.8m) £1.3 million (2021: £1.2m)
Basis for
determining
materiality
Materiality has been determined with reference to revenue
and adjusted EBITDA.
The materiality determined of £5m equates to 0.3% (2021:
0.4%) of revenue and 2.6% of adjusted EBITDA (2021: 2.8%).
In the prior year, materiality was determined on the same
basis.
Parent company materiality was determined on the basis of
net assets. It equates to 0.4% (2021: 0.3%) of net assets.
Rationale for the
benchmark applied
We consider that a materiality based on these benchmarks
reflects critical underlying measures of the Group. These are
given substantial prominence throughout the annual report
and reflect the key metrics used by analysts in their reports
and communications to shareholders and investors, as well
as those of peer companies.
As the Company is non-trading and operates as primarily a
holding company for the Group’s trading entities, we believe
that the net asset position is the most appropriate benchmark
to use.
6.2. Performance materiality
We set performance materiality at a level lower than materiality to reduce the probability that, in aggregate, uncorrected and undetected misstatements
exceed the materiality for the financial statements as a whole.
Group financial statements Parent company financial statements
Performance
materiality
60% (2021: 60%) of Group materiality 60% (2021: 60%) of parent company materiality
Basis and rationale
for determining
performance
materiality
In determining performance materiality, we considered our cumulative experience from prior year audits, our risk
assessment, including our understanding of the entity and its environment, the quality of the control environment and the
history of uncorrected misstatements in previous years.
6.3. Error reporting threshold
We agreed with the Audit Committee that we would report to the Committee all audit differences in excess of £0.25m (2021: £0.19m), as well as
differences below that threshold that, in our view, warranted reporting on qualitative grounds. We also report to the Audit Committee on disclosure
matters that we identified when assessing the overall presentation of the financial statements.
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7. An overview of the scope of our audit
7.1. Identification and scoping of components
The Group primarily operates in the United Kingdom. In addition, the Group has an active overseas entity based in Gibraltar that provides insurance
services to the Group.
For the current year audit, we revised our approach to the identification of components within the Group. Following the Group’s growth and the
establishment of the new specialist services division, we consider the divisional structure to better reflect the components of the Group, rather than the
legal entity based scoping approach adopted in prior periods. The materiality and scope of work for each component has been assessed based upon its
significance and contributions to the Group. Audit procedures were then performed based upon the level of scope identified.
The Group is organised into three divisions, within which there are eight components. We performed a full scope audit on five components, audit of
specified balances on one component and desktop procedures on the remaining two components. We performed the balance sheet procedures
centrally at Group level for all components.
The full scope and audit of specified balances scope components account for 90.8% (2021: 98.0%) of Group revenue and 96.0% (2021: 97.0%) of net
assets.
In addition to the work performed at a component level the Group audit team also performed audit procedures on, but not limited to, corporate
activities such as treasury and pensions as well as on the consolidated financial statements themselves, including entity level controls, litigation
provisions, the consolidation, and financial statement disclosures including the parent company financial statements.
7.2. Our consideration of the control environment
The Group operates a range of IT systems, which underpin the financial reporting process, including the “Central System”, which represents the main
enterprise resource management system of the Group that governs the general ledger. In addition, we identified the Group-level Micro-strategy
consolidation system as relevant to the audit. With the assistance of our IT specialists, we assessed the IT control environment and tested general IT
controls of these systems by evaluating change management, user access and segregation of duties.
We have taken a controls reliance approach on landfill accounting by testing whether relevant controls on these areas were operating effectively during
the period.
A number of control deficiencies were identified in the prior year audit, and similar deficiencies were identified during the current year audit, particularly
in relation to the design and implementation of controls in respect of the onerous contract provisions, identification and valuation of intangibles arising
in the Viridor acquisition, HMRC landfill tax enquiry and impairment of Goodwill in relation to Company Shop Group (see section 5). As a result of these
findings, we were unable to adopt a controls-based audit approach in some of these areas except for landfill accounting. In response to the deficiencies
identified, we revisited our risk assessment and altered the nature and extent of our planned testing, including setting our Group performance
materiality at 60% consistent with last year (see section 6.2), tailoring our risk-focused procedures and revising the adequacy of substantive testing across
these areas. As described in the Audit Committee Report on page 118, they will review management’s actions to address these deficiencies as well as
those identified by internal audit during the current year.
7.3. Our consideration of climate-related risks
Throughout the current year and prior year the directors have undertaken a number of steps to formalise compliance with requirements as a means
to drive change, progress actions and adopt the Task Force on Climate Related Financial Disclosures (TCFD) recommendations. In the prior year, the
directors have made a voluntary disclosure in their strategic report where they explained their response to climate change.
In the current year, management performed a climate-related risk assessment which has been reviewed by the board. As a result, climate change is
considered as an emerging risk this year under the principal risks and uncertainties section in the annual report, page 77. Management also reviews
climate risk templates for completeness of items before instructing divisions to perform their own assessment while the Sustainability Committee Board
oversee environmental compliance, sustainability strategies and performance. The directors have also disclosed their responses against Listing Rules on
page 38 of the strategic report.
As stated on pages 32-33 of the strategic report, the directors’ view is that they will support the UK to strengthen its climate pledge and reach its net
zero ambition, in line with COP26 objectives. Further to that they have also disclosed in Note 10 of the financial statements that there are assumptions
relating to climate risks that have an impact on the terminal value of the impairment assessments.
We performed our own qualitative risk assessment of the potential impact of climate change on the Group’s account balances and classes of transaction
and did not identify any additional reasonably possible risks of material misstatement. Our procedures were performed with the involvement of our
climate change and sustainability specialists and included reading disclosures in the strategic report including the TCFD disclosures to consider whether
they are materially consistent with the financial statements and our knowledge obtained in the audit.
7.4. Working with other auditors
We engaged with the Deloitte Gibraltar team as an integrated part of the Group audit team for the procedures performed on the Gibraltar entity.
A senior member of the Group audit team oversaw the Deloitte team’s work on the Gibraltar entity. We included them in our team briefings, attended
key meetings with management and reviewed their audit working papers.
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8. Other information
The other information comprises the information included in the annual report, other than the financial statements and our auditor’s report thereon. The
directors are responsible for the other information contained within the annual report.
Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do
not express any form of assurance conclusion thereon.
Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial
statements, or our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated.
If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material
misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this
other information, we are required to report that fact.
We have nothing to report in this regard.
9. Responsibilities of directors
As explained more fully in the directors’ responsibilities statement, the directors are responsible for the preparation of the financial statements and for
being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the preparation of
financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the directors are responsible for assessing the Group’s and the parent company’s ability to continue as a going
concern, disclosing as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to
liquidate the Group or the parent company or to cease operations, or have no realistic alternative but to do so.
10. Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether
due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee
that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or
error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users
taken on the basis of these financial statements.
A further description of our responsibilities for the audit of the financial statements is located on the FRC’s website at:
www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report.
11. Extent to which the audit was considered capable of detecting irregularities, including fraud
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined
above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting
irregularities, including fraud is detailed below.
11.1. Identifying and assessing potential risks related to irregularities
In identifying and assessing risks of material misstatement in respect of irregularities, including fraud and non-compliance with laws and regulations, we
considered the following:
• the nature of the industry and sector, control environment and business performance including the design of the Group’s remuneration policies, key
drivers for directors’ remuneration, bonus levels and performance targets;
• results of our enquiries of management, internal audit and the Audit Committee about their own identification and assessment of the risks of
irregularities;
• any matters we identified having obtained and reviewed the Group’s documentation of their policies and procedures relating to:
– identifying, evaluating and complying with laws and regulations and whether they were aware of any instances of non-compliance;
– detecting and responding to the risks of fraud and whether they have knowledge of any actual, suspected or alleged fraud;
– the internal controls established to mitigate risks of fraud or non-compliance with laws and regulations;
• the matters discussed among the audit engagement team including significant component audit teams and relevant internal specialists, including
tax, valuations, pensions, IT, forensic and industry specialists regarding how and where fraud might occur in the financial statements and any
potential indicators of fraud.
As a result of these procedures, we considered the opportunities and incentives that may exist within the organisation for fraud and identified the
greatest potential for fraud in the following areas: landfill accounting, accrued revenue, onerous contract provision and the HMRC landfill tax enquiry. In
common with all audits under ISAs (UK), we are also required to perform specific procedures to respond to the risk of management override.
We also obtained an understanding of the legal and regulatory framework that the Group operates in, focusing on provisions of those laws and
regulations that had a direct effect on the determination of material amounts and disclosures in the financial statements. The key laws and regulations
we considered in this context included the UK Companies Act, Listing Rules, pensions legislation and tax legislation in all relevant jurisdictions where the
Group operates.
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Information
In addition, we considered provisions of other laws and regulations that do not have a direct effect on the financial statements but compliance
with which may be fundamental to the Group’s ability to operate or to avoid a material penalty. These included the landfill tax regulations and the
Environment Act 2021.
11.2. Audit response to risks identified
As a result of performing the above, we identified landfill accounting and onerous contract provision as key audit matters related to the potential risk
of fraud. We also identified a key audit matter related to the potential risk of fraud and non-compliance with laws and regulations (HMRC landfill tax
enquiry). The key audit matters section of our report explains the matters in more detail and describes the specific procedures we performed in response
to those key audit matters.
In addition to the above, our procedures to respond to risks identified included the following:
• reviewing the financial statement disclosures and testing to supporting documentation to assess compliance with provisions of relevant laws and
regulations described as having a direct effect on the financial statements;
• Inquiring of management, the Audit Committee and in-house legal counsel concerning actual and potential litigation and claims;
• performing analytical procedures to identify any unusual or unexpected relationships that may indicate risks of material misstatement due to fraud;
• reading minutes of meetings of those charged with governance, reviewing internal audit reports and reviewing correspondence with HMRC;
• in responding to the risk on accrued revenue balance (within the Municipal business), for a sample of customers we agreed the revenue recognised
to supporting evidence and analysed the month-on-month revenue and compared to the year-end accrued revenue and debtor balances; and
• in addressing the risk of fraud through management override of controls, testing the appropriateness of journal entries and other adjustments;
assessing whether the judgements made in making accounting estimates are indicative of a potential bias; and evaluating the business rationale of
any significant transactions that are unusual or outside the normal course of business.
We also communicated relevant identified laws and regulations and potential fraud risks to all engagement team members including internal
specialists and significant component audit teams and remained alert to any indications of fraud or non-compliance with laws and regulations
throughout the audit.
Report on other legal and regulatory requirements
12. Opinions on other matters prescribed by the Companies Act 2006
In our opinion the part of the directors’ remuneration report to be audited has been properly prepared in accordance with the Companies Act 2006.
In our opinion, based on the work undertaken in the course of the audit:
• the information given in the strategic report and the directors’ report for the financial year for which the financial statements are prepared is
consistent with the financial statements; and
• the strategic report and the directors’ report have been prepared in accordance with applicable legal requirements.
In the light of the knowledge and understanding of the Group and the parent company and their environment obtained in the course of the audit,
we have not identified any material misstatements in the strategic report or the directors’ report.
13. Corporate Governance Statement
The Listing Rules require us to review the directors’ statement in relation to going concern, longer-term viability and that part of the Corporate
Governance Statement relating to the Group’s compliance with the provisions of the UK Corporate Governance Code specified for our review.
Based on the work undertaken as part of our audit, we have concluded that each of the following elements of the Corporate Governance
Statement is materially consistent with the financial statements and our knowledge obtained during the audit:
• the directors’ statement with regards to the appropriateness of adopting the going concern basis of accounting and any material uncertainties
identified set out on page 144;
• the directors’ explanation as to its assessment of the Group’s prospects, the period this assessment covers and why the period is appropriate
set out on page 89;
• the directors’ statement on fair, balanced and understandable set out on page 144;
• the board’s confirmation that it has carried out a robust assessment of the emerging and principal risks set out on pages 76 to 83;
• the section of the annual report that describes the review of effectiveness of risk management and internal control systems set out on
pages 76 to 83; and
• the section describing the work of the Audit Committee set out on page 118 to 125.
Independent Auditor’s Report to the members of Biffa plc
continued
14. Matters on which we are required to report by exception
14.1. Adequacy of explanations received and accounting records
Under the Companies Act 2006 we are required to report to you if, in our opinion:
• we have not received all the information and explanations we require for our audit; or
• adequate accounting records have not been kept by the parent company, or returns adequate for our audit have not been received from branches
not visited by us; or
• the parent company financial statements are not in agreement with the accounting records and returns.
We have nothing to report in respect of these matters.
14.2. Directors’ remuneration
Under the Companies Act 2006 we are also required to report if in our opinion certain disclosures of directors’ remuneration have not been made or the
part of the directors’ remuneration report to be audited is not in agreement with the accounting records and returns.
We have nothing to report in respect of these matters.
15. Other matters which we are required to address
15.1. Auditor tenure
Following the recommendation of the audit committee, we were appointed by the Board on 23 August 2016 to audit the financial statements for
the period ending 24 March 2017 and subsequent financial periods. The period of total uninterrupted engagement including previous renewals and
reappointments of the firm is 6 years, covering the periods ending 24 March 2017 to 25 March 2022.
15.2. Consistency of the audit report with the additional report to the audit committee
Our audit opinion is consistent with the additional report to the Audit Committee we are required to provide in accordance with ISAs (UK).
16. Use of our report
This report is made solely to the company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work
has been undertaken so that we might state to the company’s members those matters we are required to state to them in an auditor’s report and for no
other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company’s
members as a body, for our audit work, for this report, or for the opinions we have formed.
As required by the Financial Conduct Authority (FCA) Disclosure Guidance and Transparency Rule (DTR) 4.1.14R, these financial statements form part of
the European Single Electronic Format (ESEF) prepared Annual Financial Report filed on the National Storage Mechanism of the UK FCA in accordance
with the ESEF Regulatory Technical Standard (‘ESEF RTS’). This auditor’s report provides no assurance over whether the annual financial report has been
prepared using the single electronic format specified in the ESEF RTS.
Peter Gallimore, FCA
Senior statutory auditor
For and on behalf of Deloitte LLP
Statutory Auditor
Birmingham, United Kingdom
5 August 2022
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Continuing operations Notes
52 weeks ended
25 March 2022
£m
52 weeks ended
26 March 2021
£m
Revenue 2 1,443.2 1,042.0
Cost of sales (1,351.5 ) (1,000.3 )
Gross profit 91.7 41.7
Operating costs (75.0 ) (57.4 )
Impairments 10 (25.0 ) (21.9 )
Operating Loss (8.3 ) (37.6 )
Finance income 3 3.2 3.2
Finance charges 3 (22.4 ) (17.6 )
Share of results in joint venture 30 (1.1 ) (0.8 )
Loss before taxation 4 (28.6 ) (52.8 )
Taxation 7 11.0 12.3
Loss for the period (17.6 ) (40.5 )
Loss attributable to shareholders of the Parent Company (17.6 ) (40.5 )
Basic loss per share (pence) 8 (5.8 ) (13.7 )
Diluted loss per share (pence) 8 (5.6 ) (13.4 )
Consolidated Income Statement
Consolidated Statement of Other Comprehensive Income
Notes
52 weeks ended
25 March 2022
£m
52 weeks ended
26 March 2021
£m
Loss for the period (17.6 ) (40.5 )
Other Comprehensive Income/(Loss)
Items that will not be reclassified subsequently to profit or loss:
Actuarial gain/(loss) on defined benefit pension scheme 26 48.7 (21.6 )
Tax relating to items that will not be reclassified subsequently to profit or loss 7 (15.0 ) 4.1
Items that may be reclassified subsequently to profit or loss:
Gain/(Loss) on fair value of cash flow hedges:
Fair value gain/(loss) arising on hedging instruments during the period 17 15.0 (2.6 )
Net gain/(loss) on cash flow hedges in joint ventures 30 3.5 (1.0 )
Tax relating to items that may be reclassified subsequently to profit or loss 7 (2.2 ) –
Other comprehensive income/(loss) for the period, net of income tax 50.0 (21.1 )
Total comprehensive income/(loss) for the period 32.4 (61.6 )
Attributable to shareholders of the Parent Company 32.4 (61.6 )
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As at
25 March 2022
£m
As at
26 March 2021
£m
Non-current assets
Goodwill 10 264.3 224.3
Investments in joint ventures 30 29.4 9.6
Other intangible assets 11 222.9 182.5
Property, plant and equipment 12 617.2 562.2
Long-term receivables 14 2.3 65.8
Loans to joint ventures 17 14.3 6.0
Derivative financial instruments 17 7.7 –
Retirement benefit surplus 26 166.1 112.1
Current assets
Inventories 13 35.2 22.3
Contract assets 15 71.8 50.6
Trade and other receivables 14 207.6 141.3
Financial assets 17 16.3 12.8
Derivative financial instruments 17 4.0 0.3
Cash and cash equivalents 16 40.8 30.8
Current liabilities
Lease liabilities
1
25 (53.8 ) (54.7 )
Trade and other payables
2
18 (340.7 ) (257.8 )
Deferred and contingent consideration 17 (4.2 ) (9.4 )
Contract liabilities 15 (27.1 ) (19.6 )
Derivative financial instruments 17 (0.2 ) (3.0 )
Provisions 19 (20.3 ) (16.1 )
(446.3 ) (360.6 )
Net current liabilities (70.6 ) (102.5 )
Non-current liabilities
Borrowings
1
17 (368.3 ) (245.2 )
Lease liabilities
1
25 (222.5 ) (229.0 )
Derivative financial instruments 17 – (0.9 )
Trade and other payables 18 (6.6 ) (14.6 )
Deferred consideration 17
(3.0 )
Provisions 19 (137.4 ) (101.3 )
Deferred tax liability 20 (32.5 ) (11.1 )
(770.3 ) (602.1 )
Net assets 483.3 457.9
Equity
Called up share capital 22 3.1 3.1
Share premium 22 247.6 247.0
Hedging reserve 22 9.9 (6.4 )
Merger reserve 22 170.3 170.3
Retained earnings 23 52.4 43.9
Total equity attributable to shareholders 483.3 457.9
1 Lease liabilities, which have previously been included within borrowings (both current and non-current) are now disclosed as separate lines.
2 Corporation tax creditor is now included within trade and other payables as its size does not warrant its own line item.
The above changes have been made in order to enhance the users of the accounts’ understanding of the figures. No restatements have been made to the financial position at 26 March
2021. All changes noted here are reallocations between line items.
The Financial Statements were approved by the Board of Directors and authorised for issue on 5 August 2022. They were signed on its behalf by
Richard Pike
Director
Company no: 10336040
Consolidated Statement of Financial Position
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Additional
Information
Called up
share capital
(Note 22)
£m
Share
premium
(Note 22)
£m
Hedging
reserve
(Note 22)
£m
Merger
reserve
(Note 22)
£m
Retained
earnings
(Note 23)
£m
Total
equity
£m
As at 27 March 2020 2.5 235.3 (2.8 ) 74.4 101.6 411.0
Loss for the period – – – – (40.5 ) (40.5 )
Other comprehensive loss – – (3.6 ) – (17.5 ) (21.1 )
Total comprehensive loss – – (3.6 ) – (58.0 ) (61.6 )
Equity raise 0.5 1.3 – 95.9 – 97.7
Issue of share capital 0.1 10.4 – – – 10.5
Shares purchased by employee benefits trust – – – – (4.4 ) (4.4 )
Value of employee service in respect of share
option schemes (excluding NICs) – – – – 3.2 3.2
Deferred tax on share-based payments – – – – 1.5 1.5
As at 26 March 2021 3.1 247.0 (6.4 ) 170.3 43.9 457.9
Loss for the period – – – – (17.6 ) (17.6 )
Other comprehensive income – – 16.3 – 33.7 50.0
Total comprehensive income – – 16.3 – 16.1 32.4
Exercise of share options – 0.6 – – – 0.6
Shares purchased by employee benefits trust – – – – (3.6 ) (3.6 )
Value of employee service in respect of share
option schemes (excluding NICs)
Dividends paid (Note 34) – – – – (6.7 ) (6.7 )
As at 25 March 2022 3.1 247.6 9.9 170.3 52.4 483.3
Consolidated Statement of Changes in Equity
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Notes
52 weeks ended
25 March 2022
£m
52 weeks ended
26 March 2021
£m
Cash flows from operating activities
Operating Loss (8.3 ) (37.6 )
Share-based payments 21 3.7 3.8
Amortisation of intangibles 11 30.7 28.6
Depreciation of property, plant and equipment 12 94.9 87.2
Impairment of assets 10 25.0 28.7
Gain on disposal of 25% right to participate in the Protos JV – (2.8 )
(Profit)/Loss on disposal of fixed assets 4 (6.2 ) 0.3
EVP related items 20.8 –
Pension deficit payments (4.2 ) (4.0 )
Increase in inventories (12.2 ) (2.4 )
(Increase)/Decrease in receivables (72.7 ) 36.7
Increase/(Decrease) in payables 62.8 (33.8 )
Decrease/(Increase) in financial assets (3.4 ) (5.5 )
Decrease/(Increase) in provisions 13.7 24.3
Net cash from operating activities 144.6 123.5
Income tax paid (0.3 ) (0.6 )
Net cash flows from operating activities 144.3 122.9
Net cash flows from investing activities
Purchases of property, plant and equipment (67.2 ) (45.0 )
Purchases of intangible assets (2.1 ) (3.9 )
Funds on long-term deposit – (0.1 )
Business combinations 9 (135.8 ) (119.1 )
Cash acquired from business combinations 9 14.2 16.0
Deferred consideration (1.2 ) –
Investment in joint ventures (17.5 ) (8.4 )
Sale of rights to shares in joint venture – 2.8
Proceeds from the sale of property, plant and equipment 6.9 0.8
Loan to joint venture (7.5 ) (3.6 )
Interest received – 0.1
Net cash flows from investing activities (210.2 ) (160.4 )
Net cash flows from financing activities
Interest paid (19.3 ) (14.6 )
Employee share scheme purchase (3.6 ) (4.5 )
Exercise of share options 0.6 4.9
New loans raised 24 345.0 70.0
Repayment of borrowings 24 (191.1 ) (128.6 )
Extension of borrowing fees – (0.6 )
Cash flow on settlement of derivatives 4.1 (0.4 )
Equity raise – 97.7
Lease liabilities principal payments 24 (53.1 ) (43.4 )
Dividends paid (6.7 ) –
Net cash flows from financing activities 75.9 (19.5 )
Net increase in cash and cash equivalents 10.0 (57.0 )
Cash and cash equivalents at the beginning of the period 30.8 87.8
Cash and cash equivalents at the end of the period 16 40.8 30.8
In order to make the numbers clearer for the users of the financial accounts management have removed the adjusting items classification from the face
of the cash flow statement, and included the adjusting cash items within the applicable lines.
Consolidated Statement of Cash Flows
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1. Accounting Policies
General Information
Group’s registered office is Coronation Road, Cressex, High Wycombe, Buckinghamshire, HP12 3TZ . The principal activity of the Group and its subsidiaries
These financial statements are presented in Pound Sterling (‘GBP’) and are rounded to the nearest £0.1m.
Basis of accounting
The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (‘IFRS’) issued by the
International Accounting Standards Board (‘IASB’). The comparative financial information has also been prepared on this basis.
The Consolidated Financial Statements have been prepared on a historical cost basis, except for the recording of pension assets and liabilities, share-
based payments and the revaluation of certain derivative financial instruments that are measured at revalued amounts or fair values at the end of each
reporting period, as explained in the accounting policies below. Historical cost is generally based on the fair value of the consideration given in exchange
for goods and services. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market
participants at the measurement date.
The Financial Statements for 2022 have been prepared for the 52-week period ended 25 March 2022. The prior year was a 52-week period, to 26 March
2021. The upcoming year will be a 53-week period, to 31 March 2023.
The preparation of Financial Statements in conformity with IFRS requires the use of certain critical accounting estimates. It also requires management to
exercise its judgement in the process of applying the Group’s accounting policies. The areas involving a higher degree of judgement or complexity, or
areas where assumptions and estimates are significant to the Consolidated Financial Statements are disclosed on pages 173 to 176.
Going concern
During FY22, Biffa’s financial performance largely recovered from the effects of the Covid-19 pandemic and the associated lockdown measures. Revenue
and Adjusted EBITDA saw significant growth to surpass FY20 levels despite the significant headwinds faced during the year. These included high
inflationary cost pressures, driver shortages and supply chain disruption. This resilient performance gives the Directors confidence in the forecast financial
performance for the next 12 months. Latest forecasts suggest strong Adjusted EBITDA growth in FY23 as CSG performance continues to recover and
further synergies are realised on the Viridor acquisition.
These forecasts, when overlaid with sensitivity analysis taking into account different scenarios for fluctuations in trading performance, show that the
Group is expected to be able to comfortably operate within the current levels of the facility over the next 12 months.
The Group had unutilised committed bank facilities available of £341.0m as at the FY22 year end and cash and cash equivalents of £40.8m. This gives a
closing leverage ratio (Net Debt / Adjusted EBITDA) of 2.9x on a covenant basis, substantially below the covenant limit of 4.5x. The large headroom on
both liquidity and leverage puts the Group in a strong position to manage fluctuations in financial performance over the next 12 months.
The Group completed the acquisition of Viridor’s Collections business and certain recycling assets on 31 August 2021 for a total consideration of
£130.8m, with £17.0m of lease liabilities assumed.
In order to fund the Viridor acquisition, the Group arranged a private placement facility with two investors for £150.0m covering a term of 7 and 10 years
with an average borrowing cost of 2.7%.
An additional private placement facility of £195.0m was arranged with three investors (two of which also invested in the £150.0m private placement) in
February 2022, enabling the Group to reduce the drawdown on the RCF to low levels. This has a term of 8, 10 and 12 years with an average borrowing
cost of 2.5%.
The cost of the commitments since the Capital Markets Day have been captured in the going concern assessments when assessing the funding
requirements.
The going concern assumption has been assessed by considering a number of the principal risks in the Strategic Report. Multiple low cases have been
tested, one of which involves the combination of events with a negative impact such as a recession and a large one-off cash payment in FY23 similar in
amount to the sum of the protective assessments issued by HMRC on the ongoing landfill tax enquiry. The Group could continue to operate for at least
the next 12 months in each of these low cases.
After careful consideration, the Board recognise the medium and long term sustainability risks arising from climate change, including cessation of
Renewable obligation certificates held by the landfill gas business in 2027. Short term impacts in relation to climate change are not considered to have a
significant impact on the Group’s business model within the Going Concern period.
On 7 June 2022, the Group announced it had received an unsolicited offer from Energy Capital Partners (‘ECP’) to purchase 100% of the share capital
in Biffa plc. The Directors have considered this offer in the context of going concern and have decided that this does not affect the conclusion as to
whether the going concern basis of accounting should be adopted.
Based on the above, the Directors have concluded the Group is well placed to manage its financing and other business risks satisfactorily and have a
reasonable expectation that the Group will have adequate resources to continue in operation for at least 12 months from the signing date of these
Consolidated Financial Statements. They therefore consider it appropriate to adopt the going concern basis of accounting in preparing the Consolidated
Financial Statements.
Notes to the Consolidated Financial Statements
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Additional
Information
Notes to the Consolidated Financial Statements continued
1. Accounting Policies continued
Basis of consolidation
The consolidated financial statements incorporate the Financial Statements of the Company and entities controlled by the Company (its subsidiaries)
made up to 25 March 2022. Control is achieved when the Company:
• Has the power over the investee;
• Is exposed, or has rights, to variable returns from its involvement with the investee; and
• Has the ability to use its power to affect its returns.
The Company reassesses whether or not it controls an investee if facts and circumstances indicate that there are changes to one or more of the
threeelements of control listed above. When the Company has less than a majority of the voting rights of an investee, it considers that it has power
overthe investee when the voting rights are sufficient to give it the practical ability to direct the relevant activities of the investee unilaterally.
TheCompany considers all relevant facts and circumstances in assessing whether or not the Company’s voting rights in an investee are sufficient
togiveit power, including:
• The size of the Company’s holding of voting rights relative to the size and dispersion of holdings of the other vote holders;
• Potential voting rights held by the Company, other vote holders or other parties;
• Rights arising from other contractual arrangements; and
• Any additional facts and circumstances that indicate that the Company has, or does not have, the current ability to direct the relevant activities at the
time that decisions need to be made, including voting patterns at previous shareholders’ meetings.
Consolidation of a subsidiary begins when the Company obtains control over the subsidiary and ceases when the Company loses control of the
subsidiary. Specifically, the results of subsidiaries acquired or disposed of during the year are included in the Income Statement from the date the
Company gains control until the date when the Company ceases to control the subsidiary.
Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting policies used into line with the Group’s
accounting policies.
All intra-Group transactions are eliminated as part of the consolidation process.
Changes in accounting policies and disclosures
New and amended IFRS Standards that are effective for the current year
At the date of authorisation of these Financial Statements, the below Standards and amendments are effective for reporting periods beginning after 1
January 2021, but have not impacted on the Group’s reporting:
• Amendments to IFRS 9, IAS 39 and IFRS 7: Interest Rate Benchmark Reform
• Amendments to References to the Conceptual Framework in IFRS Standards
• IFRS 16 Leases: Amendment to provide lessees with an exemption from assessing whether a Covid-19-related rent concession is a lease modification
The adoption of the Standards listed above did not have a material impact on the financial statements of the Group.
New standards and interpretations not yet effective
At the date of authorisation of these financial statements, the Group has not applied the following new and revised IFRS Standards that have been issued
but are not yet effective and had not yet been adopted:
• IFRS 17 (including the June 2020 amendments to IFRS 17: Insurance Contracts)
• Amendments to IFRS 10 and IAS 28: Sale of Contribution of Assets between an Investor and its Associate or Joint Venture
• Amendments to IAS 1: Classification of Liabilities as Current or Non-current
• Amendments to IFRS 3: Reference to the Conceptual Framework
• Amendments to IAS 16: Property, Plant and Equipment - Proceeds before intended use
• Amendments to IAS 37: Onerous Contracts – Cost of Fulfilling a Contract
• Annual Improvements to IFRS Standard 2018-2020 Cycle: Amendments to IFRS 1 First-time Adoption of International Financial Reporting Standards,
IFRS 9 Financial Instruments, IFRS 16 Leases, and IAS 41 Agriculture
• Amendments to IAS 1 and IFRS Practice Statement 2: Disclosure of Accounting Policies
• Amendments to IAS 8: Definition of Accounting Estimates
• Amendments to IAS 12: Deferred Tax related to Assets and Liabilities arising from a Single Transaction
The Directors do not expect that the adoption of the Standards listed above will have a material impact on the financial statements of the Group in any
future period.
Business combinations
Acquisitions of businesses are accounted for using the acquisition method. The consideration transferred in a business combination is measured at
fair value, which is calculated as the sum of the acquisition date fair values of the assets transferred to the Group, liabilities incurred by the Group to
the former owners of the acquiree and the equity interests issued by the Group in exchange for control of the acquiree. Acquisition-related costs are
recognised in profit or loss as incurred.
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At the acquisition date, the identifiable assets acquired and the liabilities assumed are recognised at their fair value, except that:
• Deferred tax assets or liabilities, and assets or liabilities related to employee benefit arrangements, are recognised and measured in accordance with
IAS 12 Income Taxes and IAS 19 Employee Benefits respectively;
• Liabilities or equity measurements related to share-based payment arrangements of the acquired, and share-based payment arrangements of the
Group entered into to replace share-based payment arrangements of the acquired, are measured in accordance with IFRS 2 Share-based Payments
at the acquisition date;
• Assets (or disposal groups) that are classified as held for sale in accordance with IFRS 5 Non-current Assets Held for Sale and Discontinued Operations
are measured in accordance with that Standard.
Goodwill is measured as the excess of the sum of the consideration transferred, the amount of any non-controlling interests in the acquiree, and the
fair value of the acquirer’s previously held equity interest in the acquiree (if any) over the net of the acquisition date amounts of the identifiable assets
acquired and the liabilities assumed. If, after reassessment, the net of the acquisition date amounts of the identifiable assets acquired and the liabilities
assumed exceeds the sum of the consideration transferred, the excess amount of any non-controlling interests in the acquiree and the fair value of the
acquirer’s previously held interest in the acquiree (if any), is recognised immediately in profit or loss as a bargain purchase gain.
When the consideration transferred by the Group in a business combination includes assets or liabilities resulting from a contingent consideration
arrangement, the contingent consideration is measured at its acquisition date fair value and included as part of the consideration transferred in a
business combination.
Changes in the fair value of the contingent consideration that qualify as measurement period adjustments are adjusted retrospectively, with
corresponding adjustments against goodwill. Measurement period adjustments are adjustments that arise from additional information obtained during
the measurement period (which cannot exceed one year from the acquisition date) about facts and circumstances that existed at the acquisition date.
If the initial accounting for a business combination is incomplete by the end of the reporting period in which the combination occurs, the Group reports
provisional amounts for the items for which the accounting is incomplete.
Those provisional amounts are adjusted during the measurement period (see above), or additional assets or liabilities are recognised, to reflect new
information obtained about facts and circumstances that existed at the acquisition date that, if known, would have affected the amounts recognised
atthat date.
Goodwill
Goodwill is initially recognised and measured as set out above.
Goodwill is tested annually for impairment or if there is an indication of impairment. Gains and losses on the disposal of a cash-generating unit include
the carrying amount of goodwill relating to that cash-generating unit.
For the purposes of impairment testing, goodwill is allocated to each of the Group’s cash-generating units (or groups of cash-generating units) that is expected
to benefit from the synergies of the business combination. Cash-generating units to which goodwill has been allocated are tested for impairment annually,
or more frequently when there is an indication that the unit may be impaired. If the recoverable amount of the cash-generating unit is less than the carrying
amount of the unit, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit and then to the other assets of the
unit pro-rata on the basis of the carrying amount of each asset in the unit. An impairment loss recognised for goodwill is not reversed in a subsequent period.
The key assumptions when calculating the value in use are forecast revenue and costs. Management’s calculation of value in use has been developed from
forecast five-year cash flows which are prepared on the basis of past performance, expectation of future performance including climate change related matters
such as the potential cessation of ROC schemes in 2027, implications from possible carbon tax regulation and deposit return scheme coming into effect. The
value is use is also determined after considering market information and a consistent growth rate, thereafter, based on the underlying assets of each division
On disposal of a cash-generating unit, the attributable amount of goodwill is included in the determination of the profit or loss on disposal.
Investments in joint ventures
A joint venture is a joint arrangement whereby the parties that have joint control of the arrangement have rights to the net assets of the joint
arrangement. Joint control is the contractually agreed sharing of control of an arrangement, which exists only when decisions about the relevant
activities require unanimous consent of the parties sharing control.
An investment in an associate or a joint venture is accounted for using the equity method from the date on which the investee becomes an associate
or a joint venture. On acquisition of the investment in an associate or a joint venture, any excess of the cost of the investment over the Group’s share
of the net fair value of the identifiable assets and liabilities of the investee is recognised as goodwill, which is included within the carrying amount
of the investment. Any excess of the Group’s share of the net fair value of the identifiable assets and liabilities over the cost of the investment, after
reassessment, is recognised immediately in profit or loss in the period in which the investment is acquired.
Under the equity method, an investment in an associate or a joint venture is recognised initially in the Consolidated Statement of Financial Position at
cost and adjusted thereafter to recognise the Group’s share of the profit or loss and other comprehensive income of the associate or joint venture. When
the Group’s share of losses of an associate or a joint venture exceeds the Group’s interest in that associate or joint venture (which includes any long-term
interests that, in substance, form part of the Group’s net investment in the associate or joint venture), the Group discontinues recognising its share of
further losses. Additional losses are recognised only to the extent that the Group has incurred legal or constructive obligations or made payments on
behalf of the associate or joint venture.
The requirements of IAS 36 are applied to determine whether it is necessary to recognise any impairment loss with respect to the Group’s investment in
an associate or a joint venture. When necessary, the entire carrying amount of the investment (including goodwill) is tested for impairment in accordance
with IAS 36 as a single asset by comparing its recoverable amount (higher of value in use and fair value less costs of disposal) with its carrying amount. Any
impairment loss recognised is not allocated to any asset, including goodwill that forms part of the carrying amount of the investment. Any reversal of that
impairment loss is recognised in accordance with IAS 36 to the extent that the recoverable amount of the investment subsequently increases.
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Notes to the Consolidated Financial Statements continued
1. Accounting Policies continued
When a Group entity transacts with a joint venture of the Group, profits and losses resulting from the transactions with the joint venture are recognised
in the Group’s consolidated financial statements only to the extent of interests in the joint venture that are not related to the Group.
Segmental reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker. The chief operating
decision maker, who is responsible for allocating resources and assessing performance of the operating segments, has been identified as the Group
Executive Team.
The Group’s operating segments are split into four divisions:
• Collections which encompasses Municipal and Industrial & Commercial (‘I&C’)
• Resources & Energy (‘R&E’) which consists of Inerts, Organics, Recycling and Landfill Gas sub-divisions
• Specialist Services which includes Company Shop Group (‘CSG’), Hazardous Waste, Integrated Resource Management (‘IRM’), and Biffpack
• Group Business Function (‘GBF’)
During the current financial period the Group moved from recognising three divisions (Collections, Resources & Energy and Group Business Function)
to recognising four divisions (Collections, Resources & Energy, Specialist Services and Group Business Function). Operations including Company Shop
Group, Hazardous Waste, IRM and Biffpack which were formerly included in the Collections division are now reported in the Specialist Services Division.
This represents a distinction from the Municipal and Industrial & Commercial operations retained within the Collections division. The prior period
comparatives by division have been updated to reflect these allocations.
Revenue recognition
Revenue represents the fair value of goods and services delivered to customers in the normal course of business, net of trade discounts and VAT. The five-
step model is used in determining when services are deemed to have been delivered when, and to the extent that, the Company has met its obligations
under its service contracts. Payments received in advance of performance are deferred and recognised as revenue when the related service is delivered.
Collections division
Waste collection revenue
The Collections division collects waste from customer sites. Revenue is recognised at a point in time when the waste is delivered to transfer stations or to
a third party. The transaction price is based on contractually pre-agreed prices for collecting and processing the waste. Due to the short time between
start and completion of the performance obligations (usually on the same day), the revenue recognition and the allocation of the transaction price over
performance obligations is usually straightforward and dependent on the daily collection and processing of waste.
The Collections division also provides collections services to households on behalf of local authorities under Municipal contracts, for which revenue is
recognised ‘over time’. The nature of the contracts and performance obligations includes management fees to operate local authority recycling centres, waste
collections and gate fees. The annual revenue for the service is agreed at the outset of the contract and invoiced in equal amounts, monthly in arrears.
The Group recognises the revenue based on the working days within the accounting period, which is considered an appropriate approximation to
when the process occurs. This is adjusted for any discounts given and penalties for non-delivery of services. However gate fee revenue is recognised as
customer waste is deposited and based on tonnage received.
Resources & Energy (‘R&E’) division
Landfill revenue
The Company generates revenue from landfill activities by accepting customer waste onto site for disposal into void space. This revenue stream
consists of gate fee revenue derived from the Company’s operational assets and is based on measured tonnages received from customers. Performance
obligations are satisfied as the customer waste is deposited onto the landfill site and revenue is recognised at ‘a point in time’.
Revenue from sale of recyclate materials
The Group collects various waste materials, some of which are general waste and some of which are recyclable materials. The recyclable materials are
generally commingled and as such then have to be separated into individual recyclate streams ready for resale. Recyclate revenues are measured at
the agreed transaction price per tonne of recyclate under the contract with the customer. Revenue recognition occurs when control over the recyclate
assets has been transferred and therefore the performance obligation is satisfied at the point in time of collection by the customer.
Energy revenue
The Group receives revenue from the sale of electricity from generating assets. These assets include anaerobic digestion and gas from landfill sites.
Revenue from the sale of electricity is measured based upon metered output delivered at rates specified under agreed contract terms with Biffa’s broker,
EDF, under Power Purchase Agreements (‘PPA’) or prevailing market rates. Energy generation revenues are recognised at ‘a point in time’, being the point
at which the power is supplied through the sale to the customer, via EDF, based on the quantity of units supplied.
Specialist Services division
Revenue from redistribution of surplus food and household products
The Company Shop Group is a redistributor of surplus food and household product in the UK. The business redistributes surplus stock that it purchases from
the Fast Moving Consumer Goods (‘FMCG’) supply chain to members who work in key sectors including FMCG businesses, emergency services and social care.
Sales are recognised at the point which the risks and rewards attached to the products (including product obsolescence) have been transferred to the
customer. This occurs when the customers take possession of the stock that has been purchased.
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Trade discounts
Trade discounts are agreed as part of the contractual terms of certain customer contracts. The discounts are usually in the form of a price reduction
based on volume collected on a monthly basis. The calculations and terms of the discounts are set out in the respective agreed customer contracts.
They are calculated in accordance with the contract, accrued automatically by the accounting system on a monthly basis, and reported as a reduction
in revenue. At the end of the calendar month, the amount of the discount for that period is disclosed to and agreed with the relevant customers. This
discount is then recognised either by raising a credit note or by the customer raising a separate invoice. These mechanisms are agreed at the outset
of the contract. As the monetary trade discount per unit is known and the volume is known, there is no element of estimation within the calculation.
Discounts are agreed with the customer to individual contracts on a monthly basis and are immaterial as at year end.
The Material Recycling Facilities (‘MRFs’) have contracts with local authorities which contain a ‘risk-sharing mechanism’. Local authorities are charged
a gate fee per tonne of waste delivered, at the point the waste enters the site. In addition, once the commingled waste recyclate streams have been
sorted and sold, the local authorities are then entitled to a rebate based upon a pre-agreed percentage of the recyclate value achieved. The calculations
and terms of the rebates are set out in the respective contracts with local authorities. The rebates are accrued by netting this amount off revenue every
reporting period. The calculation is shared with the customer and a credit note raised (or the customer raises an invoice). Rebates are agreed with the
customer to individual contracts on a monthly basis and are immaterial at year end.
When the accruals are calculated the relevant price or index is used; or in the event that the material has not been sold or the latest index price is
unavailable at the reporting date, latest available pricing is used. The terms and the mechanism of the trade discounts and commodity rebates are
agreed and contained within the customer contracts, thereby providing certainty of the amounts to both parties of the contract. Furthermore, the
discounts and rebates are confirmed prior to the invoices being raised. As the variability is resolved promptly on a monthly basis, there is no judgement
or estimation uncertainty in determining discounts and commodity rebates and accordingly no revenue is constrained in the period.
Leases
The Group assesses whether a contract is or contains a lease at inception of the contract. The Group recognises a right-of-use asset and a corresponding
lease liability with respect to all lease arrangements in which it is the lessee, except for short-term leases (defined as leases with a lease term of 12
months or less) and leases of low-value assets (defined by management to not exceed £5,000). For these leases, the Group recognises the lease
payments as an operating expense on a straight-line basis over the term of the lease unless another systematic basis is more representative of the time
pattern in which economic benefits from the leased assets are consumed.
The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted by using the
rate implicit in the lease. If this rate cannot be readily determined, the Group uses its incremental borrowing rate.
The Group’s incremental borrowing rate is defined as the rate of interest that the lessee would have to pay to borrow over a similar term and with a
similar security the funds necessary to obtain an asset of a similar value in a similar economic environment.
Lease payments included in the measurement of the liability comprise:
• Fixed lease payments, less any lease incentives;
• Variable lease payments that depend on an index or rate, initially measured using the index or rate at the commencement date;
• The amount expected to be payable by the lessee under residual value guarantees;
• The exercise price of purchase options, if the lessee is reasonably certain to exercise the options; and
• Payments of penalties for terminating the lease, if the lease term reflects the exercise of an option to terminate the lease.
The lease liability is presented as a separate line item in the consolidated statement of financial position. In the prior year it was included within
borrowings, however management have decided for additional clarity for the users of the financial statements to split out the liability separately.
The lease liability is subsequently measured by increasing the carrying amount to reflect the interest on the lease liability (using the effective interest
method) and by reducing the carrying amount to reflect the lease payments made.
The Group remeasures the lease liability (and makes a corresponding adjustment to the related right-of-use asset) whenever:
• The lease term has changed or there is a change in the assessment of exercise of a purchase option, in which case the lease liability is remeasured by
discounting the revised lease payments using a revised discount rate;
• The lease payments change due to changes in an index or rate or a change in expected payment under a guaranteed residual value, in which cases
the lease liability is remeasured by discounting the revised lease payments using the initial discount rate (unless the lease payment change is due to
a change in floating rate, in which case a revised discount rate is used); or
• A lease contract is modified and the lease modification is not accounted for as a separate lease, in which case the lease liability is remeasured by
discounting the revised lease payments using a revised discount rate at the effective date of modification.
Right-of-use assets
The right-of-use assets comprise the initial measurement of the corresponding lease liability, lease payment at or before the commencement day and
any initial direct costs. They are subsequently measured at cost less accumulated depreciation and impairment losses.
Whenever the Group incurs an obligation for costs to dismantle and remove a leased asset, restore the site on which it is located or restore the
underlying asset to the condition required by the terms and conditions of the lease, a provision is recognised and measured under IAS 37. The costs are
included in the related right-of-use asset.
Right-of-use assets are depreciated over the shorter period of lease term and useful life of the underlying asset. If a lease transfers ownership of the
underlying asset or the cost of the right-of-use asset reflects that the Group expects to exercise a purchase option, the related right-of-use asset is
depreciated over the useful life of the underlying asset. The depreciation starts at the commencement date of the lease.
The right-of-use assets are disclosed in Note 12 to the Financial Statements.
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Notes to the Consolidated Financial Statements continued
1. Accounting Policies continued
The Group applies IAS 36 to determine whether a right-of-use asset is impaired and accounts for any identified impairment loss as described in the
‘Property, plant and equipment’ policy.
Foreign currencies
In preparing the financial information of each individual Group entity, transactions in currencies other than the entity’s functional currency (foreign
currencies) are recognised at the rates of exchange prevailing at the dates of the transactions. At the end of each reporting period, monetary items
denominated in foreign currencies are retranslated at the rates prevailing at that date. Non-monetary items carried at fair value that are denominated in
foreign currencies are re-translated at the rates prevailing at the date when the fair value was determined.
Non-monetary items that are measured in terms of historical cost in a foreign currency are not retranslated. Exchange differences on monetary items are
recognised in profit or loss in the period in which they arise except for:
• Exchange differences on foreign currency borrowings relating to assets under construction for future productive use, which are included in the cost
of those assets when they are recognised as an adjustment to interest costs on those foreign currency borrowings;
• Exchange differences on transactions entered into to hedge certain foreign currency risks (see below under financial instruments hedge accounting); and
• Exchange differences on monetary items receivable from or payable to a foreign operation for which settlement is neither planned nor likely to occur
(therefore forming part of the net investment in the foreign operation), which are recognised initially in other comprehensive income and reclassified
from equity to profit or loss on repayment of the monetary items.
For the purposes of presenting these Consolidated Financial Statements, the Group’s foreign currency denominated assets and liabilities are translated into
Sterling using the exchange rates prevailing at the end of each reporting period. Income and expense items are translated at the average exchange rates
for the period, unless exchange rates fluctuate significantly during that period, in which case the exchange rates at the dates of the transactions are used.
Exchange differences arising, if any, are recognised in other comprehensive income and accumulated in equity.
Borrowing costs
Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take a
substantial period of time to get ready for their intended use or sale, are added to the cost of those assets, until such time as the assets are substantially
ready for their intended use or sale.
All other borrowing costs are recognised in profit or loss in the period in which they are incurred.
Government grants
Government grants are not recognised until there is reasonable assurance that the Group will comply with the conditions attaching to them and that
the grants will be received.
Government grants are recognised in profit or loss on a systematic basis over the periods in which the Group recognises as expenses the related costs for
which the grants are intended to compensate. Specifically, government grants whose primary condition is that the Group should purchase, construct or
otherwise acquire non-current assets are recognised as deferred revenue in the consolidated statement of financial position and transferred to profit or
loss on a systematic and rational basis over the useful lives of the related assets.
During the prior period, the Group benefited from receipts from the UK Government under the Coronavirus Job Retention Scheme (‘CJRS’) of £12.0m. In
accordance with IAS 20, amounts received were presented as a deduction to the employment costs upon which CJRS claims had been based.
Employee benefits
Payments to defined contribution retirement benefit plans are recognised as an expense when employees have rendered service entitling them to the
contributions.
For defined benefit retirement plans, the cost of providing benefits is determined using the projected unit credit method, with actuarial valuations being
carried out at the end of each annual reporting period. Remeasurement, comprising actuarial gains and losses and the return on plan assets (excluding
interest), is reflected immediately in the statement of financial position with a charge or credit recognised in other comprehensive income in the period
in which they occur.
Remeasurement recognised in other comprehensive income is reflected immediately in retained earnings and will not be reclassified to profit or
loss. Past service cost is recognised in profit or loss in the period of a plan amendment. Net interest is calculated by applying the discount rate at the
beginning of the period to the net defined benefit liability or asset. Defined benefit costs are categorised as follows:
• Service cost (including current service cost, past service cost as well as gains and losses on curtailments and settlements)
• Net interest expense or income
• Remeasurement
The Group presents service costs in operating costs and net interest expense or income is included in finance income. Curtailment gains and losses are
accounted for as past service costs.
The retirement benefit obligation recognised in the consolidated statement of financial position represents the actual deficit or surplus in the Group’s
defined benefit plans. Any surplus resulting from this calculation is limited to the present value of any economic benefits available in the form of refunds
from the plans or reductions in future contributions to the plans.
The Group makes contributions under Admitted Body status to a number of Local Government Pension Schemes (‘LGPS’) for the period to the end of
the relevant customer contracts. The Group will only participate in LGPS for a finite period up to the end of the relevant customer contracts.
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The Group determines whether an LGPS scheme is accounted for under a defined benefit or defined contribution scheme based on whether the deficit/
surplus can be passed through to the next contractor or Local Authority at the end of the contract. If at the end of the contract, the Group is not liable to
settle any liability or equally entitled to any benefit, the scheme is recognised as defined contribution and contributions are recognised as an expense.
For contracts that do not allow for pass through of pension costs, the Group recognises the defined benefit obligation less the fair value of scheme
assets, and an adjustment to only recognise the amount of defined benefit for which it is responsible under the contract. Movements in this adjustment
are recognised in the same way as movements in plan assets.
A liability for a termination benefit is recognised at the earlier of when the entity can no longer withdraw the offer of the termination benefit and when
the entity recognises any related restructuring costs.
A liability is recognised for benefits accruing to employees in respect of wages and salaries, annual leave and sick leave in the period the related service is
rendered at the undiscounted amount of the benefits expected to be paid in exchange for that service.
Liabilities recognised in respect of short-term employee benefits are measured at the undiscounted amount of the benefits expected to be paid in
exchange for the related service.
The accounting policy for the Biffa Group is to recognise the net surplus/deficit for defined benefit plans upon acquisition through Other
Comprehensive Income, as opposed to an adjustment to goodwill pursuant to IFRS 3 Business Combinations and IAS 19 Employee Benefits.
Share-based payment plans
The Group’s management awards employee share options, from time to time, on a discretionary basis which are subject to vesting conditions. The
economic cost of awarding the share options to its employees is recognised as an employee benefit expense in the income statement equivalent to
the fair value of the benefit awarded. The fair value is determined by reference to the stochastic pricing model. The charge is recognised over the vesting
period of the award.
Cash flow
Cash and cash equivalents as defined for the Statement of Cash Flows comprise cash in hand, cash held at bank with immediate access, other short-term
investments and bank deposits with maturities of three months or less from the date of inception, and bank overdrafts.
Taxation
Income tax represents the sum of the tax currently payable and deferred tax. This facilitates comparison with prior periods to assess trends in financial
performance more readily. It is determined by management that each of these items relates to events or circumstances that are non-recurring in nature.
The tax currently payable is based on taxable profit for the year. Taxable profit differs from ‘profit before tax’ as reported in the consolidated income
statement because of items of income or expense that are taxable or deductible in other years and items that are never taxable or deductible. The
Group’s current tax is calculated using rates that have been enacted or substantively enacted by the end of the reporting period.
Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of assets and liabilities in the financial
statements and the corresponding tax bases used in the computation of the taxable profit and is accounting for using the liability method. Deferred
tax liabilities are generally recognised for all taxable temporary differences. Deferred tax assets are generally recognised for all deductible temporary
differences to the extent that it is probable that taxable profits will be available against which those deductible temporary differences can be utilised.
Such deferred tax assets and liabilities are not recognised if the temporary difference arises from the initial recognition (other than in a business
combination) of assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit. In addition, deferred tax liabilities are
not recognised if the temporary difference arises from the initial recognition of goodwill.
The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent that it is no longer probable that
sufficient taxable profits generated in subsequent reporting periods will be available to allow all or part of the asset to be recovered.
The group has considered impacts of climate change in assessing the probability of sufficient taxable profits (loss of revenue from cessation of
Renewable Obligation Certificates (‘ROCs’) in 2027, potential legislation of Deposit Return Scheme (‘DRS’) in England and operating costs due to
increased carbon taxes in subsequent reporting periods for the recoverability of the tax asset. The overall impact from the cessation of ROCs has been
considered in the future forecasts, however given the low financial impact of the DRS legislation and increased carbon taxes, the Group does not
consider it to have a material impact on the recoverability of the deferred tax asset.
Deferred tax liabilities and assets are measured at the tax rates that are expected to apply in the period in which the liability is settled or the asset realised,
based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period.
The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the manner in which the Group expects, at
the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities.
Current and deferred tax are recognised in profit or loss, except when they relate to items that are recognised in other comprehensive income or directly
in equity, in which case the current and deferred tax are also recognised in other comprehensive income or directly in equity respectively. Where current
or deferred tax arises from the initial accounting of a business combination, the tax effect is included in accounting for the business combination.
Property, plant and equipment
Landfill sites are recorded at cost less accumulated depreciation and accumulated impairment losses. The cost of landfill sites includes the cost of
acquiring, developing and engineering sites. There are no directly attributable borrowing costs. Property, plant and equipment is stated at cost less
accumulated depreciation and accumulated impairment losses.
Depreciation is recognised so as to write off the cost of assets less their residual value over their useful economic lives. The estimated useful lives, residual values
and depreciation method are reviewed at the end of each reporting period, with the effect of any changes in estimate accounted for on a prospective basis.
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Notes to the Consolidated Financial Statements continued
1. Accounting Policies continued
In the Financial Statements depreciation was recognised so as to write off the assets on the below basis:
• Buildings – length of lease straight-line method
• Plant, vehicles and equipment – 4 to 15 years straight-line method
• Landfill sites – 2 to 51 years void consumed
Land and Assets Under Construction (‘AUC’) are not depreciated. AUCs are depreciated at the point in which the asset is deemed to be complete. It is
then depreciated in line with the above classifications.
Where the obligation to restore a landfill site is an integral part of its future economic benefits, a non-current asset within property, plant and equipment
is recognised. Changes to the obligation are recorded as adjustments to the carrying value of the asset. The asset recognised is depreciated based on
energy production and void used.
Right-of-use assets are depreciated over their expected useful lives on the same basis as owned assets. However, when there is no reasonable certainty
that ownership will be obtained by the end of the lease term, assets are depreciated over the shorter of the lease term and their useful lives.
An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected to arise from the continued
use of the asset. Any gain or loss arising on the disposal or retirement of an item of property, plant and equipment is determined as the difference
between the sales proceeds and the carrying amount of the asset and is recognised in profit or loss.
Intangible assets
Intangible assets with finite useful lives that are acquired separately are carried at cost less accumulated amortisation and accumulated impairment
losses. Intangible assets acquired in business combinations and recognised separately from goodwill are recognised initially at their fair value at the
acquisition date (which is regarded as their cost). Amortisation is recognised on a straight-line basis over their estimated useful lives. The estimated useful
life and amortisation method are reviewed at the end of each reporting period, with the effect of any changes in estimate being accounted for on a
prospective basis. Intangible assets with indefinite useful lives that are acquired separately are carried at cost less accumulated impairment losses.
The following useful lives have been applied to the intangible assets during the period:
• Brand – indefinite life
• Customer contracts – 3 to 20 years
• IT development – 3 to 5 years
• Service concession arrangements – over the life of the contract
• Landfill gas rights – length of projected profitable gas extraction based on the life of the site’s associated Renewable Obligation Certificates (‘ROCs’)
An internally generated intangible asset arising from development (or from the development phase of an internal project) is recognised if, and only if, all
of the following have been demonstrated:
• The technical feasibility of completing the intangible asset so that it will be available for use of sale;
• The intention to complete the intangible asset and use or sell it;
• The ability to use or sell the intangible asset;
• How the intangible asset will generate probable future economic benefits;
• The availability of adequate technical, financial and other resources to complete the development and to use or sell the intangible asset; and
• The ability to measure reliably the expenditure attributable to the intangible asset during its development.
The amount initially recognised for internally generated intangible assets is the sum of the expenditure incurred from the date when the intangible asset
first meets the criteria listed above. When no internally generated intangible asset can be recognised, development expenditure is recognised in profit or
loss in the period in which it is incurred. Expenditure on research activities is recognised as an expense in the period in which it is incurred.
Subsequent to initial recognition, internally generated intangible assets are reported at cost less accumulated amortisation and accumulated
impairment losses on the same basis as intangible assets that are acquired separately.
An intangible asset is derecognised on disposal, or when no future economic benefits are expected from use or disposal. Gains or losses arising
from derecognition of an intangible asset, measured as the difference between the net disposal proceeds and the carrying amount of the asset, are
recognised in profit or loss when the asset is derecognised.
The Group has adopted the treatment set out in the IFRIC agenda decision and expensed configuration and customisation costs where the entity does
not control the software being configured. This is a change in accounting policy for the year ending 25 March 2022. Previously costs of this nature would
have been capitalised as intangible assets. However, after the issuance of the two IFRIC Agenda Decisions in 2020 and 2021, these costs are typically now
expensed. We have assessed the impact of this change in accounting policy on the prior period comparatives, with the impact on the carrying amount
of intangible assets recognised as being immaterial due to the historic impairment of Project Fusion assets of £13.7m in the year ending 26 March 2021.
The Group has a number of contracts for Software as a Service (‘SaaS’) arrangements. These contracts permit the Group to access vendor-hosted
software and platform services over the term of the arrangement. The Group does not control the underlying assets in these arrangements and costs
are expensed as incurred. The Group also incurs implementation costs in respect of these contracts. Implementation costs are capitalised as intangible
assets where costs meet the definition and recognition criteria of an intangible asset under IAS 38. Such costs typically relate to software coding which is
capable of providing benefit to the Group on a standalone basis. Other implementation costs, primarily relating to the configuration and customisation
of the Cloud software solution, are assessed to determine whether the implementation activity relating to these costs is distinct from the Cloud.
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Arrangement, in which case costs are expensed as the activity occurs. If the configuration and customisation costs relate to activity which is integral to
the Cloud Arrangement such that the activity is received over the term of the Cloud Arrangement, costs are recognised as a prepayment and expensed
over the term of the Cloud Arrangement.
Impairment of tangible and intangible assets other than goodwill
Assets that have an indefinite useful life are not subject to amortisation and are tested annually for impairment.
Assets that are subject to amortisation or depreciation are reviewed for impairment whenever events or circumstances indicate that the carrying
amount may not be recoverable. An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable
amount. The recoverable amount is the higher of fair value less costs to sell and value in use. For the purposes of assessing impairment, assets are
grouped at the lowest levels for which there are separately identifiable cash flows (cash-generating units).
Recoverable amount is the higher of fair value less costs of disposal and value in use. In assessing value in use, the estimated future cash flows are
discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific
to the asset for which the estimates of future cash flows have not been adjusted.
If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or
cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in profit or loss, unless the relevant asset is
carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease and to the extent that the impairment loss is greater
than the related revaluation surplus, the excess impairment loss is recognised in profit or loss.
Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating unit) is increased to the revised estimate of
its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no
impairment loss been recognised for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is recognised immediately in
profit or loss to the extent that it eliminates the impairment loss which has been recognised for the asset in prior years. Any increase in excess of this
amount is treated as a revaluation increase.
The Group carries different classes of intangible assets including, gas reserves, brand name and customer contracts. The Group also has classes of
tangible assets in property, landfill gas and plant, vehicles, and machinery. The carrying value of these is dependent on future cash flows and if these
cash flows do not meet the Group’s expectations there is risk that the assets will be impaired. The impairment reviews performed by the Group contain a
number of significant estimates:
• Forecast energy prices including the impact of climate change to these prices
• The ROCs recycle benefit rights (which is dependent on the ROC scheme being in place)
• Forecast gate fees, tonnage prices and gas yield projections; and
• Discount rates.
The above have been considered in determining the value in use of other intangible assets.
Inventories
Inventories are stated at the lower of cost and net realisable value. Costs of inventories are determined on a first-in-first-out basis. Net realisable value
represents the estimated selling price for inventories less estimated costs of completion and costs necessary to make the sale. Full provision is made for
obsolete or defective stock.
Provisions
Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event, it is probable that the Group will be
required to settle the obligation, and a reliable estimate can be made of the obligation.
The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the end of the reporting
period, taking into account the risks and uncertainties surrounding the obligation. When a provision is measured using the cash flows estimated to settle
the present obligation, its carrying amount is the present value of those cash flows (when the effect of the time value of money is material). The effects of
inflation and unwinding of the discount element on existing provisions are reflected in the Financial Statements as a finance charge.
When some or all of the economic benefits required to settle a provision are expected to be recovered from a third party, a receivable is recognised as an
asset if it is virtually certain that reimbursement will be received and the amount of the receivable can be measured reliably.
Provisions for the cost of restoring landfill sites and after-care costs are made as the obligation to restore the site arises. Costs are charged to the profit or
loss over the operational life on the basis of the usage of void space for each landfill site. The restoration obligation is typically fulfilled within two years of
the landfill site being closed to waste.
Provisions for after-care costs are made as the void usage increases, which results in the recognition of an asset representing the future economic
benefits expected to arise from future gas generation from the landfill site. Costs are charged to the profit or loss over the operational life of each landfill
site on the basis of usage of void space. When the obligation recognised as a provision gives access to future economic benefits, an asset in property,
plant and equipment is recognised. Changes in the provision arising from revised estimates that relate to the asset are recorded as adjustments to the
carrying value of the asset.
The asset is depreciated over the period of gas generation which commences during the active phase of landfill and extends beyond the closure date,
producing commercial volumes of gas for up to 16 years. After-care costs are provided for based on the Directors’ expectation that the obligation will
have been fulfilled 60 years post closure of the site.
Onerous contracts
Present obligations arising under onerous contracts are recognised and measured as provisions. An onerous contract is considered to exist where the
Group has a contract under which the unavoidable costs of meeting the obligations under the contract exceed the economic benefits expected to be
received from the contract.
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Additional
Information
Notes to the Consolidated Financial Statements continued
1. Accounting Policies continued
Service concession arrangements
Service concession arrangements typically involve a private sector entity constructing infrastructure and using that infrastructure to provide a public
service on behalf of a government or local authority for a limited period of time before handing ownership of the infrastructure back to the government
or local authority.
The Group applies the financial asset model when the concession grantor contractually guarantees the payment of amounts specified in the contract or
the shortfall, if any, between amounts received from users of the public service and amounts specified. This financial asset accrues finance income and is
reduced as the financial payments are received. This approach has been adopted on the Leicester City Council contract.
The Group applies the intangible asset model when it has a right or a licence to charge users or the local authority based on usage of the public service.
This approach has been adopted on the West Sussex Recycling contract that was acquired as part of the Viridor acquisition that was completed during
the year.
Financial assets and intangible assets resulting from the application of IFRIC 12: Service Concession Arrangements are recorded in the Group Consolidated
Statement of Financial Position.
Refer to Note 32 for further information.
Financial instruments
Financial assets and financial liabilities are recognised when a Group entity becomes a party to the contractual provisions of the instruments.
Financial assets
All recognised financial assets are measured subsequently in their entirety at either amortised cost or fair value, depending on the classification of the
financial assets.
All regular way purchases or sales of financial assets are recognised and derecognised on a trade date basis. Regular way purchases or sales are purchases
or sales of financial assets that require delivery of assets within the time frame established by regulation or convention in the marketplace.
Financial assets are classified into the following specified categories: financial assets at amortised cost, fair value through profit or loss (‘FVTPL’) and fair
value through other comprehensive income (‘FVTOCI’).
All recognised financial assets are measured subsequently in their entirety at either amortised cost or fair value depending on the classification of the
financial asset. Debt instruments that meet the following conditions are measured subsequently at amortised cost:
• The financial asset is held within a business model whose objective is to hold financial assets in order to collect contractual cash flows; and
• The contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the
principal amount outstanding.
Debt instruments that meet the following conditions are measured subsequently at fair value through other comprehensive income (‘FVTOCI’):
• The financial asset is held within a business model whose objective is achieved by both collecting contractual cash flows and selling the financial
assets; and
• The contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the
principal amount outstanding.
By default, all other financial assets are measured subsequently at FVTPL.
Amortised cost and effective interest method
The effective interest method is a method of calculating the amortised cost of a debt instrument and of allocating interest income over the relevant
period. The effective interest rate is the rate that exactly discounts estimated future cash receipts (including all fees and points paid or received that form
an integral part of the effective interest rate, transaction costs and other premiums or discounts) through the expected life of the debt instrument, or,
where appropriate, a shorter period, to the net carrying amount on initial recognition.
Income is recognised on an effective interest basis for debt instruments measured subsequently at amortised cost and at FVTOCI.
Financial assets at FVTPL
Financial assets that do not meet the criteria for being measured at amortised cost or FVTOCI are measured at FVTPL. Specifically:
• Investments in equity instruments are classified as at FVTPL, unless the Group designates an equity investment that is neither held for trading nor a
contingent consideration arising from a business combination as at FVTOCI on initial recognition.
• Debt instruments that do not meet the amortised cost criteria or the FVTOCI criteria are classified as at FVTPL. The Group has not designated any
debt instruments as at FVTPL.
Financial assets at FVTPL are stated at fair value, with any gains or losses arising on remeasurement recognised in profit or loss to the extent that they are
not part of a designated hedging relationship.
Impairment of financial assets
Financial assets, other than those at FVTPL, are assessed for indicators of impairment at the end of each reporting period. The Group recognises a loss
allowance for expected credit losses. The amount of expected credit losses is updated at each reporting date to reflect changes in credit risk since initial
recognition.
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The expected credit losses are estimated based on the Group’s historical credit loss experience, adjusted for factors that are specific to the debtors,
general economic conditions and an assessment of both the current as well as the forecast future conditions at the reporting date.
Lifetime ECL represents the expected credit losses that will result from all possible default events over the expected life of a financial instrument. In
contrast, 12-month ECL represents the portion of lifetime ECL that is expected to result from default events on a financial instrument that are possible
within 12 months after the reporting date.
For financial assets, the expected credit loss is estimated as the difference between all contractual cash flows that are due to the Group in accordance
with the contract and all the cash flows that the Group expects to receive, discounted at the original effective interest rate.
In assessing whether the credit risk on a financial instrument has increased significantly since initial recognition, the Group compares the risk of a default
occurring on the financial instrument at the reporting date with the risk of a default occurring on the financial instrument at the date of initial recognition.
In making this assessment, the Group considers both quantitative and qualitative information that is reasonable and supportable, including historical
experience and forward-looking information that is available without undue cost or effort.
Irrespective of the outcome of the above assessment, the Group presumes that the credit risk on a financial asset has increased significantly since
initial recognition when contractual payments are more than 90 days past due, unless the Group has reasonable and supportable information that
demonstrates otherwise.
The Group assumes that the credit risk on a financial instrument has not increased significantly since initial recognition if the financial instrument is
determined to have low credit risk at the reporting date. A financial instrument is determined to have low credit risk if:
• The financial instrument has a low risk of default;
• The debtor has a strong capacity to meet its contractual cash flow obligations in the near term; and
• Adverse changes in economic and business conditions in the longer term may, but will not necessarily, reduce the ability of the borrower to fulfil its
contractual cash flow obligations.
All customers are subject to credit scoring on a quarterly basis. The Group considers a financial asset to have low credit risk when the external credit
rating of the counterparty exceeds the Group’s minimum required score, and when the counterparty has a strong financial position and payments are
being made within the contractual terms.
The Group regularly monitors the effectiveness of the criteria used to identify whether there has been a significant increase in credit risk and revises them
as appropriate to ensure that the criteria are capable of identifying a significant increase in credit risk before the amount becomes past due.
The Group considers the below as constituting an event of default as historical experience indicates that financial assets that meet the following criterion
are generally not recoverable:
• Information developed internally or obtained from external sources indicates that the debtor is unlikely to pay its creditors, including the Group, in
full (without taking into account any collateral held by the Group).
Financial assets may still be subject to enforcement activities under the Group’s recovery procedures, taking into account legal advice where appropriate.
A financial asset is credit-impaired when one or more events that have a detrimental impact on the estimated future cash flows of that financial asset
have occurred. Evidence that a financial asset is credit-impaired includes observable data such as significant financial difficulty of the borrower or it
is becoming probable that the borrower will enter bankruptcy or other financial reorganisation. The Group writes off a financial asset when there is
information indicating that the debtor is in severe financial difficulty and there is no realistic prospect of recovery.
Derecognition of financial assets
The Group derecognises a financial asset when the contractual rights to the cash flows from the asset expire, or when it transfers the financial asset and
substantially all the risks and rewards of ownership of the asset to another party.
On derecognition of a financial asset, the difference between the asset’s carrying amount and the sum of the consideration received and receivable and
the cumulative gain or loss that had been recognised in other comprehensive income and accumulated in equity is recognised in profit or loss.
The Group has not participated in any material supplier financing arrangements during the current or prior year.
Financial liabilities and equity instruments
Debt and equity instruments are classified as either financial liabilities or as equity in accordance with the substance of the contractual arrangements
and the definitions of a financial liability and an equity instrument.
Borrowings are recognised initially at fair value. Any difference between the amount initially recognised and the redemption value is recognised in the
income statement over the period of the borrowings using the effective interest method.
Commitment and borrowing fees are capitalised as part of the loan and amortised over the life of the relevant agreement. All other borrowing costs are
recognised in the income statement in the period in which they are incurred.
Borrowings are classified as non-current liabilities where the Group has an unconditional right to defer settlement of the liability for at least 12 months
after the balance sheet date.
Derecognition of financial liabilities
The Group derecognises financial liabilities when, and only when, the Group’s obligations are discharged, cancelled or they expire. The difference
between the carrying amount of the financial liability derecognised and the consideration paid and payable is recognised in profit or loss.
Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities (other than financial assets and financial
liabilities at fair value through profit or loss) are added to or deducted from the fair value of the financial assets or financial liabilities, as appropriate, on
initial recognition. Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at fair value through profit or loss are
recognised immediately in the income statement.
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Additional
Information
Notes to the Consolidated Financial Statements continued
1. Accounting Policies continued
Derivative financial instruments and hedging activities
Derivatives are initially recognised at fair value on the date the entity becomes party to the contractual provisions of the instrument and are
subsequently remeasured at their fair value at each balance sheet date. The method of recognising the resulting gain or loss depends on whether the
derivative is designated as a hedging instrument and the nature of the item being hedged.
The Group designates certain derivatives as either a) fair value hedge (hedges of the fair value of recognised assets or liabilities); or b) cash flow hedge
(hedges of a particular risk associated with a recognised asset or liability or a highly probable forecast transaction); or c) net investment hedge (hedges of
net investments in foreign operations).
The Group documents the transaction relationship between the hedging instruments and hedged items at inception.
At inception and at each reporting date the Group assesses whether the derivatives used have been effective in offsetting changes in the fair value of
hedged items.
The fair values of derivative instruments used for hedging are shown in Note 17. Movements in the hedging reserve are shown in the statement of
changes in equity. At the reporting date the Group has no fair value hedges or net investment hedges.
Hedge accounting
At the inception of the hedge relationship, the Group documents the relationship between the hedging instrument and the hedged item, along with
its risk management objectives and its strategy for undertaking various hedge transactions. Furthermore, at the inception of the hedge and on an
ongoing basis, the Group documents whether the hedging instrument is effective in offsetting changes in fair values or cash flows of the hedged item
attributable to the hedged risk, which is when the hedging relationships meet all of the following hedge effectiveness requirements:
• There is an economic relationship between the hedged item and the hedging instrument;
• The effect of credit risk does not dominate the value changes that result from that economic relationship; and
• The hedge ratio of the hedging relationship is the same as that resulting from the quantity of the hedged item that the Group actually hedges and
the quantity of the hedging instrument that the Group actually uses to hedge that quantity of hedged item.
If a hedging relationship ceases to meet the hedge effectiveness requirement relating to the hedge ratio but the risk management objective for that
designated hedging relationship remains the same, the Group adjusts the hedge ratio of the hedging relationship (i.e. rebalances the hedge) so that it
meets the qualifying criteria again.
Cash flow hedge
The effective portion of changes in the fair value of derivatives that are designated as cash flow hedges are recognised in equity. The Group’s cash flow
hedges in respect of forward foreign exchange contracts result in recognition in either the income statement or in the hedging reserve.
When a hedging instrument expires or is sold, any cumulative gain or loss in equity at that time remains in equity and is recognised when the forecast
transaction occurs. When a forecast transaction is no longer expected to occur, the cumulative gain or loss that was reported in equity will be transferred
to the income statement.
If a hedging relationship ceases to meet the hedge effectiveness requirement relating to the hedge ratio but the risk management objective for that
designated hedging relationship remains the same, the Group adjusts the hedge ratio of the hedging relationship so that it meets the qualifying criteria again.
Changes in the fair value of any derivative instruments that do not qualify for hedge accounting are recognised immediately in the income statement.
Amounts previously recognised in other comprehensive income and accumulated in equity are reclassified to profit or loss in the periods when
the hedged item affects profit or loss, in the same line as the recognised hedged item. However, when the hedged forecast transaction results in
the recognition of a non-financial asset or a non-financial liability, the gains and losses previously recognised in other comprehensive income and
accumulated in equity are removed from equity and included in the initial measurement of the cost of the non-financial asset or non-financial liability.
This transfer does not affect other comprehensive income. Furthermore, if the Group expects that some or all of the loss accumulated in the cash flow
hedging reserve will not be recovered in the future, that amount is immediately reclassified to profit or loss.
The Group discontinues hedge accounting only when the hedging relationship (or a part thereof ) ceases to meet the qualifying criteria (after
rebalancing, if applicable). This includes instances when the hedging instrument expires or is sold, terminated or exercised. The discontinuation is
accounted for prospectively. Any gain or loss recognised in other comprehensive income and accumulated in cash flow hedge reserve at that time
remains in equity and is reclassified to profit or loss when the forecast transaction occurs.
Share capital
Ordinary Shares are classified as equity and recorded at par value of proceeds received. Where shares are issued above par value, the proceeds in excess
of par value are recorded in the share premium account net of direct issue costs.
Dividend distribution
Final dividend distribution to the Company’s shareholders is recognised as a liability in the Financial Statements in the period in which the dividends are
approved. Interim dividends are recognised when paid.
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Areas of judgement and key sources of estimation uncertainty
The preparation of IFRS compliant Financial Statements requires the use of accounting estimates and assumptions and also requires management
to exercise its judgement in the process of applying Group accounting policies. The Group continually evaluates its estimates, assumptions and
judgements based on available information and experience. As the use of estimates is inherent in financial reporting, actual results could differ from
these estimates.
Critical Judgements
The Group applies judgement in identifying the significant, exceptional and non-recurring items of income and expense. We have summarised the
policy in more detail in the Appendix.
Legal and tax cases
The Group has provisions in place for ongoing litigation. Management exercises judgement in determining the amount of provision required. This
provision is calculated using information provided by external professionals where applicable or management’s best estimate.
The Group has been engaged in an EVP dispute with HMRC concerning historical landfill tax. As at 26 March 2021 £47.6m was held as a financial liability,
£13.0m was held as an accrual and £63.6m was held as a prepayment. The outcome of the dispute in May 2022 has been treated as an adjusting event
for the year ending 25 March 2022 in accordance with IAS 10: Events After the Reporting Period, with these amounts being adjusted accordingly. Refer to
Note 31 for further information.
The Group is also engaged in a dispute with HMRC in relation to the landfill tax treatment of sub-soils with low levels of contamination from asbestos.
The Group has received a protective assessment of £8.5m, which has been paid. As the Group is currently disputing this assessment, and management
believe it likely that they will win the dispute, the £8.5m payment is included in prepayments in the current year. Refer to Note 31 for further information.
The Group is currently the subject of an HMRC enquiry regarding certain aspects of its landfill tax compliance as part of concerns it has regarding
possible misclassification of waste across the industry. The potential liability for the relevant period could range from approximately £170,000 up to a
possible maximum of approximately £168m (being the total amount of protective assessments issued by HMRC to Biffa for the period in question, from
March 2016 to March 2020) plus penalties and interest. The protective assessments have been issued before the conclusion of the Enquiry to ensure that
any claim for payment of landfill tax that may be made by HMRC as a result of the Enquiry, is not time-barred. There are a range of possible outcomes to
the Enquiry and further speculation at this stage to the potential liability would therefore be misleading. Biffa strongly refutes HMRC’s concerns. It is likely
that it will be some time before the Enquiry reaches a conclusion.
Management has applied judgement in concluding on the different potential outcomes and their respective probabilities, in accordance with IAS 37:
Provisions, Contingent Liabilities and Contingent Assets. It has been decided at this point that a provision of £20.0m should be recognised at March 2022.
Acquisition of Viridor
On 31 August 2021 the Group acquired 100% of the share capital of Syracuse Waste Limited and its subsidiaries from the Viridor Group. Syracuse Waste
Limited is a specially created entity into which Viridor hived down its collections business and certain recycling assets in order to enable the sale. The deal
involves the transfer of approximately 21,000 existing Viridor business waste customers alongside a network of 15 depots across the UK. The acquisition
is in line with the Group’s growth strategy and complements the current operations across the Collections and Resources & Energy divisions.
The accounting on the Viridor acquisition, in accordance with IFRS 3: Business Combinations, involves a number of key judgements:
• Fair valuations on all balance sheet items as at the date of acquisition, in particular tangible fixed assets;
• Whether the West Sussex Recycling contract acquired falls within the scope of IFRIC 12: Service Concession Arrangements and, if it does, whether a
financial asset model, intangible asset model or bifurcated model should be adopted; and
• Allocation of consideration between the divisions within the Viridor business, which in turn affects the goodwill allocated to each cash-generating
unit in the Biffa Group.
Where necessary, the Group mitigated the risk in these judgements by using external specialists. As at 25 March 2022, the opening balance sheet for the
Viridor acquisition remains within the 12 month measurement period post acquisition and should therefore be considered provisional.
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Additional
Information
Notes to the Consolidated Financial Statements continued
1. Accounting Policies continued
Key sources of estimation uncertainty
The Group has the following key sources of estimation uncertainty that have a significant risk of causing a material adjustment to the carrying amounts
of assets and liabilities within the next financial period:
Environmental and after-
care commitments of
£73.9m (see Note 19)
The Group operates a number of landfill sites in the UK. A significant cost of owning and operating a landfill site in the UK
arises after the land-filling operation ceases due to the constructive and legal obligation to restore sites and then to care
for them until it can be demonstrated that they present no ongoing risk to the environment.
A provision is made for the costs associated with restoring and maintaining its landfill sites and controlling leachate and
methane emissions from the sites. A number of factors create estimation uncertainty, including the impact of regulation,
transportation costs, inflation and changes in the real discount rate.
The provisions incorporate our best estimates of the financial effects of these uncertainties, but future changes in any of
these estimates could materially impact the calculation of the provision.
The associated outflows are estimated to arise over a period of up to 60 years depending on the date of each site closure.
In determining the provision, the estimates for future expenditure required to settle the obligation are inflated using
longer-term inflation rates of 3.33%, and discounted using the nominal risk free discount rate of 2.66%. The rates utilised
reflect the period of the obligation on a site-by-site basis which varies between 10 and 60 years.
An increase of 1% in the nominal discount rate (at current cost) would result in a decrease of environmental provisions
of approximately £16.0m (2021: £15.7m). A 10% increase in forecast cash outflows would result in an increased
environmental provision of £7.8m (2021: £7.7m).
Long-term after-care provisions included in landfill restoration and after-care provisions have been inflated at a rate of
3.3% (2021: 2.8%). An increase of 1% in the rate of inflation would result in an increase of environmental provisions of
approximately £23.1m (2021: £22.8m).
Retirement Benefit
Accounting relating to
surplus of £166.1m
(see Note 26)
The Group operates several defined benefit pension schemes which are accounted for under IAS 19 Employment
Benefits. Pension accounting is a specialist area requiring the exercise of significant management judgement and the use
of technical expertise to determine the surplus or deficit of the scheme in accordance with generally accepted actuarial
practices. The assumptions used in valuing the defined benefit pension liabilities including the discount rate, mortality
assumption and inflation level are complex and changes to the assumptions can have a material impact on the value of
pension liabilities. As at the end of the financial year the Group recognised a retirement benefit surplus of £166.1m.
If the discount rate is 1% lower the defined benefit asset would decrease by £104.6 m (2021: £113.6m).
If the inflation assumption increases by 1% the defined benefit asset would decrease by £100.0m (2021: 104.0m).
If the life expectancy increases by one year for both men and women, the defined benefit asset would decrease by
£14.9m (2021: £18.2m).
All pension valuations are performed as at the year end reporting date.
Onerous Contract Provision
of £20.4m (see Note 19)
Certain contracts held by the Group are considered onerous and long-term in nature. These contracts can be complex
and contain key performance indicator clauses where penalties may be incurred in the event of non-compliance. The
Group is therefore required to make operational and financial assumptions to estimate future losses over periods that can
extend beyond seven years.
Variability of contract penalties, underlying delivery costs, inflation rates, commodity prices applied and customer claims
or disputes can put additional pressure on margins and on future contract profitability, giving rise to onerous contract
provisions. The Group mitigates against the risk of price movements by entering into fuel hedging arrangements.
Management continue to monitor potential cost impacts on services and seek to discuss those with customers as
appropriate, on a case-by-case basis.
The prediction of future events over extended periods contains inherent risk and the outcome of customer and
subcontractor claims is uncertain and involves a high degree of management estimation. Management recognise the risk
of future onerous contract provisions being recognised due to significant increases in certain costs as detailed above.
The Group holds two onerous contract provisions during the year relating to contracts on Mid-Kent Partnership and
Leicester.
The future cash inflow from the remaining onerous contracts are highly predictable as they are fixed, based on the
terms of the contract. However, the costs associated with delivering the contract can vary and assumptions on future
cash outflows is considered a significant estimate when modelling the future net cash outflows on onerous contract
provisions. On the Mid-Kent provision a 5% increase in future cash outflows would increase the provision by £1.2m and
on the Leicester provision a 5% increase in future cash outflows would increase the provision by £1.0m.
In arriving at the onerous contract provision for the Mid-Kent Partnership contract, the Group has discounted the future
cash flows using a risk-free rate of 2.5%. If this rate increased by 500 basis points the provision charge would decrease
by £0.4m.
In arriving at the onerous contract provision for the Leicester contract, the Group has discounted the future cash flows
using a risk-free rate of 2.8%. If this rate increased by 500 basis points the provision charge would decrease by £2.1m.
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Viridor Acquisition
Accounting (see Note 9)
The accounting relating to the Viridor acquisition involves making a number of estimates that have a significant impact
on the financial position at the date of acquisition and subsequent year ends. The key estimation areas are:
• Fair valuations applied to assets and liabilities acquired, in accordance with IFRS 3: Business Combinations
• Intangible assets recognised on acquisition
• £31.5m of acquisition intangibles have been recognised on acquisition, split as follows:
• £0.3m Brand
• £31.2m Customer and contractual relationships
• Intangible asset of £37.5m and provision of £12.7m relating to the West Sussex Recycling contract, in accordance with
IFRIC 12 Service Concession Arrangements.
The parts of the acquired business allocated to the Collections and Specialist Services operating segments contain pools
of commercial customer relationships from which the business realises significant value.
The values are derived by calculating the present value of estimated future cash flows in the areas of the business the
intangible assets relate to.
The inherent estimation uncertainty in the valuations of both intangible assets and tangible assets has been mitigated by
using external valuation experts.
Refer to Note 9 for further information on the amounts recognised on acquisition.
Goodwill Impairment in
Company Shop Group
(‘CSG’) of £25.0m (see Note
10)
The Group recognised goodwill on completion of the acquisition of CSG in February 2021. The carrying value of the
goodwill is dependent on future cashflows and, if these cashflows do not meet the Group’s expectations, there is
a risk that the assets will be impaired. The impairment review performed by the Group contains a number of
significant estimates:
• Revenue in both the short and long term
• Gross margin in both the short and long term
• Discount rate
Changes in these assumptions can have a significant impact on the estimated value in use. An impairment assessment
was performed by the Group at half year, with the outcome being the recognition of a £25.0m impairment to goodwill
due to trading under performance, in accordance with IAS 36: Impairment of Assets. An additional impairment
assessment has been performed at year end, with the value in use exceeding the goodwill carrying amount and the
outcome being no further impairment. This is due to improved trading in the final quarter of the year and our confidence
in the potential of the business being confirmed. The value in use excludes any additional value which may be generated
by future store roll-outs.
The key assumptions when calculating the value in use are detailed above. Management’s calculation of value in use has
been developed from forecast five-year cash flows which are prepared on the basis of past performance and expectation
of future performance which considers climate change, market information and a consistent growth rate.
The valuation of the goodwill allocated to CSG has headroom of £9.0m at the end of the financial year. The pre-tax
discount rate used in the value in use calculation was 9.75%, an increase in the pre-tax discount rate of 110 basis points
would reduce headroom to nil. The short term compounded annual growth rate used was 7.71%, a reduction of 89 basis
points in the short term compounded annual growth rate would reduce headroom to nil. The average gross profit margin
on short and medium term cashflows used was 56.4%, a reduction of 250 basis points would reduce headroom to nil. The
gross profit margin on long term cashflows used was 57.0%, a reduction of 100 basis points would reduce headroom
to nil.
HMRC Landfill Tax Enquiry The Group operates a number of landfill sites in the UK. Operators of landfill sites are responsible for collecting Landfill Tax
and paying it to HMRC. Excise Notice LFT1: a general guide to Landfill Tax (“LFT1”) sets out guidance published by HMRC
on the application of Landfill Tax legislation to the activities of landfill site operators such as Biffa.
In February 2020, Biffa Waste Services Limited (“BWSL”) was notified by HMRC that it had concerns regarding certain
aspects of Landfill Tax compliance that may have led to an underpayment of Landfill Tax and was conducting an enquiry
(the “Enquiry”), primarily relating to the interpretation of the qualifying fines regime set out in LFT1. HMRC also raised
concerns, based on its analysis of BWSL’s data, over the potential conduct of BWSL and specific customers which may
have led to the incorrect rate of Landfill Tax being paid.
Fines are particles produced by a waste treatment process that involves an element of mechanical treatment. For a landfill
site operator to treat fines as qualifying fines (meaning that Landfill Tax on such material is payable at a lower rate), it must
be satisfied that the conditions set out in LFT1 have been met. These include pre-acceptance checks on customers, visual
inspections of materials deposited at the landfill site and compliant loss on ignition (“LOI”) tests conducted at the specified
frequency (which is dependent on whether a customer is classified as low or high risk). LOI tests are laboratory tests on
samples of waste to establish the amount of organic content in the waste.
In response to the concerns raised by HMRC, Biffa appointed Ernst & Young (“EY”) to conduct an extensive review.
In May 2020, an interim report was submitted by EY and BWSL to HMRC addressing a number of the concerns raised
by HMRC and outlining some immediate changes to processes at landfill sites operated by Biffa, which were made on a
without prejudice basis, to mitigate the risk of any ongoing potential liability.
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Additional
Information
Notes to the Consolidated Financial Statements continued
HMRC Landfill Tax Enquiry
(continued)
In March 2021, a disclosure report and supporting data (the “Disclosure Report”), prepared by EY and BWSL, was
submitted to HMRC. The declared liability of BWSL in the Disclosure Report was approximately £170,000, with the other
concerns, including those relating to the potential conduct of BWSL and specific customers, strongly refuted.
In February 2022, BWSL received a further letter from HMRC which responded to a number of specific findings in the
Disclosure Report, asserted specific amounts that they considered were due and indicated that HMRC would be carrying
out further work on other aspects of the Disclosure Report. Following receipt of this letter, further detailed work has been
carried out by Biffa and its advisors.
Protective assessments
HMRC has issued protective assessments totalling approximately £153m to BWSL in respect of the period from March
2016 to March 2020. In addition, in June 2022, HMRC issued approximately £15m of further protective assessments,
the majority of which were in relation to the period April to June 2020, to cover the period to the end of the Disclosure
Report. Consistent with their usual practice when conducting an enquiry that may result in additional liability to tax, the
protective assessments have been issued by HMRC before the conclusion of the Enquiry to ensure that any claim for
payment of Landfill Tax that may be made by HMRC as a result of the findings of the Enquiry is not time-barred.
These protective assessments are not necessarily an indication of what liability may ultimately arise, nor is their existence
an indication that a claim will be brought against BWSL by HMRC. BWSL is not currently required to make payment to
HMRC or reserve or ringfence funds for a possible payment as a result of these protective assessments, however it has
made a payment on account of £170,000 for the declared liability under the Disclosure Report.
Potential outcomes and liabilities
In Biffa’s view, based on advice received to date, there are a range of possible outcomes to the Enquiry. BWSL’s potential
liability to Landfill Tax for the relevant period could range from approximately £170,000 (based on the declared liability
in the Disclosure Report) up to approximately £168m (being the amount raised in protective assessments to date), plus
potential penalties and interest. In addition, BWSL will incur further costs in conducting and responding to the Enquiry.
To date the Group has not received any formal claim from HMRC with regard to the matters that are the subject of
the Enquiry.
The Enquiry is expected to continue into 2023. At the end of the Enquiry, HMRC will be required to confirm the amount
of the protective assessments. If BWSL does not accept HMRC’s decision , then BWSL will be entitled to request a formal
statutory review by HMRC. Assuming HMRC upholds its decision in respect of all or part of the assessments, BWSL will
have 30 days from the date of HMRC’s review decision to submit an appeal to the First-tier Tax Tribunal (“FTT”) to challenge
HMRC and formally protect BWSL’s position. To bring the appeal, BWSL would be required to pay the assessed Landfill
Tax to HMRC at that stage, although BWSL could make a hardship application to HMRC to secure their agreement to the
deferral of the payment of the assessed tax, failing which BWSL could apply to the FTT directly on grounds of hardship. If
the Enquiry resulted in BWSL being liable to pay additional Landfill Tax, such amounts should be tax deductible.
Provision (see Note 19)
A provision of £3m was recognised in the year to 26 March 2021, based on Biffa’s best estimate of the liabilities at that
point in time, recognising the fact that the Enquiry was at an early stage. This reflected the information that had been
shared with Biffa at that time and the Directors’ expectations of how the matter would be resolved. Following the receipt
of further correspondence from HMRC in February 2022, the provision at the year end has been increased to £20m.
This reflects Biffa’s best estimate of the potential liabilities arising from all specific amounts asserted by HMRC to date.
Further liabilities could however arise, and the cost of settling these liabilities could vary from the provision recognised.
Changes to this liability in the future cannot currently be estimated.
Contingent liability (see Note 29)
As noted above, a provision has been recognised relating to specific amounts asserted by HMRC to date. However,
broader concerns have also been raised by HMRC about how certain requirements within the qualifying fines regime set
out in LFT1 were intended to be applied in practice, and the extent to which Biffa has complied with these requirements.
No specific amounts have been associated with these issues to date by HMRC. Based on advice received to date for these
areas, noting the early stages of HMRC’s enquiry, it is considered that a present obligation does not exist and a liability is
not probable. BWSL’s potential additional liability for Landfill Tax for the relevant period could be up to approximately
£154m (being the total amounts raised in protective assessments less the provision made excluding costs), plus penalties,
interest and further costs in responding to the Enquiry.
Based on advice received, the Directors do not consider a liability is likely to arise in respect of these broader concerns,
and therefore this item is treated as a contingent liability and no provision arises for these broader concerns.
In order to illustrate the impact that changes in assumptions could have on the Group’s results and financial position, further sensitivity analysis has been
included within the Notes.
1. Accounting Policies continued
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2. Segmental Information
The Group is managed by type of business and is organised into three operating divisions:
• Collections which encompasses Municipal and Industrial & Commercial.
• Resources & Energy which consists of Inerts, Organics, Recycling and Landfill Gas sub-divisions.
• Specialist Services which includes Company Shop Group and Industrial Services.
These operating divisions represent the business segments in which the Group reports its primary segment information and are consistent with the
internal reporting provided to the chief operating decision maker. Head office costs are recorded within the Group Business Function (‘GBF’) division,
however for operating and business decisions only three divisions are considered. Group Business Function costs represent shared services and
corporate costs (including, inter alia, Board and corporate costs, finance, HR, IT, legal and insurance, external affairs and Safety, Health, Environment and
Quality Management (‘SHEQ’)) remaining after allocation to operating divisions. The chief operating decision maker, who is responsible for allocating
resources and assessing performance of the operating divisions, has been identified as the Group Executive Team. The activities of the divisions are
detailed on pages 66 to 76. The operations acquired as part of the Viridor acquisition have been integrated and allocated appropriately across the three
operating divisions.
During the current financial period the Group moved from recognising two operating divisions (Collections and Resources & Energy) to recognising
three operating divisions (Collections, Resources & Energy and Specialist Services). Operations including Company Shop Group, Hazardous Waste, IRM
and Biffpack which were formerly included in the Collections division are now reported in the Specialist Services Division. This represents a distinction
from the Municipal and Industrial & Commercial operations retained within the Collections division. The prior period comparatives by division have been
updated to reflect these allocations.
The Group’s segmental results are as follows:
2022
£m
2021
£m
Revenue
Collections 873.9 677.6
Resources & Energy 395.2 272.0
Specialist Services 174.1 92.4
Total 1,443.2 1,042.0
Revenue within divisions is eliminated upon consolidation. Sales between operating divisions are carried out at arm’s length. There have been no other
material amounts of revenue recognised in the year that relate to performance obligations satisfied or partially satisfied in previous years. Revenue
received where the performance obligation will be fulfilled in the future is classified as deferred income or contract liabilities and disclosed in Note 15.
All trading activity and operations are in the United Kingdom and there is therefore no secondary reporting format by geographical segment. There is no
single customer that accounts for more that 10% of the Group’s revenue (2021: none).
2022
£m
2021
£m
Operating Profit/(Loss)
Collections 65.6 27.8
Resources & Energy 17.5 (43.9)
Specialist Services (19.9) 8.2
Group Business Function (71.5) (29.7)
Total (8.3) (37.6)
2022
£m
2021
£m
Tangible assets net book value
Collections 319.3 264.1
Resources & Energy 226.6 194.8
Specialist Services 50.5 44.0
Group Business Function 20.8 59.3
Total 617.2 562.2
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Additional
Information
Notes to the Consolidated Financial Statements continued
2022
£m
2021
£m
Intangible assets net book value
Collections 21.3 14.8
Resources & Energy 121.8 101.3
Specialist Services 5.4 –
Group Business Function 74.4 66.4
Total 222.9 182.5
2022
£m
2021
£m
Capital expenditure
Collections 104.1 57.3
Resources & Energy 96.2 64.1
Specialist Services 16.4 47.6
Group Business Function 7.1 9.6
Total 223.8 178.6
Capital expenditure comprises additions to intangible assets and property, plant and equipment including leased assets and acquisitions.
2022
£m
2021
£m
Depreciation
Collections 55.8 51.8
Resources & Energy 29.7 28.9
Specialist Services 6.2 2.1
Group Business Function 3.2 4.4
94.9 87.2
Amortisation
Collections 4.5 4.6
Resources & Energy 25.1 22.8
Specialist Services – –
Group Business Function 1.1 1.2
30.7 28.6
Total Amortisation and Depreciation 125.6 115.8
3. Finance Income and Charges
2022
£m
2021
£m
Finance charges
Interest on bank overdrafts, bonds and loans (9.7) (6.7)
Interest on lease liabilities (Note 25) (9.8) (8.5)
Interest unwind on discounted provisions (Note 19) (2.8) (1.8)
Interest on forward contracts (0.1) (0.6)
Total finance charges (22.4) (17.6)
Interest income 0.9 0.1
Net interest on the net defined benefit surplus (Note 26) 2.3 3.1
Total finance income 3.2 3.2
Net finance charges (19.2) (14.4)
2. Segmental Information continued
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4. Loss Before Taxation
2022
£m
2021
£m
The following costs / (income) have been included in arriving at the Loss Before Taxation:
Employee costs (Note 5) 361.0 294.5
Cost of inventories recognised in expense (Note 13) 68.3 54.1
EVP tax dispute (Note 31) 20.8 –
Provision for HMRC landfill tax enquiry 17.0 3.0
Defined benefit obligation expense/(income) (Note 26) 0.5 (3.3)
Depreciation of property, plant and equipment (Note 12)
• Owned assets 42.8 37.6
• Right- of-use assets 52.1 49.6
Amortisation of intangible assets (Note 11)
• Acquisition intangibles 29.6 27.4
• Other intangibles 1.1 1.2
Expense relating to short-term leases and leases of low-value assets:
• Plant and machinery 21.0 16.5
• Other 4.5 2.0
Impairments 25.0 21.9
Income from sub-leasing right-of-use assets (3.3) (3.3)
(Profit)/Loss on disposal of property, plant and equipment, and intangible assets (6.2) 0.3
Income from grants (0.4) –
Expected credit loss recognised 1.2 0.3
During the current financial period an impairment of £25.0m was recognised in relation to the goodwill arising from the Company Shop Group
acquisition, see Note 10 for further information. In the prior period a one-off cost of £8.2m relating to the impairment of the Poplars Anaerobic Digestion
plant was recognised, in addition to the write off of £13.7m of obsolete capitalised work in relation to Project Fusion.
Operating costs have been split into administration and distribution costs as detailed below:
2022
£m
2021
£m
Operating costs
Distribution costs 26.1 18.8
Administrative expenses 48.9 38.6
75.0 57.4
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Additional
Information
Notes to the Consolidated Financial Statements continued
5. Employees and Directors
The average monthly number of persons (including Executive Directors) employed by the Group, by reporting division during the period, was:
2022
Number
2021
Number
By division
Collections
1
6,749 6,570
Resources & Energy 1,105 867
Specialist Services
1
1,454 403
Group Business Function 436 398
9,744 8,238
1 During the current financial period the Group moved from recognising two operating divisions (Collections and Resources & Energy) to recognising three operating divisions
(Collections, Resources & Energy and Specialist Services). Operations including Company Shop Group, Hazardous Waste, IRM and Biffpack were formerly included within the Collections
division are now reported in the Specialist Services Division. The prior period comparatives have been updated to reflect these allocations.
2022
£m
2021
£m
Their aggregate remuneration comprised:
Wages and salaries 314.7 257.7
Social security costs 30.4 24.5
Other pension costs 13.2 10.4
Redundancy and termination payments 2.7 1.9
361.0 294.5
In the prior period, the Group also received £12.0m in furlough payments from HMRC as part of the Coronavirus Job Retention Scheme (‘CJRS’). These
payments were netted off against respective salary and wage costs. In the current year the Group received £nil from the CJRS.
The remuneration of the Directors within the Directors’ Report on Remuneration is set out on pages 126 to 140 and forms part of these Financial
Statements.
Key management compensation
2022
£m
2021
£m
Their aggregate remuneration comprised:
Wages and salaries 2.4 1.9
Social security costs 0.5 0.7
Other pension costs 0.3 0.3
Long-term incentives 1.9 0.7
5.1 3.6
Key management personnel have been defined as the Group Executive Team.
6. Auditor’s Remuneration
The analysis of the Company and Biffa Group’s auditor’s remuneration is as follows:
2022
£m
2021
£m
Fees payable to the Company’s auditor for the audit of the Company’s Consolidated Annual Financial
Statements 1.0 0.7
Fees payable to the Company’s auditor for the audit of the Company’s subsidiaries 0.5 0.4
Total audit fees 1.5 1.1
Audit-related assurance services 0.1 0.1
Total audit and non-audit fees 1.6 1.2
The other assurance services provided by the auditor related to agreed upon procedures and other assurance services outside of statutory requirements.
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7. Taxation Recognised in Profit or Loss
2022
£m
2021
£m
Current tax
Current period 0.2 –
Adjustment in respect of prior years – (0.2)
0.2 (0.2)
Deferred tax
Origination and reversal of temporary differences (9.5) (8.7)
Adjustment in respect of prior years 0.3 (3.4)
Adjustment attributable to changes in tax rates and laws (2.0) –
(11.2) (12.1)
Total tax credit (11.0) (12.3)
Corporation tax is calculated at 19% (2021: 19%) of the estimated assessable profit for the period. The charge for the period can be reconciled to the
profit per the consolidated income statement as follows:
2022
£m
2021
£m
Loss before tax (28.6) (52.8)
Loss multiplied by the standard rate of corporation tax in UK of 19%(2021: 19%) (5.4) (10.0)
Effects of:
Adjustments in respect of prior years 0.3 (3.6)
Expenses not deductible for tax purposes (0.2) 1.4
Effect of super deduction (3.6) –
Effect of change in rate (2.0) –
Non-taxable income (0.1) (0.1)
Total tax credit (11.0) (12.3)
During the current financial period a deferred tax asset and corresponding credit to the income statement of £15.5m (2021: £nil) has been recognised as
a result of the outcome of the EVP Dispute. Refer to Note 31 for further details.
In addition to the amount credited to the consolidated income statement, the following amounts have been charged/(credited) directly to equity:
2022
£m
2021
£m
Deferred tax charge/(credit) arising on actuarial (gains)/losses 15.0 (4.1)
Deferred tax charge/(credit) arising on hedging 2.2 –
Deferred tax charge/(credit) arising on share-based payments – (1.5)
Total deferred tax charged/(credited) directly to equity 17.2 (5.6)
The Finance Act 2021, which provides for an increase in the main rate of corporation tax from 19% to 25% effective from 1April 2023, was enacted on 24
May 2021. As deferred tax assets and liabilities are measured at the rate that are expected to apply in the periods of reversal, deferred tax balances at the
balance sheet date have been calculated at the rate at which the relevant balance is expected to be recovered or settled.
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Additional
Information
Notes to the Consolidated Financial Statements continued
8. Earnings per Share
Basic Earnings per Ordinary Share are based on the Group profit for the year and a weighted average of 305,323,888 (2021: 294,645,659 ) Ordinary Shares
in issue during the year.
2022 2021
Loss for the
period
£m
Earnings
per Share
pence
Loss for the
period
£m
Earnings
per Share
pence
Basic earnings per share (17.6) (5.8) (40.5) (13.7)
Diluted earnings per share (17.6) (5.6) (40.5) (13.4)
2022
£m
2021
£m
Total number of weighted Ordinary Shares 305.7 297.8
Shares held in employee benefit trust in respect of share options (0.4) (3.2)
Weighted average number of Ordinary Shares for the purposes of basic Earnings per Share 305.3 294.6
Effect of potentially dilutive Ordinary Shares:
Impact of share options 6.8 7.2
Weighted average number of Ordinary Shares for the purposes of diluted Earnings per Share 312.1 301.8
9. Acquisitions
52-week period ended 25 March 2022
Green Circle (Polymers) Limited
On 25 June 2021, the Group acquired the trade and assets of Green Circle (Polymers) Limited in exchange for cash consideration of £5.6m and deferred
cash consideration of £3.7m payable over a period of 13 years. The deferred consideration has an acquisition date fair value of £3.3m. This acquisition
includes a 50,000 tonne capacity Plastics Recycling Facility (‘PRF’) at Grangemouth in Scotland, which helps to secure feed stock for our Seaham, Redcar
and Washington Polymers plants.
Goodwill of £6.0m arising from the acquisition of Green Circle (Polymers) reflects the secured feed stock as well as being the only plastics recycling facility
in Scotland putting it in an ideal position to process the materials collected through Scotland’s Deposit Return Scheme (‘DRS’) which comes into force in
2022. The Green Circle acquisition is part of the business within the Resources & Energy division.
Since acquisition to the end of the financial year Green Circle (Polymers) has generated revenues of £4.2m and a loss before tax of £0.2m. If the Green
Circle (Polymers) acquisition had been completed on the first day of the financial year, Group revenues for the year would have been £1,448.8m and
Group loss for the period would have been unchanged.
At the end of the financial year the Group does not anticipate any of the trade and other receivables within Green Circle (Polymers) Limited to be
irrecoverable.
Syracuse Waste Limited
On 31 August 2021, the Group acquired 100% of the share capital of Syracuse Waste Limited and its subsidiaries from Viridor. Syracuse Waste Limited is
a specially created entity into which Viridor hived down its collections business and certain recycling assets in order to enable the sale. The deal involves
the transfer of approximately 21,000 existing Viridor business waste customers alongside a network of 15 depots across the UK. The acquisition is in line
with the Group’s growth strategy and complements the current operations across the Collections and Resources & Energy divisions.
Goodwill of £65.4m arising from the acquisition of Syracuse Waste Limited reflects the additional national scale of the collections business, in line with
the Group’s strategy to consolidate the highly fragmented UK I&C collections market and become the leading UK-based integrated waste management
business.
Since acquisition to the end of the financial year Syracuse Waste Limited has generated revenues of £84.0m and a profit before tax of £11.8m. If the
Syracuse Waste Limited acquisition had been completed on the first day of the financial year, Group revenues for the year would have been £1,587.2m
and Group loss for the period would have become a profit of £2.6m.
As at 25 March 2022, the opening balance sheet for the Viridor acquisition remains within the 12 month measurement period post acquisition and
should therefore be considered provisional.
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The amounts recognised in respect of the identifiable assets acquired and liabilities assumed are as set out in the table below:
Green Circle
£m
Syracuse Waste
£m
Total
£m
Intangible assets – 69.0 69.0
Property, plant and equipment 3.5 45.5 49.0
Trade and other receivables – 17.5 17.5
Inventory 0.1 0.7 0.8
Cash and cash equivalents – 14.2 14.2
Deferred tax liability (0.4) (15.0) (15.4)
Current tax liability – (0.4) (0.4)
Provisions – (23.1) (23.1)
Trade and other payables – (26.0) (26.0)
Borrowings (0.3) (17.0) (17.3)
Total net assets 2.9 65.4 68.3
Goodwill 6.0 65.4 71.4
Total consideration
Satisfied by:
Cash 5.6 130.2 135.8
Deferred consideration 3.3 – 3.3
Corporation tax to be paid through – 0.6 0.6
Total consideration transferred 8.9 130.8 139.7
Net cash outflow arising on acquisition:
Cash consideration 5.6 130.2 135.8
Less: cash and cash equivalent balances acquired – (14.2) (14.2)
5.6 116.0 121.6
Acquisition-related costs included in adjusting items amount to £9.4m (2021: £2.0m), see Appendix for further details.
52-week period ended 26 March 2021
On 24 February 2021, the Group acquired 100% of the share capital of Company Shop Group Limited in exchange for consideration of £93.2m, being
£86.0m of cash, £2.2m of deferred consideration and £5.0m of contingent consideration based upon the performance of the acquired business. As at 26
March 2021 net assets acquired were valued at £21.2m, leading to the recognition of £72.0m of goodwill. During the current financial period and within
the measurement period to 24 February 2022, two further adjustments have been made with respect to the acquisition accounting for this transaction,
resulting in a decrease in goodwill recognised by £6.4m. See Note 10 for further details.
On 1 September 2020, the Group acquired the trade and assets including vehicles, wheelie bin and rear end load (‘REL’) commercial services, from
Donald Ward Limited for consideration of £2.6m. Net assets of £0.8m were recognised upon acquisition in addition to £1.8m of goodwill. During the
current period, outstanding contingent consideration of £0.5m was settled.
On 8 October 2020, the Group acquired 100% of the share capital of Camo Ltd (which trades under the name of Simply Waste), in addition to two
dormant subsidiaries, in exchange for consideration of £32.7m. Net assets of £14.4m were recognised upon acquisition in addition to £18.3m of goodwill.
During the current period, outstanding deferred consideration of £0.6m was settled.
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Additional
Information
Notes to the Consolidated Financial Statements continued
10. Goodwill
Total
£m
Cost:
As at 26 March 2021 224.8
Additions (Note 9) 71.4
Reversal of contingent consideration (Note 9) (5.0)
Fair value uplift on CSG assets (Note 9) (1.4)
As at 25 March 2022 289.8
Accumulated Impairment Losses:
As at 26 March 2021 (0.5)
Impairment charge (25.0)
As at 25 March 2022 (25.5)
Net book value:
As at 26 March 2021 224.3
As at 25 March 2022 264.3
2022
£m
2021
£m
By division
Collections
1
158.5 108.7
Resources & Energy
2
56.7 39.2
Specialist Services
1,2
49.1 76.4
264.3 224.3
1 During the current financial period the Group moved from recognising two operating divisions (Collections and Resources & Energy) to recognising three operating divisions
(Collections, Resources & Energy and Specialist Services). Operations including Company Shop Group, Hazardous Waste, IRM and Biffpack were formerly included within the Collections
division are now reported in the Specialist Services Division. The prior period comparatives have been updated to reflect these allocations.
2 Within the prior period comparatives a correction has been made to reallocate £4.3m of goodwill incorrectly presented within the Resources & Energy Division. This balance was
allocated historically within the Specialist Services Division and this correction returns the balances to their historic position.
Operating Divisions
The Group reviews at each reporting period whether there are any indicators of impairment in accordance with IAS 36: Impairment of Assets. An
annual impairment review is completed by comparing the carrying amount of the goodwill for each operating division to its recoverable amount. The
recoverable amount is the higher of its fair value less costs of disposal and its value in use. If the recoverable amount is less than the carrying amount, an
impairment loss is allocated first to reduce the carrying amount of the goodwill and then to the assets of the operating division.
The key assumptions when calculating the value in use are forecast revenue and costs. Management’s calculation of value in use has been developed from
forecast five-year cash flows which are prepared on the basis of past performance, expectation of future performance including climate change related matters
such as the potential cessation of ROC schemes in 2027, implications from possible carbon tax regulation and deposit return scheme coming into effect. The
value is use is also determined after considering market information and a consistent growth rate, thereafter, based on the underlying assets of each division.
The pre-tax discount rates used in the value in use calculations at year end are as follows:
• Collections 10.00%
• Resources & Energy 9.75%
• Specialist Services 9.25%
The annual growth rate assumption for the Group’s operating divisions beyond the five-year plan period, based on market trends, after adjustment for
assumed inflation, is 2.0% (2021: 2.0%). This is considered appropriate due to the long-term nature of the business. These forecasts are adjusted to the
extent that events since they were developed (the impact of Covid-19) indicate that they may no longer be relevant. No reasonably foreseeable change
in the assumptions used in the value in use calculations would cause an impairment to any of the operating divisions.
Company Shop Group
There have been two measuring period adjustments during the current financial period to the goodwill arising from the Company Shop Group
acquisition. Goodwill was reduced by £5.0m as the contingent consideration decreased as a result of post-acquisition performance and by a further
£1.4m due to an increase in the fair value of the property acquired.
During the current financial period, the Group moved from recognising two operating divisions to three operating divisions, leading to the recognition
of goodwill balances previously reported in Collections in the newly recognised Specialist Services division.
Following the change in recognition, the goodwill balances recognised within the Specialist Services division were subject to an impairment analysis.
Due to trading underperformance at the time, the Goodwill associated with the Company Shop Group acquisition was impaired by £25.0m during the
interim reporting period. No other goodwill allocated to the Specialist Services Division required impairment at interim, or at the year end.
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Overview
The valuation of the goodwill allocated to CSG has headroom of £9.0m at the end of the financial year. The pre-tax discount rate used in the value in
use calculation was 9.75%, an increase in the pre-tax discount rate of 110 basis points would reduce headroom to nil. The short term compounded
annual growth rate used was 7.71%, a reduction of 89 basis points in the short term compounded annual growth rate would reduce headroom to nil.
The average gross profit margin on short and medium term cashflows used was 56.4%, a reduction of 250 basis points would reduce headroom to nil.
The gross profit margin on long term cashflows used was 57.0%, a reduction of 100 basis points would reduce headroom to nil.
11. Other Intangible Assets
Landfill
gas rights
£m
IT
development
£m
Brand
£m
Customer
contracts
£m
Service
Concession
Agreements
£m
Total
£m
Cost:
As at 27 March 2020 190.2 18.4 37.0 66.4 – 312.0
Acquired through business combination – – 8.2 16.0 – 24.2
Additions – 4.0 – – – 4.0
Impairments – (13.7) – – – (13.7)
Disposals – (0.4) – – – (0.4)
As at 26 March 2021 190.2 8.3 45.2 82.4 – 326.1
Acquired through business combination – – 0.3 31.2 37.5 69.0
Additions – 2.1 – – – 2.1
Disposals – (1.6) – – – (1.6)
As at 25 March 2022 190.2 8.8 45.5 113.6 37.5 395.6
Accumulated amortisation:
As at 27 March 2020 (68.3) (2.5) (1.2) (43.0) – (115.0)
Charge for the period (21.5) (1.2) – (5.9) – (28.6)
As at 26 March 2021 (89.8) (3.7) (1.2) (48.9) – (143.6)
Charge for the period (20.1) (1.1) (0.3) (7.2) (2.0) (30.7)
Disposals – 1.6 – – – 1.6
As at 25 March 2022 (109.9) (3.2) (1.5) (56.1) (2.0) (172.7)
Net book amount:
As at 25 March 2022 80.3 5.6 44.0 57.5 35.5 222.9
As at 26 March 2021 100.4 4.6 44.0 33.5 – 182.5
The Group holds intangible assets relating to the Landfill Gas (‘LFG’) business. The LFG business generates some of its income via the production of
Renewable Obligation Certificates (‘ROCs’). These are “green energy certificates” which are issued to operators of accredited renewable generating
stations for the eligible renewable electricity that they generate. ROCs are then sold on to energy providers for which the Group recognises revenue on
sales. The ROCs scheme lasts for 20 years and the majority of landfill gas sites will see their ROCs scheme terminate in financial year 2027. At this point,
the revenue and profit profile of the LFG division will change significantly. In the prior year, there was a change in the accounting estimate of the useful
life of the LFG business to match the ROCs scheme termination dates and therefore amended the amortisation profile to better match the costs of the
asset against the principal periods from which the Group will receive future economic benefits. The Group recognised amortisation of £20.1m on LFG
sites during the financial year (2021: £21.5m).
During the current financial period a brand intangible of £0.3m was recognised from within the Viridor acquisition and amortised over the period of
time during which all acquired assets transferred over to Biffa branding. This was fully amortised to £nil as at the close of the financial period. Service
concession arrangements relate to the IFRIC 12 interpretation for the West Sussex Recycling contract acquired as part of the Viridor acquisition during
the current financial period.
All amortisation charges are recognised in profit or loss. Included within IT development costs are internally generated assets with a net book value of
£3.4m (2021: £1.7m). The amortisation charge in relation to these assets was £0.6m (2021: £0.9m).
Given the significant investment in technology and IT development, the Group undertakes a review of the remaining useful lives of assets each year and
impairs where necessary those that are superseded by new technology. The key estimates underpinning the value in use for IT projects is the forecast costs.
IFRS 3 requires that on acquisition, intangible assets are recorded at fair value. The Biffa brand was first created in the early 20th century and has been
used throughout the Group since then. It remains a highly recognisable brand. Given the longevity of the brand, the Directors consider the asset to have
an indefinite life. The Directors reconsider the valuation of the brand at each reporting date. The recognition of brand and landfill gas rights as intangible
assets initially arose during the fair value exercise undertaken following the acquisition of the Biffa Group by Wasteholdco 1 in 2008. The values were
subsequently remeasured following the restructuring of the Group in 2013.
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Additional
Information
Notes to the Consolidated Financial Statements continued
12. Property, Plant and Equipment
Land and
buildings
£m
Landfill
sites
¹
£m
Plant, vehicles
and equipment
£m
Assets under
construction
£m
Total
£m
Cost:
As at 27 March 2020 214.8 88.4 372.3 23.5 699.0
Additions 30.1 2.1 38.7 18.0 88.9
Acquired through business combination 25.8 – 35.7 – 61.5
Disposals (1.6) – (43.8) – (45.4)
Lease modifications (1.3) – – – (1.3)
Transfers¹ (0.1) 2.9 15.4 (15.3) 2.9
As at 26 March 2021 267.7 93.4 418.3 26.2 805.6
Additions 12.5 5.1 76.4 8.3 102.3
Acquired through business combination 19.8 – 29.2 – 49.0
Adjustment to prior period acquisitions 1.4 – – – 1.4
Disposals (9.5) (0.1) (36.4) – (46.0)
Transfers – 1.1 28.3 (28.3) 1.1
As at 25 March 2022 291.9 99.5 515.8 6.2 913.4
Accumulated depreciation:
As at 27 March 2020 (34.7) (52.0) (84.6) – (171.3)
Acquired through business combination (0.7) – (13.6) – (14.3)
Charge for the period (17.6) (4.3) (65.3) – (87.2)
Impairments (2.1) – (11.6) (1.0) (14.7)
Lease modifications 0.2 – – – 0.2
Disposals 1.6 – 42.3 – 43.9
As at 26 March 2021 (53.3) (56.3) (132.8) (1.0) (243.4)
Charge for the period (20.4) (4.7) (69.8) – (94.9)
Disposals 6.0 – 36.1 – 42.1
As at 25 March 2022 (67.7) (61.0) (166.5) (1.0) (296.2)
Net book amount:
As at 25 March 2022 224.2 38.5 349.3 5.2 617.2
As at 26 March 2021 214.4 37.1 285.5 25.2 562.2
1 Landfill sites includes £8.8m (2021: £8.8m) in relation to future economic benefit to be derived as a result of actively fulfilling after-care obligations that results in gas generation. Landfill
site transfers include £1.1m (2021: credit of £2.9m) in relation to the future economic benefit to be derived as a result of actively fulfilling after-care obligations that results in gas
generation. When the obligation recognised as a provision gives access to future economic benefits, an asset in property, plant and equipment is recognised. Changes in the provision
arising from revised estimates that relate to the asset are recorded as adjustments to the carrying value of the asset. When the carrying value of the asset is negative, these are classified
to provisions.
In line with the Group’s commitment to reduce its Scope 1 and 2 carbon emissions to 50% by 2030 (from a 2019 baseline) and achieve Net Zero by no
later than 2050, the need for replacement of existing vehicle fleet with those which use alternative sources of “cleaner” energy source was carried out and
its impact on the useful economic life of vehicles was considered. The Group however does not consider this transition to result in a material impact on
the carrying value of the vehicles.
During the current financial year, Land and Buildings with a net book value of £3.5m were disposed, in addition to plant, vehicles and equipment with
a net book value of £0.3m. Associated outstanding lease liabilities of £3.1m were also terminated. Total cash consideration of £6.9m was received (2021:
£0.8m), leading to the recognition of a gain on disposal of fixed assets of £6.2m (2021: loss on disposal of £0.3m).
Biffa plc / Annual Report and Accounts 2022
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Land and buildings and landfill sites at net book value comprise:
2022 2021
Land and
buildings
£m
Landfill
sites
£m
Land and
buildings
£m
Landfill
sites
£m
Freehold 42.8 13.5 39.1 14.7
Long leasehold 58.7 16.0 52.8 14.3
Short leasehold 122.7 9.0 122.5 8.1
224.2 38.5 214.4 37.1
As at 25 March 2022 the Group had entered into contractual commitments for the acquisition of plant, property and equipment amounting to
£12.5m(2021: £6.6m).
Right-of-use assets
The Group records its right-of-use assets within property, plant and equipment. The Group leases assets including buildings and plant and equipment.
The average lease term is 12.8 years (2021: 13.4 years). The Group has options to purchase certain plant and equipment for a nominal amount at the end
of the lease term. The Group’s obligations are secured by the lessors’ title to the leased assets for such leases.
The carrying amount of the Group’s total right-of-use assets included within Property, Plant and Equipment are analysed as follows:
Land and
buildings
£m
Plant, vehicles
and equipment
£m
Total
£m
Carrying value
As at 27 March 2020 127.1 145.4 272.5
Acquired through business combination 19.1 4.5 23.6
Additions 41.6 18.3 59.9
Depreciation charge for the period (14.0) (35.6) (49.6)
Disposals – (1.3) (1.3)
Lease modifications (1.2) – (1.2)
Impairment of assets – (1.3) (1.3)
Transfer to owned assets after lease expiry – (6.6) (6.6)
As at 26 March 2021 172.6 123.4 296.0
Acquired through business combination 13.7 3.6 17.3
Additions 8.2 20.3 28.5
Depreciation charge for the period (17.9) (34.0) (51.9)
Disposals 1.8 0.2 2.0
Lease modifications 0.7 – 0.7
As at 25 March 2022 179.1 113.5 292.6
Net book amount:
As at 25 March 2022 179.1 113.5 292.6
As at 26 March 2021 172.6 123.4 296.0
187
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Additional
Information
Notes to the Consolidated Financial Statements continued
13. Inventories
2022
£m
2021
£m
Raw materials and consumables 2.3 1.3
Finished goods 32.9 21.0
35.2 22.3
Inventories are stated at the lower of cost and net realisable value. Inventories consumed in the period ended 25 March 2022 were £68.3m (2021:
£54.1m). Inventory written down in the period totalled £nil (2021: £nil). Reversals of inventory previously written down in the period were £nil (2021: £nil).
At the end of the financial year £4.2m (2021: £3.8m) of inventory held by the Group related to Company Shop Group.
14. Trade and Other Receivables
2022
£m
2021
1
£m
Amounts falling due within one year
Trade receivables 178.0 115.8
Less expected credit loss allowance (5.8) (4.6)
Trade receivables – net 172.2 111.2
Other debtors 5.3 1.5
Prepayments 30.0 28.4
Prepaid landfill provision expenditure 0.1 0.2
207.6 141.3
All amounts included within other debtors and prepayments are due within one year. The movement in prepayments relates to the timing of payments
to suppliers. Trade receivables are non-interest bearing. Due to their short maturities, the fair value of trade and other receivables approximates to their
book value. The average credit period taken on invoices was 35 days (2021: 33 days).
The Viridor acquisition increased trade receivables by £12.0m, and this together with the significant increase in revenue year on year, primarily driven by
price increases, Green Circle and the plant at Seaham, have led to trade receivables ending the year at £178.0m (2021: £115.8m). Included in the Group’s
trade receivables balances are debts with a carrying amount of £16.2m (2021: £9.6m) which are past due at the reporting date. Despite the significant
increase in the total trade receivables balance, the great work our accounts receivable team have done in collecting overdue balances has meant the
ageing profile of our trade receivables has improved, with only 9% overdue compared with 10% at March 2021.
Credit limits for new customers are assigned based on the potential customer’s credit quality. An external credit scoring system is used before assigning
any credit limit over £500. Management monitors the utilisation of credit limits regularly. The trade receivables balance consists of a large number of
customer balances, in excess of 87,000, represented largely by local account customers, and there is no significant concentration of credit risk.
The Group writes off a trade receivable when there is information indicating that the debtor is in severe financial difficulty and there is no realistic
prospect of recovery, for example when a customer enters liquidation. Our trade receivables expected credit loss increased to £5.8m (2021: £4.6m) with
the Viridor acquisition increasing the expected credit loss provision by £1.0m.
The following table details the risk profile of trade receivables. As the Group’s historical credit loss experience does not show significantly different loss
patterns for different customer segments, the provision for loss allowance based on past due status is not distinguished between the Group’s type
ofcustomer.
Expected
credit loss rate
%
Lifetime
expected credit
loss
£m
As at 25 March 2022
Trade receivables – days past due
1 to 30 days 1.0% 2.7
31 to 60 days 1.0% 0.5
61 to 90 days 1.0% 0.3
91 to 120 days 50.0% 0.4
Over 120 days 50.0% 1.9
Biffa plc / Annual Report and Accounts 2022
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Expected
credit loss rate
%
Lifetime
expected credit
loss
£m
As at 26 March 2021
Trade receivables – days past due
1 to 30 days 1% 2.1
31 to 60 days 1% 0.5
61 to 90 days 1% 0.3
91 to 120 days 50% 0.2
Over 120 days 50% 1.5
The allowance for expected credit loss (‘ECL’) includes individually impaired trade receivables which are in excess of 120 days overdue, in liquidation or
are the subject of legal action. The ECL recognised represents the difference between the carrying amount of these trade receivables and the present
value of any expectedrecoveries.
The following table shows the movement in ECL that has been recognised in trade and other receivables in accordance with the simplified approach set
out in IFRS 9.
2022
£m
2021
£m
Movement in expected credit losses
Balance at the beginning of the period 4.6 4.3
Impairment losses recognised 2.2 0.6
Amounts recovered during the period 1.0 0.6
Amounts written off as uncollectable (1.2) (1.4)
Expected credit losses in relation to (decrease)/increase in credit risk (0.8) 0.5
5.8 4.6
The Directors consider that the carrying amount of trade receivables approximates their fair value.
Long-term receivables
2022
£m
2021
£m
Amounts falling due after more than one year
Funds on long-term deposit 2.3 2.2
Prepayment in respect of EVP Dispute (Note 31) – 63.6
2.3 65.8
As a result of the negative outcome on the EVP Dispute the corresponding prepayment of £63.6m has been impaired to nil. More details are available in
Note 31.
In determining the expected credit losses for these long-term receivables, the Directors have taken into account the historical default experience
and financial position of the counterparties. No expected credit loss has been recognised on the basis that the counterparties are HMRC and A-rated
financialinstitutions.
189
Biffa plc / Annual Report and Accounts 2022
Additional
Information
Notes to the Consolidated Financial Statements continued
15. Assets and Liabilities Related to Contracts with Customers
The Group has recognised the following contract liabilities related to contracts with customers:
2022
£m
2021
£m
Current contract assets 71.8 50.6
Current contract liabilities (27.1) (19.6)
44.7 32.8
The timing of payments received from customers, relative to the recording of revenue, can have a significant impact on the liabilities recorded on the
Group’s Statement of Financial Position recognised in less than one year.
Certain contracts have payment terms based on contractual milestones, which are not necessarily aligned to when revenue is recognised, particularly for
those contracts with revenue recognised over time by reference to the stage of completion. Where cash is received in advance of work carried out and
therefore the revenue recognised a contract liability arises.
The contract liabilities primarily relate to the advance consideration received from customers in respect of performance obligations which have not yet
been fully satisfied and for which revenue has not been recognised. All contract liabilities held at 25 March 2022 are expected to satisfy performance
obligations in the next 12 months.
The contract assets primarily relate to the Group’s right to consideration for work completed but not invoiced at the balance sheet date. The contract
assets are transferred to trade receivables when the amounts are agreed by the customer. On most contracts, certificates and agreement is by the
customer on a monthly basis. All contract assets held at 26 March 2021 are expected to be invoiced and transferred to trade receivables within the
next12 months.
None of the contract assets at the end of the reporting period are past due, and, taking into account the historical default experience and the future
prospects in the industry, the Directors consider that no contract assets are impaired.
16. Cash and Cash Equivalents
2022
£m
2021
£m
Cash at bank and in hand 40.2 27.0
Short-term deposits
0.6
3.8
Balance at the end of the period 40.8 30.8
Deposits comprise £nil (2021: £nil) of funds on overnight deposit via a Group cash pooling facility and an insurance deposit of £0.6m (2021: £3.8m) which
represents cash held as security for self-insurance obligations. Included within the total cash balance is £0.9m (2021: £4.1m) which cannot be accessed
by the Group as it is held as collateral against insurance liabilities by Bray Insurance Company Limited, which is the Group’s captive insurancecompany.
17. Financial Instruments
2022
£m
2021
£m
Assets held at amortised cost
Liquidity fund
1
10.7
8.7
10.7 8.7
1 Current investments held by Bray Insurance Company Limited, the Group’s captive insurance company.
Derivative financial instruments
The derivatives that the Group has entered into qualify for hedge designation as cash flow hedges under IFRS 9. All cash flow hedges were deemed to
be fully effective and therefore movements in fair value were all recognised within the hedge reserve.
The Group has entered into forward foreign exchange rate contracts which all mature within one year; these forwards will be used by the Group to
hedge Euro currency payments for the export of Refuse Derived Fuel (‘RDF’). The forward foreign exchange contracts have resulted in the recognition of
a derivative liability of £0.2m (2021: derivative liability of £0.3m).
During the year as a result of two private placement debt raises, the Group reduced its exposure to variable interest rate borrowing. The Group
terminated the variable to fixed interest rate swaps, resulting in a net gain of £1.1m.
The Group enters into commodity swaps to hedge against future movements in fuel prices. At the end of the financial year these hedges were in an
asset position of £11.7m (2021: liability position of £0.6m). Had fuel prices been 10% higher as at the year end date, the fuel commodity hedges would
have increased in value by £3.0m to an asset position of £14.7m.
The fair value measurements of derivatives are classified as Level 2 in the fair value hierarchy as defined by IFRS 13 Fair Value Measurement, as they are
derived from inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly
(i.e. derived from prices).
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2022 2021
Fair value
£m
Notional
£m
Fair value
£m
Notional
£m
Forward foreign exchange contracts (0.2) 6.3 (0.3) 6.2
Interest rate swaps – – (2.7) 150.0
Commodity hedges 11.7 23.9 (0.6) 22.4
11.5 30.2 (3.6) 178.6
The table below represents the cumulative amount of gains and losses on the Group’s derivative financial instruments.
Foreign exchange risk Interest rate risk Commodity risk Total
2022
£m
2021
£m
2022
£m
2021
£m
2022
£m
2021
£m
2022
£m
2021
£m
Balance as the start of the period 0.3 (0.6) 2.7 1.6 0.6 – 3.6 1.0
Gain/(loss) arising on changes in fair value of
hedging instruments during the period
(0.1) 0.9 1.4 1.1 (16.1) 0.6 (14.8) 2.6
(Gain)/loss reclassified to profit or loss – forecast
transaction no longer expected to occur
– – (4.1) – – – (4.1) –
Cumulative (gain)/loss transferred to initial
carrying amount of hedged items
– – – – 3.8 – 3.8 –
Balance at the end of the period 0.2 0.3 – 2.7 (11.7) 0.6 (11.5) 3.6
Borrowings
2022 2021
Book value
£m
Average
interest rate
%
Book value
£m
Average
interest rate
%
Current
Lease liabilities 53.8 3.1% 54.7 3.0%
53.8 54.7
Non-current
Lease liabilities (Note 25) 222.5 3.1% 229.0 3.0%
Private placements and bank loans 354.0 2.8% 197.6 2.8%
EVP preference instrument (Note 31) 14.3 – 47.6 –
590.8 474.2
644.6 528.9
2022
£m
2021
£m
Private placements, bank loans and leases 630.3 481.3
EVP preference liability 14.3 47.6
644.6 528.9
The Group undertook a private placement raising £150.0m in order to maintain adequate funding headroom following the acquisition of Viridor. The
Group issued a further £195.0m private placement following the launch of its Sustainability-Linked Finance Framework in December. The £195.0m
private placement debt has been raised from MetLife Investment Management, New York Life Insurance Company and Pricoa Private Capital. The
funding is linked to two key performance targets:
• Reducing scope 1 and 2 GHG emissions by 50% by 2030; and
• Tripling Biffa Polymers plastics recycling capacity by 2025.
As at 25 March 2022 the Group has an undrawn Revolving Credit Facility (‘RCF’) of £341.0m (2021: £150.0m). Due to the nature of the RCF and continued
repayments and drawdowns, the cash flows were presented on a net basis in the Statement of Cash Flows. The expiration date of the RCF is March 2026.
In the year ended 24 March 2017 certain pre-IPO lenders were issued with preference share capital in Wasteholdco 1 Limited in exchange for settlement
of amounts due to them. After the unsuccessful outcome of the EVP Dispute, as disclosed in Note 31, the associated liability has been reduced from
£47.6m to £14.3m.
Borrowings are measured at amortised cost with the exception of the EVP preference liability which is measured at fair value. All financial assets and
financial liabilities have been categorised as Level 2. Level 2 financial instruments have been valued using inputs other than quoted prices that are
observable for the asset or liability either directly or indirectly.
Refer to Note 24 for the cashflow movement on borrowings during the current a prior financial periods.
191
Biffa plc / Annual Report and Accounts 2022
Additional
Information
Notes to the Consolidated Financial Statements continued
17. Financial Instruments continued
Interest rates on borrowings
2022 2021
Principal
£m
Average
interest rate
%
Principal
£m
Average
interest rate
%
Term facility 9.0 3.2% 197.6 2.8%
Private placement – £150.0m
150.0 2.7% – –
Private placement – £195.0m
195.0 2.5% – –
354.0 197.6
Fair value of financial assets and liabilities
2022 2021
Book value
£m
Fair value
£m
Book value
£m
Fair value
£m
Financial assets
Trade and other receivables
1
(Note 14) 172.2 172.2 111.2 111.2
Financial asset arising on liquidity fund
10.7 10.7
8.7 8.7
Financial asset arising from IFRIC 12 (Note 32) 4.0 4.0 4.1 4.1
Financial asset arising from capitalisation of borrowing fees 1.0 1.0 – –
Financial asset arising from investment in Lovejunk Limited 0.6 0.6 – –
Funds on long-term deposit 2.3 2.3 2.3 2.3
Prepayment in respect of EVP Dispute (Note 31) – – 63.6 63.6
Loans to joint ventures 14.3 14.3 6.0 6.0
Derivative financial instrument 11.7 11.7 0.3 0.3
Cash and cash equivalents (Note 16)
40.8 40.8
30.8 30.8
257.6 257.6 227.0 227.0
Financial liabilities
Private placements and bank loans
2
(354.0) (337.4) (197.6) (197.6)
Lease liabilities (Note 25) (276.3) (276.3) (283.7) (283.7)
EVP preference liability (Note 31) (14.3) (14.3) (47.6) (47.6)
Trade and other payables
3
(Note 18) (286.7) (286.7) (206.5) (206.5)
Deferred and contingent consideration (7.2) (7.2) (9.4) (9.4)
Derivative financial instrument (0.2) (0.2) (3.9) (3.9)
(938.7) (922.1) (748.7) (748.7)
Net financial assets and liabilities (681.1) (664.5) (521.7) (521.7)
1 Trade and other receivables excludes prepayments, other debtors and accrued income.
2 Private placements and bank loans includes £195.0m green loan following the launch of its Sustainability-Linked Finance Framework in December. The fund is linked to two key
performance targets:
– Reducing scope 1 and 2 GHG emissions by 50% by 2030; and
– Tripling Biffa Polymers plastics recycling capacity by 2025.
3 Trade and other payables excludes contingent liabilities, deferred income, taxation and social security and other non-financial liabilities.
The fair values of financial assets and liabilities are determined as follows:
• Interest rate swaps are measured at the present value of future cash flows estimated and discounted based on the applicable yield curves derived
from quoted interest rates.
• The fair values of non-derivative financial assets and liabilities are determined based on discounted cash flow analysis using current market rates for
similar instruments.
Financial risk management
The Group’s activities expose it to a variety of financial risks: market risk (including capital risk management, cash flow interest rate risk, currency risk and
price risk), credit risk and liquidity risk. The Group’s overall risk management programmes focus on the unpredictability of financial markets and seek
to minimise potential adverse effects on the Group’s financial performance. Financial risk management in the above areas is carried out under a policy
approved by the Board of Directors.
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Capital risk management
The Group manages its capital structure using a number of measures and taking into account its future strategic plans. Such measures include its net
interest cover, liquidity and leverage ratios. Total capital is calculated as ‘equity’ as shown in the consolidated statement of financial position plus Net
Debt. Net Debt is calculated as total borrowings (including current and non-current borrowings as shown in the consolidated statement of financial
position) less cash and cash equivalents. The Directors are satisfied that the current risk management strategy is appropriate and effective.
Cash flow interest rate risk
The Group’s interest-bearing assets include cash and cash equivalents which earn interest at floating rates. The Group’s income and operating cash flows
are substantially independent of changes in market interest rates. The Group’s interest rate risk arises from long-term borrowings. Borrowings issued at
variable rates expose the Group to cash flow interest rate risk. Group policy is to maintain an appropriate proportion of its borrowings at fixed rate using
interest rate swaps to achieve this when necessary.
The interest rate risk profile of the Group’s financial assets and liabilities was as follows:
2022
£m
2021
£m
Financial liabilities
Floating rate financial liabilities (excluding derivatives) 9.0 197.6
Fixed rate financial liabilities 621.3 283.7
Non-interest bearing financial liabilities 272.9 215.9
Non-interest bearing EVP preference instrument 14.3 47.6
Total financial liabilities (excluding derivatives) 917.5 744.8
Fixed rate financial liabilities relate to lease liabilities. Non-interest bearing financial liabilities comprise trade payables.
2022
£m
2021
£m
Financial assets
Floating rate financial assets (excluding derivatives) 2.3 65.9
Floating rate financial assets (cash and cash equivalents)
40.8
30.8
43.1 96.7
Non-interest bearing assets
Liquidity fund 6.9 8.7
Non-interest bearing financial assets 192.1 121.3
199.0 130.0
Total financial assets (excluding derivatives) 245.9 226.7
The interest on fixed rate financial instruments is fixed until the maturity of the investment. The interest on floating rate financial instruments is reset at
intervals of less than one year. The other financial assets and liabilities of the Group that are not included in the above tables are non-interest bearing and
therefore not subject to interest rate risk.
Fixed rate and non-interest bearing financial assets and liabilities are exposed to fair value interest rate risk and floating rate financial assets and liabilities
to cash flow interest rate risk.
Currency risk
The Group is exposed to currency risk arising from currency exposures primarily related to the disposal of RDF via export to Europe. The Group enters
into forward contracts to purchase Euros based upon expected costs. These derivatives are classified as cash flow hedges.
Price risk
The Group is not materially exposed to any equity securities price risk, but is exposed to commodity price risks on its outputs. The commodities that the
Group is exposed to are fuel, electricity, paper, glass, cardboard, steel, aluminium and plastics (including HDPE and PET). The price risk associated with
commodities is considered to be in the ordinary course of business for the Group.
Credit risk
Credit risk is managed on a Group basis as appropriate. Credit risk arises from cash and cash equivalents, derivative financial instruments and deposits
with banks and financial institutions, as well as credit exposures to customers, including outstanding receivables. For banks and financial institutions, only
independently rated parties with a minimum rating of A are accepted.
Management does not expect any significant losses of receivables that have not been provided for as shown in Note 14.
The carrying amount of financial assets recorded in the financial information, which is net of impairment losses, represents the Group’s maximum
exposure to credit risk. These amounts include receivable balances from local authority clients, hence are not exposed to significant credit risk. Given the
above factors, the Board does not consider it necessary to present a detailed analysis of credit risk.
193
Biffa plc / Annual Report and Accounts 2022
Additional
Information
Notes to the Consolidated Financial Statements continued
17. Financial Instruments continued
Liquidity risk
The Group ensures that there are sufficient committed loan facilities in order to meet short-term business requirements, after taking into account the
cash flows from operations and its holding of cash and cash equivalents. The expected undiscounted cash flow of the Group’s financial assets and
liabilities (including derivatives), by remaining contractual maturity, at the balance sheet date is shown below:
2022
Due within
one year
£m
Due between
one and
two years
£m
Due between
two and
five years
£m
Due five years
and beyond
£m
Total
£m
Non-derivative financial liabilities
Borrowings, excluding lease liabilities – – (9.0) (345.0) (354.0)
Lease liabilities (53.8) (43.1) (69.4) (110.0) (276.3)
Trade and other payables (286.7) – – – (286.7)
Deferred and contingent consideration
(4.2) (0.3) (0.8) (1.9)
(7.2)
EVP liability – – (14.3) – (14.3)
Non-derivative financial assets
Cash and cash equivalents
40.8
– – –
40.8
Liquidity fund
10.7
– – –
10.7
Trade and other receivables 172.2 – – – 172.2
(121.0) (43.4) (93.5) (456.9) (714.8)
2021
Due within
one year
£m
Due between
one and two
years
£m
Due between
two and five
years
£m
Due five years
and beyond
£m
Total
£m
Non-derivative financial liabilities
Borrowings, excluding lease liabilities – – (197.6) – (197.6)
Lease liabilities (54.7) (43.8) (80.7) (104.5) (283.7)
Trade and other payables (206.5) – – – (206.5)
Deferred and contingent consideration (9.4) – – – (9.4)
EVP liability (47.6) – – – (47.6)
Non-derivative financial assets
Cash and cash equivalents 30.8 – – – 30.8
Liquidity fund 8.7 – – – 8.7
Trade and other receivables 111.2 – – – 111.2
(167.5) (43.8) (278.3) (104.5) (594.1)
Biffa plc / Annual Report and Accounts 2022
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Governance Report
Overview
18. Trade and Other Payables
2022
£m
2021
£m
Current
Trade payables 208.7 155.7
Taxation and social security 54.0 51.3
Interest payable 1.8 0.7
Accruals 75.6 49.5
Other payables 0.6 0.6
340.7 257.8
Non-current
Trade and other payables 6.6 14.6
Included within trade payables is £2.3m (2021: £0.6m) in relation to Government grants.
The taxation and social security figure of £54.0m (2021: £51.3m) includes £0.3m (2021: £0.3m) in relation to the corporation tax creditor, which was
presented as a separate line item within the Statement of Financial Position within the prior year financial statements.
19. Provisions
Landfill
restoration
& after-care
£m
Insurance
£m
Onerous
contracts
£m
Dilapidations
£m
IFRIC 12
£m
HMRC
Landfill Tax
Enquiry
£m
Other
£m
Total
£m
As at 27 March 2020 56.6 15.0 15.4 7.8 – – 0.5 95.3
Utilised (8.5) (1.7) (6.6) (0.1) – – 1.3 (18.2)
Charged to profit and loss account 3.6 2.8 10.2 1.1 – – 1.9 19.6
Impact of real discount rate changes to
profit and lossaccount 17.4 – 3.2 – – – – 20.6
Unwinding of discount 1.8 – – – – – – 1.8
Transfers from fixed/other assets 0.1 – (1.7) – – – (0.1) (1.7)
As at 26 March 2021 71.0 16.1 20.5 8.8 – – 1.0 117.4
Utilised (4.7) (5.8) (6.3) (0.2) – – (3.5) (20.5)
Acquired from acquisition – – 2.0 3.4 12.7 – 5.0 23.1
Charged to income statement 4.6 2.7 4.2 1.5 – 17.0 (1.3) 31.3
Impact of real discount rate changes to
income statement (0.3) – – – – – – (0.3)
Unwinding of discount 2.4 – – – 0.4 – – 2.8
Transfers from fixed assets (Note 12) 0.9 – – – – – – 0.9
Transfers from trade and other payables – – – – 3.0 – 3.0
As at 25 March 2022 73.9 13.0 20.4 13.5 13.1 20.0 3.8 157.7
Provisions have been analysed between current and non-current as follows:
2022
£m
2021
£m
Current 20.3 16.1
Non-current 137.4 101.3
157.7 117.4
Landfill restoration and after-care
As part of its normal activities, the Group undertakes to restore its landfill sites and to maintain the sites and control leachate and methane emissions
from the sites. A provision is made for these anticipated costs. A number of estimate uncertainties affect the calculation, including the impact of
regulation, climate change, accuracy of site surveys, transportation costs, and changes in the real discount rate. The provisions incorporate our best
estimates of the financial effects of these uncertainties, but future changes in any of these estimates could materially impact the calculation of the
provision. Restoration costs are incurred as each site is filled and in the period immediately after its closure. The provision incorporates the best estimate
of the financial effect of these uncertainties, but future changes in any of the assumptions could materially impact the calculation of the provision.
Maintenance and leachate and methane control costs are incurred as each site is filled and for a number of years post closure.
195
Biffa plc / Annual Report and Accounts 2022
Additional
Information
Notes to the Consolidated Financial Statements continued
19. Provisions continued
After-care costs are incurred as each site is filled and for a number of years post closure. This period can vary significantly from site to site, depending upon
the types of waste landfilled and the speed at which it decomposes, the way the site is engineered and the regulatory requirements specific to the site.
Changes in the provision arising from revised estimates or discount rates or changes in the expected timing of expenditures that relate to property, plant
and equipment are recorded as adjustments to their carrying value and depreciated prospectively over their remaining useful economic lives; otherwise
such changes are recognised within the income statement.
The associated outflows are estimated to arise over a period of up to 60 years depending on the date of each site closure. In determining the provision,
the estimates for future expenditure required to settle the obligation are inflated using longer-term inflation rates, and discounted using the nominal
discount rate. The rates utilised reflect the period of the obligation on a site-by-site basis which varies between 10 and 60 years.
Insurance
The associated outflows are estimated to arise over a period of up to six years from the balance sheet date. The Insurance provision includes self
insurance by the Group on both low and high value items. Self insurance by the Group on low value items was previously recorded within the ‘Other
Provisions’ classification. This presentation has been updated to better present the different provisions classifications in both the current period and prior
period comparatives.
Onerous contracts
The Group recognises an onerous contract provision for any unavoidable net loss arising from contracts. The Group reviews its onerous contract
provisions at each reporting date and whenever there is a material change in management’s expectations of the contract. At the end of the financial
year the Group had two onerous contract provisions for Mid-Kent and Leicester.
The future cash inflow from the remaining onerous contracts are highly predictable as they are fixed, based on the terms of the contract. However, the
costs associated with delivering the contract can vary and assumptions on future cash outflows is considered a significant estimate when modelling the
future net cash outflows on onerous contract provisions. On the Mid-Kent provision a 5% increase in future cash outflows would increase the provision
by £1.2m and on the Leicester provision a 5% increase in future cash outflows would increase the provision by £1.0m.
The onerous contract provisions for Leicester will be utilised within seven years of the balance sheet date, and Mid-Kent’s onerous contract provision
will be utilised within two years.
Dilapidations
Dilapidations arise on leased items where the Group recognises an obligation in order to return these items to their original condition as at the inception
of the lease. Dilapidations were previously presented as part of the ‘Other Items’ classification. This presentation has been updated to better present the
different provisions classifications in both the current period and prior period comparatives. Dilapidation provisions are utilised against cashflows arising
at the end of lease contract periods, which range from one to thirteen years from 25 March 2022.
IFRIC 12
During the current period the Group recognised an IFRIC 12 provision for the future capital expenditure on reverting assets on the West Sussex Recycling
contract acquired as part of the Viridor acquisition. The provision is discounted over the duration of the contract term. At acquisition a total of £12.7m
was recognised, with a further £0.4m recognised in the unwinding of the provision to 25 March 2022. This provision will be utilised over the period of the
West Sussex Recycling contract term until 2033.
HMRC Landfill Tax Enquiry
As set out in Note 1, Biffa Waste Services Limited (“BWSL”) is currently the subject of an enquiry by HMRC regarding certain aspects of its Landfill Tax
compliance (“the Enquiry”), as part of concerns HMRC has primarily relating to the interpretation of the qualifying fines regime set out in LFT1. HMRC also
raised concerns, based on its analysis of BWSL’s data, over the potential conduct of BWSL and specific customers, which may have lead to the incorrect
rate of Landfill Tax being paid. Biffa strongly refutes HMRC’s concerns, is fully co-operating with HMRC in relation to the Enquiry and is receiving advice
from Ernst & Young (“EY”). To date, no formal claim for tax has been received from HMRC, there is no certainty that HMRC will bring a claim and it is likely
that it will be some time before the Enquiry reaches a conclusion.
In Biffa’s view, based on advice received to date, there are a range of possible outcomes to the Enquiry, and it is difficult to accurately ascertain the
quantum of any potential liability with any certainty or precision. Whilst Biffa believes it has a strong defence, there remains significant uncertainty in
the ultimate outcome and a provision has been recognised for £20.0m based on specific amounts asserted by HMRC to date and associated costs.
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. Based on the current status of the Enquiry, we consider there will be
no obligation to make settlement for at least 12 months after the balance sheet date.
Other
Other provisions relate to legal fees and life assurance. Previously Dilapidations and Self insurance on low value items provisions were also included
within this balance, but have now been separately disclosed in both the current period and prior period comparatives.
Discounting of provisions
Long-term provisions included in landfill restoration and after-care have been inflated and discounted using the below nominal rates. Long-term
provisions included in onerous contracts have been discounted using the below nominal rates. In previous years, the Group discounted onerous
contract provisions using WACC rates based on the equity and debt leverage of the Group adjusted for industry risk rates. In FY21, the Group changed
the rate used to discount its onerous contract provisions to a risk-free rate.
Biffa plc / Annual Report and Accounts 2022
196
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Financial
Statements
Corporate
Governance Report
Overview
Period of obligation
Inflation rate Discount rate
2022 2021 2022 2021
5 years 3.6% 2.1% 2.7% 1.0%
10 years 3.6% 2.4% 2.8% 1.6%
20 years 3.6% 2.8% 2.9% 2.1%
30 years 3.4% 2.7% 2.9% 2.2%
60 years 3.3% 2.7% 2.7% 2.0%
An increase of 1% in the real discount rate (at current cost) would result in a decrease of environmental provisions of approximately £16.0m (2021:
£15.7m). A 10% increase in cash outflows would result in an increased environmental provision of £7.8m (2021: £7.7m).
Long-term after-care provisions included in landfill restoration and after-care provisions have been inflated at a rate of 3.3% (2021: 2.8%). An increase of
1% in the rate of inflation would result in an increase of environmental provisions of approximately £23.1m (2021: £22.8m).
In arriving at the onerous contract provision for the Mid-Kent Partnership contract, the Group has discounted the future cash flows using a risk-free rate
of 2.5%. If this rate increased by 500 basis points the provision charge would decrease by £0.4m.
In arriving at the onerous contract provision for the Leicester contract, the Group has discounted the future cash flows using a risk-free rate of 2.8%. If this
rate increased by 500 basis points the provision charge would decrease by £2.1m.
20. Deferred Taxation
The following are the major tax assets and liabilities recognised by the Group and movements thereon during the current period:
Temporary
difference
arising
on property,
plant and
equipment
£m
Share-based
payments
£m
Provisions
£m
Hedging
£m
Retirement
benefit
obligation
£m
Goodwill
£m
Intangible
assets
£m
Recognised
tax losses
carried
forward
£m
Total
£m
As at 27 March 2020 21.9 0.8 0.9 – (23.6) 7.7 (34.4) 9.4 (17.3)
Acquired (6.9) – – – – – (4.6) (11.5)
Credit/(charge) to income
statement 10.6 – (0.1) – (1.8) (0.9) 5.3 (1.0) 12.1
Credit/(charge) to SOCI – 1.5 – – 4.1 – – – 5.6
As at 26 March 2021 25.6 2.3 0.8 – (21.3) 6.8 (33.7) 8.4 (11.1)
Acquired (5.5) – – – (0.3) – (9.6) – (15.4)
Credit/(charge) to income
statement 6.6 0.4 0.5 0.1 (4.9) 0.8 (3.3) 11.0 11.2
Credit/(charge) to SOCI – – – (2.2) (15.0) – – – (17.2)
As at 25 March 2022 26.7 2.7 1.3 (2.1) (41.5) 7.6 (46.6) 19.4 32.5
A deferred tax liability of £32.5m (2021: £11.1m liability) has been recognised in the current year using the tax rate of 25% (2021: 19%). Deferred tax assets
and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities.
As at 25 March 2022 the Group had unused tax losses of £94.6m (2021: £61.9m) available for offset against future profits. A deferred tax asset has
been recognised in respect of £77.4m (2021: £43.9m) of these losses. No deferred tax asset has been recognised in respect of the remaining £17.2m
(2021: £17.2m) as it is not considered probable that there will be future taxable profits available in the statutory entity in which these losses are being
carried forward.
During the current financial period a deferred tax asset and corresponding credit to the income statement of £15.5m (2021: £nil) has been recognised as
a result of the outcome of the EVP Dispute. Refer to Note 31 for further details.
The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent that it is no longer probable that
sufficient taxable profits generated in subsequent reporting periods will be available to allow all or part of the asset to be recovered.
The group has considered impacts of climate change in assessing the probability of sufficient taxable profits (loss of revenue from cessation of ROCs
in 2027, potential legislation of Deposit Return Scheme (“DRS”) in England and operating costs due to increased carbon taxes in subsequent reporting
periods for the recoverability of the tax asset). The overall impact from the cessation of ROCs has been considered in the future forecasts, however given
the low financial impact of the DRS legislation and increased carbon taxes, the group does not consider it to have a material impact on the recoverability
of the deferred tax asset.
197
Biffa plc / Annual Report and Accounts 2022
Additional
Information
Notes to the Consolidated Financial Statements continued
21. Share-based Payments
Date of grant
2022
Number
2021
Number
2 July 2018 820,319 842,980
1 October 2018 218,359 218,359
11 December 2018 18,819 18,819
1 July 2019 1,656,417 1,671,056
1 July 2020 2,122,335 2,205,172
1 June 2021 29,792 –
14 June 2021 1,564,400 –
The following share-based expenses charged in the year are included within administration expenses:
2022
£m
2021
£m
Share option plans 3.7 3.8
During the year the Group had two conditional share-based payment arrangements granted to Directors and employees. The schemes are equity settled.
Performance Share Plan
Date of grant
Number of
options
originally
granted
Contractual
life
(years)
Share price
at
date of grant
(pence)
Number of
employees
at grant
Expected
volatility
Expected life
(years)
Risk-free
rate
Fair value
per
option
(pence)
2 July 2018 1,014,880 2.9 251.0 36 24% 2.93 0.71% 173.2
1 October 2018 218,359 2.9 253.0 2 24% 2.93 0.89% 173.8
11 December 2018 18,819 2.9 192.2 1 24% 2.93 0.90% 114.1
1 July 2019 1,773,988 3.0 211.0 37 25% 3.0 0.54% 112.8
1 July 2020 2,354,948 3.0 201.0 77 27% 2.93 (0.07%) 107.7
1 June 2021 29,792 3.0 300.5 1 30% 2.09 0.09% 174.4
14 June 2021 1,855,274 3.0 293.5 41 29% 3.01 0.14% 187.6
The Group uses the following fair value models to value its share awards namely stochastic, black-scholes and chaffe model.
The expected volatility is a measure of the amount by which a share price is expected to fluctuate during the period. It is calculated based on statistical
analysis of daily share prices over the length of the award period. A reconciliation of movements in the number of share awards can be summarised
asfollows:
Date of grant
Number of
options
originally
granted Vested
Lapsed/
Forfeited 25 March 2022
2 July 2018 1,014,880 (820,319) (194,561) –
1 October 2018 218,359 (218,359) – –
11 December 2018 18,819 (18,819) – –
1 July 2019 1,773,988 – (117,571) 1,656,417
1 July 2020 2,354,948 – (232,613) 2,122,335
1 June 2021 29,792 – – 29,792
14 June 2021 1,855,274 – (290,874) 1,564,400
The Performance Share Plan (‘PSP’) provides for the grant of awards in the form of conditional free shares or nil-cost options. Shares in relation to the
award will be released to participants subsequent to the date of the preliminary announcement of results for the 2021/22 financial year dependent
upon the extent to which the performance conditions of achievement of adjusted EPS targets for the fiscal year ended 25 March 2022 and performance
of the Company’s relative total shareholder growth have been satisfied. The EPS fair value is equivalent to the share price at grant date on the basis that it
is a non-market-based measure.
Sharesave Plan
In the financial year 2017 the Biffa Group launched the Biffa Sharesave Plan to all employees with six months or more continuous employment at the
date of the scheme launch. The scheme is subject to HMRC rules which limit the monthly contributions to £500. The scheme term is for three years and
options may be exercised during the six months after completion of the Save As You Earn contract.
Since the launch of the scheme new Sharesave Plans have been launched in subsequent financial years under the same terms.
During the period 1,577,127 options were granted at a fair value 75.68 pence; the share price at reward was 350.0 pence. At 25 March 2022, 4,032,668
options were outstanding under the Sharesave Plans.
Biffa plc / Annual Report and Accounts 2022
198
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Financial
Statements
Corporate
Governance Report
Overview
22. Reserves
Share capital
Number of
shares
Called up
share capital
£
As at 26 March 2021 305,599,408 3,055,994
Share issues 309,075 3,091
As at 25 March 2022 305,908,483 3,059,085
Share premium
The share premium represents amounts received in excess of the nominal value of shares issued since IPO, net of the direct costs associated with issuing
those shares.
£m
As at 26 March 2021 247.0
Shares issues 0.6
As at 25 March 2022 247.6
Merger reserve
The opening merger reserve of £170.3m arose on both the acquisition of Wasteholdco 1 Limited in 2008 and a Jersey registered 'cash box' company that
facilitated an equity raise in 2020.
£m
As at 26 March 2021 170.3
As at 25 March 2022 170.3
Hedging reserve
2022
£m
2021
£m
Balance as the start of the period (6.4) (2.8)
Fair value gain/(loss) arising on hedging instruments during the period 15.0 (2.6)
Net gain/(loss) on cash flow hedges in joint ventures 3.5 (1.0)
Tax relating to items that may be reclassified subsequently to profit or loss (2.2) –
Balance as at the end of the period 9.9 (6.4)
23. Retained Earnings
2022
£m
2021
£m
Retained earnings at the start of the period 43.9 101.6
Loss for the period (4.9) (40.5)
Other comprehensive income for the period 33.7 (17.5)
Value of employee service in respect of share option schemes (excluding NICs) 2.7 3.2
Purchase of shares in EBT (3.6) (4.4)
Deferred tax on movement in share option schemes – 1.5
Dividends paid (6.7) –
Retained surplus at the end of the period 65.1 43.9
199
Biffa plc / Annual Report and Accounts 2022
Additional
Information
Notes to the Consolidated Financial Statements continued
24. Reconciliation of Net Cash Flow to Movement in Net Debt
2022
£m
2021
£m
Net increase/(decrease) in cash and cash equivalents
10.0
(57.0)
Net (increase)/decrease in private placements and bank loans (156.4) 51.4
Net decrease/(increase) in lease liabilities 7.4 (25.7)
Movement in Group Net Debt in the period (139.0) (31.3)
Group Net Debt at beginning of period (456.8) (425.5)
Group Net Debt at end of period (595.8) (456.8)
Analysis of Group Net Debt
2022
£m
2021
£m
Cash and cash equivalents
40.8
30.8
Lease liabilities (276.3) (283.7)
Private placements and bank loans (354.0) (197.6)
EVP preference liability (6.3) (6.3)
Group Net Debt (595.8) (456.8)
EVP preference liability 6.3 6.3
Other finance instruments
10.7
8.7
Capitalised loan arrangement fees – (2.4)
Covenant Basis Net Debt (578.8) (444.2)
The £6.3m EVP preference liability has been included within Group Net Debt as it is payable to EVP preference shareholders. The remaining £8.0m liability
payable to EVP preference shareholders will be funded by reduced tax payments on future earnings. Refer to Note 31 for more details.
The Group’s leverage is calculated on Group Net Debt as follows:
2022
%
2021
%
Group Leverage Ratio (Group Net Debt: Adjusted EBITDA)
3.1x
3.3x
Changes in liabilities arising from financing activities
The table below details changes in the Group’s liabilities arising from financing activities, including both cash and non-cash changes. Liabilities arising
from financing activities are those for which cash flows were, or future cash flows will be, classified in the Group’s consolidated cash flow statement as
cash flows from financing activities.
Non-cash changes
As at
26 March
2021
£m
Financing
cash flows
£m
Acquired
loans
£m
Acquisition of
subsidiary
£m
New
leases
£m
Other
changes
£m
25 March
2022
£m
Lease liabilities (283.7) 62.8 – (17.3) (31.9) (6.2) (276.3)
Private placements and bank loans (197.6) 191.1 (345.0) – – (2.5) (354.0)
EVP preference liability (47.6) – – – – 33.3 (14.3)
(528.9) 253.9 (345.0) (17.3) (31.9) 24.6 (644.6)
Non-cash changes
As at
27 March
2020
£m
Financing
cash flows
£m
Acquired
loans
£m
Acquisition of
subsidiary
£m
New
leases
£m
Other
changes
£m
26 March
2021
£m
Lease liabilities (258.0) 43.4 – (23.3) (45.6) (0.2) (283.7)
Bank loans (249.0) 59.2 (6.7) – – (1.1) (197.6)
EVP preference liability (47.6) – – – – – (47.6)
(554.6) 102.6 (6.7) (23.3) (45.6) (1.3) (528.9)
Other changes includes:
• Interest expense recognised on lease liabilities
• Disposal of lease liabilities;
• Interest accruing on the RCF and Private placements; and
• The release from the EVP liability.
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Statements
Corporate
Governance Report
Overview
25. Lease Liabilities
Finance lease obligations are classified based on the amounts that are expected to be settled within the next 12 months and after more than 12 months
from the reporting date, as follows:
2022
£m
2021
£m
Current liabilities 53.8 54.7
Non-current liabilities 222.5 229.0
276.3 283.7
Undiscounted lease liabilities maturity analysis:
Undiscounted lease liabilities Present value of lease liabilities
2022
£m
2021
£m
2022
£m
2021
£m
Within one year 62.2 62.8 53.8 54.7
More than one year but less than two years 49.0 50.4 43.1 43.8
More than two years but less than five years 79.5 94.5 69.4 80.7
After five years 257.1 222.2 110.0 104.5
447.8 429.9 276.3 283.7
Less: future finance charges (171.5) (146.2) – –
276.3 283.7 276.3 283.7
The average lease term is 12.8 years (2021: 13.4 years). For the period ended 25 March 2022, the effective borrowing rate was 3.1% (2021: 3.0%).
Amounts recognised in profit and loss relating to leases and right-of-use assets:
2022
£m
2021
£m
Depreciation expense on right-of-use assets (Note 12) 51.9 49.6
Interest expense on lease liabilities (Note 3) 9.8 8.5
Income from sub-leasing right-of-use assets (Note 4) (3.3) (3.3)
Expense relating to short-term and low-value assets (Note 4) 25.5 18.5
Cash repayments of £62.8m (2021: £43.4m) on leases have been made in the year.
26. Pension and Post-retirement Benefits
Defined contribution schemes
2022
£m
2021
£m
Defined contribution expense 11.5 10.4
Defined benefit schemes
The Group operates a number of defined benefit schemes: Biffa Pension Scheme (‘BPS’), an Unfunded Unapproved Retirement Benefits Scheme
(‘UURBS’), the Federated Pension Plan (‘FPP’), Prudential Platinum (‘Platinum’), the Kent County Council Pension Fund (the 'Kent Fund’), The Citrus Pension
Plan - Biffa Waste Services Limited Section (previously named the Viridor Somerset Section) (‘Citrus’), the Devon County Council Pension Fund (‘Devon’),
the Staffordshire Pension Fund (the 'Staffordshire Fund’) and the Greater Manchester Pension Fund (‘GMPF’) (collectively, the 'Schemes’).
The Group is also admitted in the Cornwall Pension Fund (the ‘Cornwall Fund’) and Norfolk Pension Fund (the ‘Norfolk Fund’). The contractual terms of
the commercial agreements that admit the Group to these schemes limit the actuarial risk that the Group is exposed to; consequently the schemes have
been accounted for as a defined contribution scheme.
The Schemes offer both pensions in retirement and death benefits to members. All the Schemes are closed to new members. The BPS, Platinum, the
Cornwall Fund, the Kent Fund and the Staffordshire Fund are open to accrual although the BPS is closed for the majority of members and only a few
employees with statutory protections remain in active service. The BPS makes up around 95% of the total liability across the Schemes.
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Information
Notes to the Consolidated Financial Statements continued
26. Pension and Post-retirement Benefits continued
The Schemes expose the Group to actuarial risks such as market (investment) risk, interest rate risk, inflation risk currency risk and longevity risk.
Contributions to the Schemes for the year ended 31 March 2023 are expected to be £2.1m (2021: £5.9m).
The Schemes are administered by Trustees and the assets are held separately to the legal entity that is the Group. The Trustee board of the Schemes
is composed of an independent Trustee, and other employer and member nominated Trustees (where the legal minimum proportion of member
nominated Trustees has been upheld). The Trustees are required by law to act in the best interests of the members of the Scheme Investment policy with
regard to the assets of the Schemes.
The Group considers two measures of the Schemes' surplus or deficit. The accounting position is shown on the Group’s Consolidated Statement of
Financial Position. The funding position, calculated at the triennial actuarial assessment, is used to agree contributions to the Schemes. The two measures
will vary because they are for different purposes, and are calculated at different rates and in different ways. The key calculation difference is that the
funding position considers the expected returns of Scheme assets when calculating the Schemes' liability, whereas the accounting position under IAS 19
discounts liabilities based on corporate bond yields.
The Schemes have an accounting surplus that is fully recognised on the basis that future economic benefits are unconditionally available in the form of
a reduction in the future cash contributions or as a cash refund. Where a surplus of a defined benefit Scheme arises or there is potential for a surplus to
arise from committed future contributions the rights of the Trustees to prevent the Group obtaining a refund of that surplus is considered in determining
whether it is necessary to restrict the amount of the surplus that is recognised.
A full actuarial valuation of the Schemes was carried out as at 31 March 2021 which revealed a funding surplus of £19.3m on the technical provisions.
A deficit of £106.9m has been recognised against the solvency estimate and a deficit of £86.2m has been recognised against the low dependency
estimate. The Group has proposed to pay the current rate of deficit reduction contributions under the existing Recovery Plan up to the point the Scheme
achieves its medium term objective of securing the liabilities with an insurer. The remaining contributions under the current Recovery Plan are as follows:
• a payment of £4.3m made on 28 March 2022;
• a payment before 31 March 2023 equal to £4.3m increased with actual RPI inflation; and
• a payment of £2.0m before 31 March 2024.
The Cornwall Fund, Norfolk Fund, Kent Fund, Staffordshire Fund and GMPF are all Local Government Pension Schemes. When determining the
appropriate accounting treatment for these schemes, the Group considers the extent to which it is exposed to actuarial risk throughout the term of the
commercial contract and also obligated to fund any deficit on exit of the contract.
Investment risk
The present values of the Schemes’ liabilities are calculated using a discount rate determined by reference to yields available on high-quality AA-rated
corporate bond yields; in other words, from the position of being fully funded then if the return on the Schemes’ assets were below this rate, it would
create a deficit in the Schemes.
In addition to the natural interest rate hedging provided by its investment in bonds the Trustee also purchases derivatives to ensure that the funding
position of the Schemes are, overall, hedged against 85% of movements in long-term risk-free interest rates and 85% of movements in inflation
expectations. No annuities or specific mortality hedging products have been purchased by the Schemes.
Interest risk
A decrease in the corporate bond yield will increase the Schemes’ liabilities; however, this will be partially offset by an increase in the value of the
Schemes’ corporate bond assets.
Longevity risk
The present values of the Schemes’ liabilities are calculated by reference to the best estimate of the mortality of the Schemes’ members both during and
after their employment. An increase in the life expectancy of the Schemes’ members will increase the Schemes’ liabilities.
Inflation risk
The present values of the Schemes’ liabilities are calculated by reference to the future expected pension indexation (both indexation in deferment and
pension increases in payment), which will depend on future inflation expectations. As such, an increase in the expectation of future inflation will increase
the Schemes’ liabilities.
The lump sum death benefits paid to the dependants of the Schemes’ members are insured with an external insurance company. The present value of
the obligation, and the related current service cost and past service cost, were measured using the projected unit credit method.
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A full actuarial valuation of the Schemes was carried out as at 31 March 2021 and has been updated to 25 March 2022 by a qualified independent
actuary. The major assumptions used by the actuary were (in nominal terms) as follows:
2022
%
2021
%
Discount rate 2.9% 2.0%
Rate of salary increase 3.9% 3.1%
Rate of inflation – RPI 4.2% 3.1%
Rate of inflation – CPI 3.4% 2.6%
Rate of pension increases – RPI with floor of 0% cap of 2.5% p.a. (non-pensioners) 1.9% 2.1%
Rate of pension increases – RPI with floor of 0% cap of 2.5% p.a. (pensioners) 2.2% 2.1%
Rate of pension increases – RPI with floor of 0% cap of 5.0% p.a. (non-pensioners) 2.8% 2.9%
Rate of pension increases – RPI with floor of 0% cap of 5.0% p.a. (pensioners) 3.3% 2.9%
Rate of pension increases – RPI with floor of 0% cap of 6.0% p.a. (non-pensioners) 3.0% 3.0%
Rate of pension increases – RPI with floor of 0% cap of 6.0% p.a. (pensioners) 3.5% 3.0%
Rate of pension increases – CPI with floor of 0% cap of 3.0% p.a. (non-pensioners) 2.1% 2.2%
Rate of pension increases – CPI with floor of 0% cap of 3.0% p.a. (pensioners) 2.3% 2.2%
Rate of pension increases – CPI uncapped (non-pensioners) 3.0% 2.9%
Rate of pension increases – CPI uncapped (pensioners) 3.3% 2.9%
Longevity (years)
Expected future lifetime of a male pensioner currently aged 65 21.2 21.2
Expected future lifetime of a female pensioner currently aged 65 23.3 23.2
Expected future lifetime from age 65 of a male member currently aged 45 22.5 22.5
Expected future lifetime from age 65 of a female member currently aged 45 24.9 25.2
1 In excess of any Guaranteed Minimum Pension (‘GMP’).
The assets in the Schemes were:
2022 2021
£m % £m %
Asset category
Equities 107.4 17.1% 149.8 24.1%
Bonds 10.8 1.7% 245.8 39.5%
Properties and infrastructure 22.5 3.6% 22.9 3.7%
Hedge funds 72.0 11.5% 98.3 15.8%
Other 415.6 66.1% 104.8 16.9%
628.3 621.6
Actual return on plan assets 9.4 57.5
The fair value of all of the above asset classes are determined based on quoted (‘bid’) market prices. Virtually all equity and debt instruments have quoted
prices in active markets. Derivatives are classified as Level 2 instruments and hedge funds and property as Level 3 instruments. It is the policy of the
Schemes to use hedge funds and liability driven investments to hedge some of their exposure to interest rate and inflation risks. This policy has been
implemented during the current and prior years.
The key source of estimation uncertainty relates to the valuation of the property portfolio, where a valuation is obtained annually from professionally
qualified external valuers. The evidence to support these property valuations is based primarily on recent, comparable market transactions on an arm’s
length basis. However the assumptions applied are inherently subjective and so are subject to a degree of uncertainty.
An increase in the property valuation of 10% would increase pension assets by £2.3m. An increase in the valuation of traded assets of 10% would
increase pension assets by £19.0m.
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Information
Notes to the Consolidated Financial Statements continued
26. Pension and Post-retirement Benefits continued
Reconciliation of opening and closing balances of the present value of the defined benefit obligation
2022
£m
2021
£m
Benefit obligation at beginning of period 525.8 485.9
Service cost 2.5 2.5
Gain on settlement – (3.0)
Interest cost 10.4 11.6
Contributions by Scheme participants 0.3 0.4
Net remeasurement (gains)/losses – financial (56.2) 68.9
Net remeasurement (gains)/losses – demographic (4.3) 3.8
Net remeasurement losses/(gains) – experience 1.0 (4.0)
Newly recognised schemes 7.8 –
Benefits paid (16.8) (40.4)
Past service costs 0.1 0.1
Benefit obligation at end of period 470.6 525.8
Reconciliation of opening and closing balances of the fair value of Schemes’ assets
2022
£m
2021
£m
Fair value of Schemes’ assets at beginning of period 621.6 599.3
Interest income on Schemes’ assets 12.4 14.3
Return on assets, excluding interest income (3.0) 43.1
Contributions by employers 5.7 5.9
Contributions by Schemes’ participants 0.3 0.4
Newly recognised schemes 9.3 –
Benefits paid (16.8) (40.4)
Scheme administrative cost (1.2) (1.0)
Fair value of plan assets at end of period 628.3 621.6
Amounts recognised in comprehensive income in respect of defined benefit Schemes
2022
£m
2021
£m
Current service cost 2.6 2.4
Past service cost 0.1 0.1
Gain on settlement – (3.0)
Administrative cost 1.2 1.0
Service cost adjustment in respect of Greater Manchester Pension Fund (1.1) (0.7)
Net interest on the net defined benefit surplus (2.3) (3.1)
Components of defined benefit cost/(gain) recognised in the Income Statement 0.5 (3.3)
Remeasurement on the net defined benefit liability
Return on Schemes’ assets (excluding amounts in net interest expense) 3.0 (43.1)
Actuarial gains and losses from changes in financial assumptions (56.2) 68.9
Actuarial gain from changes in demographic assumptions (4.3) 3.8
Actuarial gain from changes in experience assumptions 1.0 (4.0)
Movement in asset ceiling 3.1 (0.6)
Newly recognised schemes (1.3) –
GMPF Admission agreement 6.0 (3.4)
Components of defined benefit (gain)/cost recognised in other comprehensive income (48.7) 21.6
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The current service cost is included in operating costs in the income statement. The net interest expense is included within finance charges in the
consolidated income statement. The remeasurement of the net defined benefit liability is included in other comprehensive income.
The amount included in the consolidated statement of financial position arising from the Group’s obligation in respect of its defined benefit Schemes is
as follows:
2022
£m
2021
£m
Present value of funded defined benefit obligation (470.6) (525.8)
Fair value of funded Schemes’ assets 628.3 621.6
Adjustment for the restriction in asset benefit (4.3) (1.1)
Adjustment in respect of GMPF agreement 12.7 17.4
Net asset arising from defined benefit obligation 166.1 112.1
Significant actuarial assumptions for the determination of the defined benefit obligation are the discount rate, expected future inflation and mortality.
The sensitivity analyses below have been determined based on reasonably possible changes in the respective assumptions occurring at the end of the
reporting period, while holding all other assumptions constant.
If the discount rate is 1% lower the defined benefit asset would decrease by £104.6 m (2021: £113.6m).
If the inflation assumption increases by 1% the defined benefit asset would decrease by £100.0m (2021: 104.0m).
If the life expectancy increases by one year for both men and women, the defined benefit asset would decrease by £14.9m (2021: £18.2m).
The sensitivity analysis presented above may not be representative of the actual change in the defined benefit obligation as it is unlikely that the change
in assumptions would occur in isolation of one another as some of the assumptions may be correlated.
Furthermore, in presenting the above sensitivity analysis, the present value of the defined benefit obligation has been calculated using the projected
unit credit method at the end of the reporting period, which is the same as that applied in calculating the defined benefit obligation liability recognised
in the statement of financial position.
The Schemes’ participating employers are Biffa Waste Services Limited, Biffa Municipal Limited, Biffa Environmental Municipal Services Limited, Biffa
Leicester Limited and Biffa West Sussex Limited. These subsidiaries fund the cost of any protected members’ future accrual (to the extent that any
protected members remain working for each of these companies) earned on a yearly basis.
Protected members pay a range of fixed contributions of pensionable salary depending on what section of the Schemes they are in. These contributions
range from 3% to 6% of pensionable salary. The residual contribution (including past service augmentations) is paid by the above entities of the Group.
These contributions, required to fund accrual, are agreed between Biffa Corporate Holdings Limited (the Principal Employer) and the Trustees of the
Schemes following each triennial valuation of the Schemes.
In accordance with the Pensions Act 2004, the Schemes’ liabilities are measured using a prudent discount rate at the triennial valuation, but some
asset out performance is allowed for when calculating the deficit recovery contributions paid for by the participating employers. Additional liabilities
stemming from past service due to augmentation of benefits are added to the Schemes’ deficit.
The average duration of the benefit obligation at 25 March 2022 is approximately 19 years (2021: 21 years).
The Group expects to make a contribution of £10.2m to the Schemes during the financial year to 31 March 2023.
27. Related Party Transactions
There have been no material related party transactions in the 52 weeks ended 25 March 2022 (2021: nil) except for key management compensation as
set out in the Directors’ Remuneration Report.
Details of the Directors’ remuneration are set out in the Directors’ Remuneration Report on pages 126 to 140. There have been no related party
transactions with any Directors in the year or in the subsequent period.
During the year to 25 March 2022, the Group invested £17.4m (2021: £8.4m) in Protos ERF Ltd and Newhurst ERF Limited. The Group issued further loan
notes of £7.5m (2021: £3.6m) during the period and accrued unpaid interest income of £0.8m (2021: £0.3m). As at 25 March 2022 the Group recognised
outstanding loan receivable balances due from Protos ERF Ltd and Newhurst ERF Ltd of £14.3m (2021: £6.0m). Both parties can redeem the notes at
any time. The annual rate of interest on the notes is 8%. This whole balance remained outstanding at year end. None of the amount is deemed to be
uncollectable and no expenses have been recognised during the period in respect of bad or doubtful debts in this regard. On financial close, 25 March
22, the Group received from the joint venture reimbursement for development costs incurred.
No Directors held any material interest in any contract with the Company or the Group in the year or subsequent period to 25 March 2022. The Group
has made £5.7m (2021: £5.9m) of contributions to the defined benefit pension schemes. There are no additional related party transactions to disclose.
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Information
Notes to the Consolidated Financial Statements continued
28. Principal Subsidiary Undertakings
All subsidiary undertakings have a financial year ended coterminous with Biffa plc unless otherwise noted. The Companies disclosed below are deemed
to be the principal subsidiaries of the Group.
Principal subsidiary Place of incorporation Activity Shareholding
Biffa Municipal Limited
1
England and Wales Waste management 100%
UK Waste Management Limited
1
England and Wales Waste management 100%
Biffa Waste Management Limited
1
England and Wales Waste management 100%
Biffa West Sussex Limited
1
England and Wales Waste management 100%
Bray Insurance Company Limited
2
Gibraltar Insurance services 100%
Poplars Resource Management Company Limited
1
England and Wales Waste management 100%
Biffa Waste Services Limited
1
England and Wales Waste management 100%
Biffa Leicester Limited
1
England and Wales Waste management 100%
Biffa Environmental Municipal Services Limited
1
England and Wales Waste management 100%
Camo Limited
1
England and Wales Waste management 100%
Company Shop Limited
3
England and Wales Other retail non-specialist 100%
Syrcause Waste Limited
1
England and Wales Waste management 100%
Biffa (West Sussex) Recycling Limited
4
England and Wales Waste management 100%
Specialist Waste Recycling Limited
1
England and Wales Waste management 100%
1 Registered at Coronation Road, Cressex, High Wycombe, Buckinghamshire HP12 3TZ.
2 Registered at Fiduciary Management Limited, Suite 23 Portland House, Glacis Road, Gibraltar, GX11 1AA.
3 Registered at Wentworth Way, Tankersley, Barnsley, South Yorkshire, S75 3DH.
4 Registered at Annan Suite, 10 York Place, Edinburgh, Scotland EH1 3EP.
29. Contingent Liabilities
The Group must satisfy the financial security requirements of environmental agencies in order to ensure that it is able to discharge the obligations in
the licences or permits that the Group holds for its landfill sites. The Group satisfies these financial security requirements by providing financial security
bonds. The amount of financial security which is required is determined in conjunction with the regulatory agencies, as is the method by which
assurance is provided. The Group has existing bond arrangements in England and Wales of approximately £86.7m outstanding at 25 March 2022 (2021:
£82.9m) in respect of the Group’s permitted waste activities where the Group has obligations under the Environment Agency’s fit and proper person
test to make adequate financial provision in order to undertake those activities. Additionally, the Group has bonds to a value of £16.1m (2021: £14.6m) in
connection with security for performance of local authority and other contracts. No liability is expected to arise in respect of these bonds. The Group also
has four letters of credit in relation to the deferred equity contributions on Newhurst EfW and Protos EfW amounting to £32.2m (2021: £57.4m).
Hazardous soils
The Group is engaged in a dispute with HMRC in relation to the landfill tax treatment of sub-soils with low levels of contamination from asbestos relating to
the period 2012 to 2016. The Group received protective assessments of £8.5m from HMRC and paid these monies to HMRC in December 2019. Although
the outcome is not certain, the cash payment is held on the balance sheet within prepayments as the Group expects to successfully defend this case.
EVP
The EVP dispute with HMRC in relation to the landfill tax treatment of certain materials used in the engineering of landfill sites from September 2009 to
May 2012 came to end in May 2022. This is fully explained in Note 31.
HMRC Landfill Tax Enquiry
As set out in Note 1, Biffa Waste Services Limited (“BWSL”) is currently the subject of an enquiry by HMRC regarding certain aspects of its Landfill Tax
compliance (the “Enquiry”), as part of concerns HMRC has primarily relating to the interpretation of the qualifying fines regime set out in LFT1. HMRC
also raised concerns, based on its interpretation of BWSL’s data, over the potential conduct of BWSL and specific customers, which may have led to the
incorrect rate of Landfill Tax being paid. Biffa strongly refutes HMRC’s concerns, is fully co-operating with HMRC in relation to the Enquiry and is receiving
advice from Ernst & Young (“EY”). To date, no formal claim for tax has been received from HMRC, there is no certainty that HMRC will bring a claim and it is
likely that it will be some time before the Enquiry reaches a conclusion.
Whilst a provision has been made for £20m relating to specific amounts asserted by HMRC to date, HMRC has also raised broader concerns about certain
aspects of Biffa’s compliance with the qualifying fines regime set out in LFT1.
The Directors do not consider that a liability is likely to arise for those broader concerns, and therefore this is treated as a contingent liability.
BWSL’s potential additional liability for Landfill Tax for the relevant period could be up to approximately £154 million (being the additional amount
raised in protective assessments less the provision made excluding costs), plus penalties, interest and further costs in responding to the Enquiry. The
total protective assessments figure has increased from the amount of £153m disclosed by the Group on 7 June 2022, due to the Group subsequently
receiving further protective assessments of £15m from HMRC.
The protective assessments have been issued before the conclusion of the Enquiry to ensure that any claim for payment of Landfill Tax that may be
made by HMRC as a result of the Enquiry, is not time-barred.
For further information, please refer to the key source of estimation uncertainty relating to this matter in Note 1 and the related provision disclosure in
Note 19.
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30. Investments in Joint Ventures
Details of each of the Group’s joint ventures at the end of the reporting period are as follows:
Name of joint venture Principal activity Place of incorporation and principal place of business
Proportion of ownership interest
and voting rights held by the
Group
Protos Holding Ltd Energy from waste England and Wales 25%
Protos ERF Ltd Energy from waste England and Wales 25%
Newhurst ERF Holding Ltd Energy from waste England and Wales 50%
Newhurst ERF Limited Energy from waste England and Wales 50%
All of the above joint ventures and associates are accounted for using the equity method in these consolidated financial statements as set out in the
Group’s accounting policies in Note 1.
Summarised financial information in respect of each of the Group’s material joint ventures is set out below. The summarised financial information below
represents amounts in the financial statements of joint ventures prepared in accordance with IFRS Standards.
2022 2021
Newhurst
£m
Protos
£m
Newhurst
£m
Protos
£m
Current assets 7.0 52.9 3.1 24.4
Non-current assets 255.3 185.8 125.7 89.7
Current liabilities (7.4) (22.1) (7.0) (16.5 )
Non-current liabilities (197.7) (213.1) (98.8) (105.1)
57.2 3.5 23.0 (7.5)
The above amounts of assets and liabilities include the following:
Cash and cash equivalents 5.1 50.0 (0.1) 22.6
Current financial liabilities (excluding trade and other payables and provisions) (5.7) (14.8) (6.9) (6.6)
Non-current financial liabilities (excluding trade and other payables and provisions) (197.7) (213.1) (98.8) (105.1)
Revenue – – – –
Loss for the year (1.8) (1.2) (1.0) (1.2)
Other comprehensive income/(loss) attributable to the owners of the
Company 14.1 (14.4) 5.2 (14.5)
Total comprehensive income/(loss) 12.3 (15.6) 4.2 (15.7)
Reconciliation of the above summarised financial information to the carrying amount of the Group’s interest in the joint venture recognised in the
consolidated financial statements:
2022 2021
Newhurst
£m
Protos
£m
Newhurst
£m
Protos
£m
Net assets of joint venture 57.2 3.5 23.0 (7.7)
Group’s percentage ownership interest in the joint venture 50% 25% 50% 25%
Carrying amount of the Group’s interest in the joint venture 28.6 0.8 11.5 (1.9)
2022 2021
Newhurst
£m
Protos
£m
Newhurst
£m
Protos
£m
Interest in joint venture carried forward 11.5 (1.9) 3.0 –
Additions 10.8 6.6 6.4 2.0
Share of post-tax results (0.8) (0.3) (0.5) (0.3)
Share of net loss on cash flow hedge in joint venture 7.1 (3.6) 2.6 (3.6)
Interest in the joint venture at the end of the period 28.6 0.8 11.5 (1.9)
The Protos joint venture is currently in a net asset position of £3.5m at the end of March 2022 (2021: £7.5m liability) as a result of the unrealised fair value
of the cash flow hedges (Biffa’s 25% interest: asset of £1.3m (2021: £1.9m liability)). The fair value gain is £6.1m at the balance sheet date (2021: £14.5m
fair value loss) (Biffa’s 25% interest: gain of £1.5m (2021: £3.6m interest loss)). The net asset has been recognised in the financial statements due to the
commitment made by Biffa to fund the joint venture and the associated letters of credit.
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Additional
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Notes to the Consolidated Financial Statements continued
31. EVP-related Items
The Group has been engaged in a dispute with HMRC concerning historical Landfill Tax.
HMRC claimed that the Group was liable for £61.9m of Landfill Tax in respect of certain waste materials deposited in Biffa’s landfill sites from 2009 to 2012
(‘EVP’). Biffa contested that the material was used in the sites for an engineering purpose and was not therefore subject to Landfill Tax. Notwithstanding
the Group’s opinion on the tax treatment of this material, since 2012 all materials of this nature have been subjected to Landfill Tax.
The matter was heard by the First Tier Tax Tribunal which found in HMRC’s favour, before Biffa won the Upper Tax Tribunal for the EVP case. HMRC
however requested a further hearing from the Court of Appeal which took place in March 2021. Biffa was unsuccessful in the hearing with the Court of
Appeal and the Directors sought leave to appeal the decision to the Supreme Court. In May 2022 the Group’s request of leave to appeal was refused by
the Supreme Court.
The contested amount was paid to HMRC following the refinancing of the Group upon its IPO in October 2016. In addition to the payment of £61.9m,
the Group paid £1.7m in interest in the period ended 24 March 2017. The Directors, having taken appropriate advice, did not believe that a liability to tax
exists and accordingly treated the payment of the tax and associated interest as a prepayment.
As part of the IPO of the Group, arrangements were put in place to make certain payments to the shareholders and certain members of employee
incentive schemes of the Group immediately prior to its Listing, subject to and in respect of the outcome of the dispute. A financial liability of £47.6m
was recognised in borrowings and an accrual of £13.0m was recognised in non-current liabilities.
With the negative outcome confirmed, the £63.6m prepayment has been impaired to £nil and a corresponding deferred tax asset of £15.5m has been
recognised. The £47.6m financial liability has been reduced to £14.3m and the accrual has been reduced to £3.5m. These outstanding balances reflect
the amounts payable to the shareholders and certain members of employee incentive schemes of the Group respectively, immediately prior to its
Listing. The net impact of these transactions on Profit After Tax is a loss of £5.4m.
These transactions have been included in the financial statements for the year ending 25 March 2022 because, despite the outcome of the appeal
arising after the year end date, the event is considered to be an adjusting event in line with IAS 10: Events After the Reporting Period.
Of the total remaining liability of £17.8m, £6.3m has been included within Group Net Debt, consistent with previous years.
32. Service Concession Arrangements
Prior to the Viridor acquisition, the Group had two integrated waste management contracts that could potentially be considered as service concession
arrangements. These were with Leicester City Council (25 years – awarded in 2003) and West Sussex County Council (25 years – awarded in October
2010). The concessions vary as to the extent of their obligations, but typically require the construction and operation of an asset during the concession
period including scheduled maintenance and capital expenditure. The operation of the assets includes the provision of waste management services
such as collection, recycling and disposal. Typically at the end of concession periods the assets are returned to the concession owner. There have not
been any significant changes to these arrangements in the period.
The construction of the infrastructure for West Sussex County Council was funded by the Council and therefore falls outside of the scope of IFRIC 12 and
neither a financial asset nor intangible asset has been recognised. The Leicester City Council contract does fall within the scope of IFRIC 12, however, and
a financial asset of £4.0m (2021: £4.1m) has been recognised in relation to this contract. This is included in Note 17.
These contracts generated revenue of £47.2m in the 52 weeks ended 25 March 2022 (2021: £43.4m). The contract with Leicester City Council is loss
making and a return to profitability is not expected and as such an onerous contract provision has been recognised.
In addition to the contract above, the Group has taken over control of the West Sussex Recycling contract (30 years – awarded in 2004) as part of the
Viridor acquisition during the year. As it involves construction and maintenance of recycling assets that will be returned to the Council at the end of the
contract, this arrangement is considered to be within the scope of IFRIC 12. An intangible asset of £37.5m has been recognised on acquisition and is
being amortised over the remaining life of the contract. This contract has generated revenue of £16.7m in the seven months since it was acquired.
Biffa plc / Annual Report and Accounts 2022
208
Strategic Report
Financial
Statements
Corporate
Governance Report
Overview
33. Non-principal Subsidiary Undertakings
Biffa plc is the ultimate parent company in the Biffa Group. The following entities complete the full list of the Company’s subsidiary undertakings.
Name Country of incorporation Activity Shareholding
Wasteholdco 1 Limited†
2
Jersey Holding company 100%
Wasteholdco 2 Limited*
2
Jersey Holding company 100%
Biffa Group Holdings Limited*
2
Jersey Holding company 100%
Biffa Group Limited*
1
England and Wales Holding company 100%
GS Equity Co*
4
Cayman Islands Holding company 100%
Biffa GS Holdings Limited*
1
England and Wales Holding company 100%
GS Acquisitions Limited*
1
England and Wales Holding company 100%
Material Recovery Nominees Limited*
1
England and Wales Dormant 100%
Biffa GS UK Holdings Limited*
1
England and Wales Holding company 100%
Biffa GS (LPP) Limited*
1
England and Wales Waste management 100%
Biffa GS Environmental Limited*
1
England and Wales Waste management 100%
Biffa GS (RUR) Limited*
1
England and Wales Dormant 100%
Biffa GS Environmental Recycling Limited*
1
England and Wales Waste management 100%
Biffa GS (M&B) Limited*
1
England and Wales Waste management 100%
Biffa GS (FC) Limited*
1
England and Wales Waste management 100%
Biffa (WES) Limited*¹ England and Wales Dormant 100%
Biffa Group Holdings (UK) Limited*
1
England and Wales Holding company 100%
Biffa Corporate Services Limited*
1
England and Wales Dormant 100%
Biffa Corporate Holdings Limited*
1
England and Wales Holding company 100%
Biffa Netherlands B.V.*
3
Netherlands Holding company 100%
Biffa Waste Limited*
1
England and Wales Dormant 100%
Biffa Holdings (Jersey) Limited*
2
Jersey Dormant 100%
Biffa UK Group Limited*
1
England and Wales Dormant 100%
Biffa UK Limited*
1
England and Wales Dormant 100%
Biffa (UK) Holdings Limited*
1
England and Wales Dormant 100%
UK Waste Management Holdings Limited*
1
England and Wales Dormant 100%
Biffa (Land) Limited*
5
Guernsey Waste management 100%
Biffa (Roxby) Limited*
1
England and Wales Dormant 100%
Norwaste Limited*
1
England and Wales Dormant 100%
Loristan Services Ltd***
1
England and Wales Dormant 100%
Biffa West Sussex Holdco Limited*
1
England and Wales Dormant 100%
Bray 2008 (Malta) Limited*
6
Malta Holding company 100%
Reclamation & Disposal Limited*
1
England and Wales Dormant 100%
Biffa Holdings Limited*
1
England and Wales Holding company 100%
Biffa (Jersey) Limited*
2
Jersey Holding company 100%
Richard Biffa (Reclamation) Limited*
1
England and Wales Dormant 100%
M Joseph & Son (Birmingham) Limited*
1
England and Wales Dormant 100%
Biffa Pension Scheme Trustees Limited*
1
England and Wales Dormant 100%
Cressex Insurance Services Limited*
1
England and Wales Dormant 100%
White Cross Limited*
1
England and Wales Dormant 100%
Wastedrive Limited*
1
England and Wales Dormant 100%
Wastedrive (Manchester) Limited*
1
England and Wales Waste management 100%
Amber Engineering Limited*
1
England and Wales Waste management 100%
O’Brien Waste Recycling Solutions Holdings Limited*
1
England and Wales Dormant 100%
O’Brien Waste Recycling Solutions Limited*
1
England and Wales Dormant 100%
New Star Environmental Limited***
1
England and Wales Waste management 100%
SWR Smash & Grab Limited***
1
England and Wales Waste management 100%
209
Biffa plc / Annual Report and Accounts 2022
Additional
Information
Name Country of incorporation Activity Shareholding
RUR3 Environmental Limited***
1
England and Wales Waste management 100%
SWRNewstar Limited*
1
England and Wales Dormant 100%
Company Shop Holdco Limited*
1
England and Wales Waste management 100%
Simply Waste Solutions Limited***
1
England and Wales Dormant 100%
Community Shop C.I.C***
7
England and Wales Other retail non-specialist 100%
Weir Waste Services Limited*
1
England and Wales Dormant 100%
Weir Recycling Services Limited*
1
England and Wales Dormant 100%
Island Waste Services Limited*
1
England and Wales Waste management 100%
Lavelle & Sons Limited***
1
England and Wales Dormant 100%
Biffa (Corby) Limited***
1
England and Wales Dormant 100%
Biffa (Earls Barton) Limited***
1
England and Wales Dormant 100%
Barge Waste Management Limited*
1
England and Wales Waste management 100%
* Financial year ended 25 March 2022
** Financial year ended 31 December 2021
*** Financial year ended 31 March 2022
† Directly held by Biffa plc.
1 Registered at Coronation Road, Cressex, High Wycombe, Buckinghamshire HP12 3TZ.
2 Registered at 44 Esplanade, St Helier, Jersey, JE4 9WG.
3 Registered at Jupiter Building, 2nd Floor, Herikerbergweg 88, 1101 CM Amsterdam, The Netherlands.
4 Registered at Intertrust Corporate Services (Cayman) Limited, 190 Elgin Avenue, George Town, Grand Cayman KY19005.
5 Registered at PO Box 119, Martello Court, Admiral Park, St Peter Port, Guernsey, GY1 3H.
6 Registered at 171 Old Bakery Street Valletta, VLT 1455 Malta.
7 Registered at Wentworth Way, Tankersley, Barnsley, South Yorkshire, S75 3DH.
34. Dividends
Dividends have been reinstated for FY22. During the year an interim dividend of 2.20 pence per share was paid (2021: nil). The Board is recommending a
final dividend of 4.49 pence per share for the year ended 25 March 2022 (2021: nil).
35. Post Balance Sheet Events
In May 2022 the Group was unsuccessful in its appeal to the Supreme Court in relation to the EVP Dispute. Given this qualifies as an adjusting event in
accordance with IAS 10: Events after the Reporting Period, certain EVP related balances have been reduced accordingly in the current period. Refer to
Note 31 for further information.
On 7 June 2022, the Group announced that it had received an unsolicited offer from Energy Capital Partners (‘ECP’) to acquire 100% of the share capital
of Biffa plc for £4.45 per share. This offer has not yet been formally submitted to the Board.
Subsequent to 25 March 2022, the Biffa Group acquired certain trade and assets of DJB Recycling Limited, a Sheffield-based waste collection and
recycling business, for a maximum cash consideration of £1.9m. The business generated revenue of c. £4.7m in the last 12 months, employed 31 people,
had a fleet of 13 vehicles and operated from 2 sites in Sheffield prior to completion. The deal was completed on 30 June 2022.
In July 2022 Circularity Scotland Ltd (CSL), the scheme administrator for Scotland’s deposit return scheme, appointed Biffa to provide collection, counting
and sorting services for the billions of drinks containers which are placed on the Scottish market each year.
Notes to the Consolidated Financial Statements continued
33. Non-principal Subsidiary Undertakings continued
Biffa plc / Annual Report and Accounts 2022
210
Parent Company Statement of Financial Position
The parent company statements are prepared under FRS 101 and relate to the Company and not to the Group. The financial statements are prepared
under the historical cost convention. The accounting policies which have been applied to these accounts can be found on pages 213 to 215 and a
separate independent auditor’s report on pages 145 to 156.
Notes
2022
£m
2021
£m
Assets
Non-current assets
Investments 3 257.9 256.4
Trade and other receivables 4 434.0 105.7
691.9 362.1
Current assets
Financial assets 5 1.0 –
Cash and cash equivalents 6 – 0.2
1.0 0.2
Current liabilities
Derivatives financial instruments 7 – (3.0)
Trade and other payables 8 (1.8) (0.2)
(1.8) (3.2)
Net current liabilities (0.8) (3.0)
Non-current liabilities
Borrowings 9 (345.0) –
(345.0) –
Net assets 346.1 359.1
Equity
Called up share capital 10 3.1 3.1
Share premium 10 247.6 247.0
Merger reserve 10 95.8 95.8
Hedging reserve – (2.9)
Retained earnings (0.4) 16.1
Total surplus attributable to shareholders 346.1 359.1
Retained loss for the year was £8.9m (2021: £17.1m profit).
As permitted by section 408 of the Companies Act 2006, the Company has not presented its own income statement or statement of comprehensive
income. The loss of the Company for the year attributable to shareholders was £8.9m (2021: £17.1m profit).
The Financial Statements on pages 211 to 219 were approved by the Board and authorised for issue on 5 August 2022 and signed on its behalf by:
Richard Pike
Director Biffa plc
Company no: 10336040
211
Biffa plc / Annual Report and Accounts 2022
Additional
Information
Strategic Report
Financial
Statements
Corporate
Governance Report
Overview
Parent Company Statement of Changes in Equity
Called up
share capital
£m
Share
premium
£m
Merger
reserve
£m
Hedge
reserve
£m
Retained
(deficit)/
earnings
£m
Total
equity
£m
As at 27 March 2020 2.5 235.3 – (1.0) 0.2 237.0
Profit for the period – – – – 17.1 17.1
Other comprehensive income for the period – – – (1.9) – (1.9)
Total comprehensive income/(loss) – – – (1.9) 17.1 15.2
Shares purchased by employee benefits trust – – – – (4.4) (4.4)
Value of employee service in respect of share option schemes
(excluding NICs) – – – – 3.2 3.2
Equity raise 0.5 1.3 95.8 – – 97.6
Shares issued 0.1 10.4 – – – 10.5
As at 26 March 2021 3.1 247.0 95.8 (2.9) 16.1 359.1
Loss for the period – – – – (8.9) (8.9)
Other comprehensive income for the period – – – 2.9 – 2.9
Total comprehensive income/(loss) – – – 2.9 (8.9) (6.0)
Shares purchased by employee benefits trust – – – – (3.6) (3.6)
Value of employee service in respect of share option schemes
(excluding NICs)
– – – – 2.7 2.7
Shares issues – 0.6 – – – 0.6
Dividend paid – – – – (6.7) (6.7)
As at 25 March 2022 3.1 247.6 95.8 – (0.4) 346.1
212
Biffa plc / Annual Report and Accounts 2022
Notes to the Parent Company Financial Statements
1. Accounting Policies
General Information
Biffa plc (the ‘Company’) is a public company by shares incorporated and registered in the UK and is the ultimate parent company. The address of the
Group’s registered office is Coronation Road, Cressex, High Wycombe, Buckinghamshire, HP12 3TZ. The principal activity of the Company is as holding
company for the Biffa Group which offers the provision of waste management services within the United Kingdom.
These financial statements are presented in Pound Sterling (‘GBP’) and are rounded to the nearest £0.1m.
Basis of preparation
These Financial Statements relate to Biffa plc, a publicly traded company incorporated and domiciled in England and Wales. The registered address is
Coronation Road, Cressex, High Wycombe, Buckinghamshire, HP12 3TZ.
These Financial Statements present the results of the Company as an individual entity and are prepared on the going concern basis, in accordance with
Financial Reporting Standard 101 ‘Reduced Disclosure Framework’ (‘FRS 101’) and the Companies Act 2006.
The Company is part of a larger group and participates in the Group’s centralised treasury and banking arrangements. The Company is expected to
generate positive cash flows to continue to operate in the foreseeable future.
The Company has not presented its own income statement or statement of comprehensive income as permitted by section 408 of the Companies
Act2006.
The Company meets the definition of a qualifying entity under FRS 100 Application of Financial Reporting Requirements issued by the FRC. Accordingly,
these Financial Statements are prepared in accordance with Financial Reporting Standard 101 Reduced Disclosure Framework. The Financial Statements
have been prepared in accordance with the accounting policies set out below, which have been consistently applied to all the years presented except
where the Company has elected to take the following exemptions as allowed under FRS 101.
• The requirements of IAS 7 ‘Statement of Cash Flows’.
• The requirements of paragraph 17 of IAS 24 ‘Related Party Disclosures’ in respect of key management personnel.
• Requirements of IAS 24 ‘Related Party Disclosures’ to disclose transactions between wholly owned members of the Group.
• The requirements of IFRS 7 ‘Financial Instruments: Disclosures’, as equivalent disclosures are provided in the Consolidated Financial Statements of the
Group to which the Company belongs.
• The requirements of IFRS 2 ‘Share-based Payments’.
• The requirements of paragraphs 91 to 99 of IFRS 13 ‘Fair Value Measurements’, as equivalent disclosures are presented in the consolidated
FinancialStatements.
Going concern
Biffa plc operates as the holding company for the Biffa Group of companies, which provides waste management services within the United Kingdom.
During FY22, the Group’s financial performance largely recovered from the effects of the Covid-19 pandemic and the associated lockdown measures.
Revenue and Adjusted EBITDA saw significant growth to surpass FY20 levels despite the significant headwinds faced during the year. These included
high inflationary cost pressures, driver shortages and supply chain disruption. This resilient performance gives the Directors confidence in the forecast
financial performance for the next 12 months. Latest forecasts suggest strong Adjusted EBITDA growth in FY23 as Company Shop Group performance
continues to recover and further synergies are realised on the Viridor acquisition.
These forecasts, when overlaid with sensitivity analysis taking into account different scenarios for fluctuations in trading performance, show that the
Group is expected to be able to comfortably operate within the current levels of the facility over the next 12 months.
The Group had unutilised committed bank facilities available of £341.0m as at the FY22 year end and cash and cash equivalents of £40.8m. This gives a
closing leverage ratio (Net Debt / Adjusted EBITDA) of 2.9x on a covenant basis, substantially below the covenant limit of 4.5x. The large headroom on
both liquidity and leverage puts the Group in a strong position to manage fluctuations in financial performance over the next 12 months.
The Group completed the acquisition of Viridor’s Collections business and certain recycling assets on 31 August 2021 for a total consideration of
£130.8m, with £17.0m of lease liabilities assumed.
In order to fund the Viridor acquisition, the Group arranged a private placement facility with two investors for £150.0m covering a term of 7 and 10 years
with an average borrowing cost of 2.7%.
An additional private placement facility of £195.0m was arranged with three investors (two of which also invested in the £150.0m private placement) in
February 2022, enabling the Group to reduce the drawdown on the RCF to low levels. This has a term of 8, 10 and 12 years with an average borrowing
cost of 2.5%.
The cost of the commitments since the Capital Markets Day have been captured in the going concern assessments when assessing the funding
requirements.
The going concern assumption has been assessed by considering a number of the principal risks in the Strategic Report. Multiple low cases have been
tested, one of which involves the combination of events with a negative impact such as a recession and a large one-off cash payment in FY23 similar in
amount to the sum of the protective assessments issued by HMRC on the ongoing landfill tax enquiry. The Group could continue to operate for at least
the next 12 months in each of these low cases.
213
Biffa plc / Annual Report and Accounts 2022
Additional
Information
Strategic Report
Financial
Statements
Corporate
Governance Report
Overview
Notes to the Parent Company Financial Statements
continued
1. Accounting Policies continued
After careful consideration, the Board recognise the medium and long term sustainability risks arising from climate change, including cessation of
Renewable obligation certificates held by the landfill gas business in 2027. Short term impacts in relation to climate change are not considered to have a
significant impact on the Group’s business model within the Going Concern period.
On 7 June 2022, the Group announced it had received an unsolicited offer from Energy Capital Partners (‘ECP’) to purchase 100% of the share capital
in Biffa plc. The Directors have considered this offer in the context of going concern and have decided that this does not affect the conclusion as to
whether the going concern basis of accounting should be adopted.
Based on the above, the Directors have concluded the Company is well placed to manage its financing and other business risks satisfactorily and
have a reasonable expectation that the Company will have adequate resources to continue in operation for at least 12 months from the signing date
of these Consolidated Financial Statements. They therefore consider it appropriate to adopt the going concern basis of accounting in preparing the
FinancialStatements.
Key judgements and estimates
Management considers Expected Credit Loss (‘ECL’) on inter-company balances to be a key judgement and estimate. An expected credit loss provision
of £4.4m has been recognised as at the close of the current period (2021: £1.2m) in relation to the balance due from subsidiary undertakings.
Investments
Investments are initially stated at cost. Investments are tested for impairment when an event that might affect asset value has occurred.
An impairment loss is recognised to the extent that the carrying amounts cannot be recovered either by selling the asset or by the discounted future
cash flows from the investment.
Dividend distribution
Final dividend distribution to the Company’s shareholders is recognised as a liability in the Company’s Financial Statements in the period in which the
dividends are approved by the Company’s shareholders. Interim dividends are recognised when paid.
Other receivables
Other receivables are recognised initially at fair value less any provision for expected credit loss. They are subsequently held at amortised cost less any
provision for expected credit loss.
Financial assets
Financial assets are classified into the following specified categories: financial assets at amortised cost, fair value through profit or loss (‘FVTPL’) and fair
value through other comprehensive income (‘FVTOCI’).
All recognised financial assets are measured subsequently in their entirety at either amortised cost or fair value depending on the classification of the
financial asset. Debt instruments that meet the following conditions are measured subsequently at amortised cost:
• The financial asset is held within a business model whose objective is to hold financial assets in order to collect contractual cash flows; and
• The contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the
principal amount outstanding.
Debt instruments that meet the following conditions are measured subsequently at fair value through other comprehensive income (‘FVTOCI)’:
• The financial asset is held within a business model whose objective is achieved by both collecting contractual cash flows and selling the financial
assets; and
• The contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the
principal amount outstanding.
By default, all other financial assets are measured subsequently at FVTPL.
214
Biffa plc / Annual Report and Accounts 2022
Derivative financial instruments and hedging activities
Derivatives are initially recognised at fair value on the date a derivative contract is entered into and subsequently remeasured at fair value at each
balance sheet date. The method of recognising the resulting gain or loss depends on whether the derivative is designated as a hedging instrument and,
if so, the nature of the item being hedged.
The Company designates certain derivatives as either a) fair value hedge (hedges of the fair value of recognised assets or liabilities); or b) cash flow hedge
(hedges of a particular risk associated with a recognised asset or liability or a highly probable forecast transaction); or c) net investment hedge (hedges of
net investments in foreign operations).
The Company documents the transaction relationship between the hedging instruments and hedged items at inception. At inception and at each
reporting date the Company assesses whether the derivatives used have been highly effective in offsetting changes in the fair value of hedged items.
The fair values of derivative instruments used for hedging are shown in Note 5. Movements in the hedging reserve are shown in the statement of
changes in equity.
At the reporting date the Company has no fair value hedges or net investment hedges.
Financial liabilities
Debt instruments are classified as financial liabilities. Borrowings are recognised initially at fair value, net of transaction costs incurred. Any difference
between the amounts initially recognised (net of transaction costs) and the redemption value is recognised in the income statement over the period of
the borrowings using the effective interest method.
Commitments and borrowing fees are capitalised as part of the loan and amortised over the life of the relevant agreement. All other borrowing costs are
recognised in the income statement in the period in which they are incurred.
Borrowings are classified as non-current liabilities where the Company has an unconditional right to defer settlement of the liability for at least 12
months after the balance sheet date.
Other payables
Accounts payable are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities.
Share capital
Ordinary shares are classified as equity and are recorded at par value of proceeds received. Where shares are issued above par value, the proceeds in
excess of par value are recorded in the share premium account net of direct issue costs.
Share-based payment plans
The Group’s management awards employee share options, from time to time, on a discretionary basis which are subject to vesting conditions. The
economic cost of awarding the share options to its employees is recognised as an employee benefit expense in the income statement equivalent to
the fair value of the benefit awarded. The fair value is determined by reference to the stochastic pricing model. The charge is recognised over the vesting
period of the award.
2. Employees and Directors
Details of the remuneration received by Directors of Biffa plc are included in the Directors’ Remuneration Report on pages 126 to 140. Biffa plc has two
employees (2021: two), being the Chief Executive Officer and Chief Financial Officer.
3. Investments
£m
As at 27 March 2020 255.8
Movements relating to share options granted/(issued) on behalf of subsidiary employees 0.6
As at 26 March 2021 256.4
Movements relating to share options granted/(issued) on behalf of subsidiary employees 1.5
As at 25 March 2022 257.9
There have been no indicators of impairment during the year and no requirement for impairment. The Directors believe that the carrying value of the
investments is supported by their underlying net assets.
Disclosure of the Company’s joint venture and subsidiaries is given in Notes 28 and 33 of the Group Financial Statements.
215
Biffa plc / Annual Report and Accounts 2022
Additional
Information
Strategic Report
Financial
Statements
Corporate
Governance Report
Overview
4. Trade and Other Receivables
2022
£m
2021
£m
Amounts falling due after more than one year
Amounts due from subsidiary undertaking 434.0 105.7
Total 434.0 105.7
The Directors consider that the carrying amount of trade receivables approximates their fair value. The balance due from subsidiary undertakings is
unsecured, non-interest bearing and repayable on demand. An expected credit loss provision of £4.4m has been recognised as at the close of the
current period (2021: £1.2m) in relation to the balance due from subsidiary undertakings.
5. Financial Assets
2022
£m
2021
£m
Financial assets 1.0 –
During the current financial period the Company undertook two private placements and capitalised associated borrowing costs of £1.0m (2021: £nil).
See Note 9 for further details.
6. Cash and Cash Equivalents
2022
£m
2021
£m
Cash at bank and in hand – 0.2
7. Fair Value of Financial Assets and Liabilities
Financial assets and liabilities
2022 2021
Book
value
£m
Fair
value
£m
Book
value
£m
Fair
value
£m
Trade and other receivables 434.0 434.0 105.7 105.7
Financial assets 1.0 1.0 – –
Cash and cash equivalents – – 0.2 0.2
Derivative liabilities – – (3.0) (3.0)
Trade and other payables (1.8) (1.8) (0.2) (0.2)
Borrowings (345.0) (345.0) – –
Total financial assets and liabilities 88.2 88.2 102.7 102.7
Derivative financial instruments
Full details of the derivative financial instruments are disclosed in Note 17 of the Group Financial Statements. The fair value and the notional amounts are
as follows:
2022 2021
Fair
value
£m
Notional
£m
Fair
value
£m
Notional
£m
Forward foreign exchange contracts – – (0.3) 6.2
Interest rate swaps – – (2.7) 150.0
Notes to the Parent Company Financial Statements
continued
Biffa plc / Annual Report and Accounts 2022
216
8. Trade and Other Payables
2022
£m
2021
£m
Current
Amounts payable to subsidiary undertakings – 0.2
Other creditors 0.5 –
Interest payable 1.3 –
Total trade and other payables 1.8 0.2
All creditors are unsecured. The fair value of non-derivative financial assets and liabilities are determined based on discounted cash flow analysis using
current market rates for similar instruments.
9. Borrowings
2022
£m
2021
£m
Non-current
Private placements 345.0 –
Total borrowings 345.0 –
The Company undertook a private placement raising £150.0m in order to maintain adequate funding headroom following the acquisition of Viridor.
The Company issued a further £195.0m loan notes following the launch of its Sustainability-Linked Finance Framework in December. The £195.0m
private placement debt has been raised from MetLife Investment Management, New York Life Insurance Company and Pricoa Private Capital. The
funding is linked to two key performance targets:
• Reducing scope 1 and 2 GHG emissions by 50% by 2030; and
• Tripling Biffa Polymers plastics recycling capacity by 2025.
10. Reserves
Share capital
Number of
shares
m
Called up
share capital
£m
As at 26 March 2021 305.6 3.1
Shares issued and allotted 0.3 –
As at 25 March 2022 305.9 3.1
Share premium
The share premium represents amounts received in excess of the nominal value of shares issued upon IPO, net of the direct costs associated with issuing
those shares.
£m
As at 26 March 2021 247.0
Shares issued and allotted 0.6
As at 25 March 2022 247.6
Merger reserve
£m
As at 26 March 2021 95.8
As at 25 March 2022 95.8
11. Related Party Transactions
There have been no material related party transactions in the 52 weeks ended 25 March 2022 (2021: £nil) except for key management compensation as
set out in the Directors Remuneration Report, page 126 to 140.
.
Biffa plc / Annual Report and Accounts 2022
Additional
Information
Strategic Report
Financial
Statements
Corporate
Governance Report
Overview
217
Notes to the Parent Company Financial Statements
continued
12. UK Registered Subsidiaries Exempt from Audit
Biffa plc is the ultimate parent company in the Biffa Group. The following UK subsidiaries will take advantage of the audit exemption set out within
Section 479A of the Companies Act 2006 for the period ended 25 March 2022. The undertakings listed below are 100% indirectly owned by Biffa plc. In
accordance with Section 479C of the Companies Act, the Company will guarantee the debts and liabilities of the below UK subsidiary undertakings.
Name Company Number
Amber Engineering Limited 1067283
Barge Waste Management Limited 2849409
Biffa (Corby) Limited 3216850
Biffa (Earls Barton) Limited 748129
Biffa (Roxby) Limited 2031961
Biffa (UK) Holdings Limited 3249158
Biffa Corporate Holdings Limited 5656364
Biffa Corporate Services Limited 7155949
Biffa Environmental Municipal Services Limited 905800
Biffa Group Holdings (UK) Limited 4081901
Biffa GS (FC) Limited 4800628
Biffa GS (LPP) Limited 2276396
Biffa GS (M&B) Limited 1173504
Biffa GS (RUR) Limited 4594882
Biffa GS Environmental Limited 3446693
Biffa GS Environmental Recycling Limited 4786413
Biffa GS Holdings Limited 4602885
Biffa GS UK Holdings Limited 4631832
Biffa Holdings Limited 1032104
Biffa Pension Scheme Trustees Limited 2694166
Biffa UK Group Limited 3650457
Biffa UK Limited 3650459
Biffa Waste Limited 4084432
Biffa Waste Management Limited 1138022
Biffa WES Limited 2729607
Biffa West Sussex Holdco Limited 7001231
CAMO Limited 6524298
Community Shop CIC 8690615
Company Shop Holdco Limited 12215502
Company Shop Limited 192743
Cressex Insurance Services Limited 6848093
GS Acquisitions Limited 7255980
Island Waste Services Limited 1552791
Lavelle & Sons Limited 1312867
Loristan Services Limited 1390710
M Joseph & Son (Birmingham) Limited 440100
Material Recovery Nominees Limited 5186581
New Star Environmental Limited 7306131
Norwaste Limited 1041912
O’Brien Waste Recycling Solutions Holdings Limited 9560589
O’Brien Waste Recycling Solutions Limited 9362987
Poplars Resource Management Company Limited 2630491
Reclamation & Disposal Limited 879315
Richard Biffa (Reclamation) Limited 929000
RUR3 Environmental Limited 6304761
218
Biffa plc / Annual Report and Accounts 2022
Name Company Number
Simply Waste Solutions Limited 12155099
Specialist Waste Recycling Limited SC324466
SWR Smash & Grab Limited 5667032
SWRNewstar Limited 11098385
Syracuse Waste Limited 13269384
UK Waste Management Holdings Limited 2536345
UK Waste Management Limited 1362615
Wastedrive (Manchester) Limited 1517244
Wastedrive Limited 1396771
Weir Recycling Services Limited 9390664
Weir Waste Services Limited 3777183
White Cross Limited 1537610
Biffa plc / Annual Report and Accounts 2022
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Information
Strategic Report
Financial
Statements
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Governance Report
Overview
219
Alternative Performance Measures
The Group’s financial performance is analysed into three components: ‘Statutory Performance’, ‘Adjusted Performance’ and ‘Adjusting Items’. Adjusted
performance is used by management to monitor financial performance as it is considered it aids comparability of the reported financial performance
year to year. As detailed within this appendix, Management of the Group identify a number of Alternative Performance Measures (‘APMs’) in order to
separately disclose an adjusted performance for the Group. The Directors believe that the presentation of the results in this way, which is not meant
to be a substitute for or superior to IFRS measures, is relevant to an understanding of the Group’s performance trends, financial performance and
position. These APMs are also used to enhance the comparability of information between reporting periods and the Group’s divisions, to aid the user
in understanding the performance of the business. Our APMs and KPIs are aligned to our strategy and together form the basis of the performance
measures for remuneration. Consequently, APMs are consistent with how the performance is planned and reported internally to the Board and
Operating Committees to aid their decision making.
APMs have been presented in this appendix to provide a useful tool in understanding the performance of the business. It should be noted, however,
that the APMs presented in these financial statements may not be comparable with similarly titled measures presented by other companies. It is
recommended that APMs are viewed as supplementary information alongside the equivalent statutory measures.
This appendix has been presented to help users of the financial statements understand the rationale behind our use of APMs, our methodology with
respect to identifying adjusting items and the impact of these adjusting items on the APMs. The Group income statement does not disclose any
adjusting items and has been presented as a single column showing the statutory results only. The same approach has been adopted for the Group
statement of cash flows.
Depreciation and amortisation relates to the write-down of both intangible and tangible fixed assets over their estimated useful economic lives.
Amortisation of acquisition intangibles is disclosed separately in line with the divisional Adjusted Business Operating Profit.
The Group’s policy is to exclude items that are considered significant in nature and/or value, not in the normal course of business or are consistent
with items that were separately disclosed in prior periods. Treatment as an adjusting item provides users of the accounts with additional useful
information to assess the year-on-year trading performance of the Group. Management utilises an exceptional item framework that has been
approved by the Board. This follows a three-step process which considers the nature of the event, the financial materiality involved and the particular
facts and circumstances.
Items of income and expense that are considered by management for designation as adjusting items include items such as significant acquisition-related
costs, write-downs or impairments of non-current assets, movements on onerous contract provisions and strategy-related and restructuring costs.
APM
Closest equivalent
statutory measure Definition and reconciliation
Net Revenue Revenue • Statutory revenue excluding landfill tax. Unless stated otherwise, ‘revenue’ refers to statutory revenue.
• Landfill tax is excluded as the rate is outside the Group’s control.
• See table below for reconciliation.
Organic Net
Revenue Growth
Revenue • The increase/(decrease) in Net Revenue in the period excluding Net Revenue from acquisitions completed
in the period and Net Revenue from acquisitions completed in the prior period up to the anniversary of the
relevant acquisition date, to the extent such Net Revenue falls in the current period. Where comparative
periods differ in duration, the KPI is adjusted on a pro-rata basis.
• Organic Net Revenue Growth can be expressed both as an absolute financial value and as a percentage of
prior period revenue.
• Organic Net Revenue Growth is presented to demonstrate to users of the financial statements the growth
attributed to organic growth rather than as a result of acquisition.
• See table below for reconciliation.
Acquisition Net
Revenue Growth
Revenue • Acquisition Net Revenue Growth in any period represents the Net Revenue Growth in the relevant period
from (i) acquisitions completed in the relevant period and (ii) any acquisitions completed in the 12 months
prior to the relevant period up to the 12-month anniversary of the relevant acquisition date (to the extent
such Net Revenue falls in the current period). Acquisition Revenue Growth is calculated on the same basis,
using revenue in place of Net Revenue.
• Acquisition Net Revenue Growth is presented to demonstrate the level of growth achieved as a direct
result of the Group’s acquisition strategy.
• See table below for reconciliation.
EBITDA Profit for the Year • Profit before depreciation, amortisation, net finance costs and taxation.
Adjusted EBITDA Operating Profit • Profit before depreciation and amortisation, adjusting items, changes to landfill provisions, net finance costs
and taxation.
• Adjusted Divisional EBITDA is stated after allocation of shared service costs.
• Adjusted EBITDA is presented because it is widely used by analysts and investors to evaluate the
profitability of companies. EBITDA eliminates potential differences in performance caused by variations
in capital structures, tax positions, the cost and age of tangible assets and the extent to which intangible
assets are identifiable.
• See table below for reconciliation.
Operating Profit Profit for the Year • Profit before net finance costs and taxation.
Appendix
Biffa plc / Annual Report and Accounts 2022
220
APM
Closest equivalent
statutory measure Definition and reconciliation
Adjusted
Operating Profit
Operating Profit • Profit before adjusting items, amortisation of acquisition intangibles, impact of real discount rate changes
to landfill provisions, net finance costs and taxation.
• Adjusted Divisional Operating Profit is stated after allocation of shared service costs.
• See table below for reconciliation.
Profit Before Tax Profit for the Year • Profit Before Taxation.
Adjusted Profit
Before Tax
Profit for the Year • Profit Before Tax excluding adjusting items, amortisation of acquisition intangibles and the impact of real
discount rate changes to landfill provisions.
Adjusted Profit for
the Year
Profit for the Year • Profit excluding adjusting items, amortisation of acquisition intangibles and the impact of real discount
rate changes to landfill provisions.
Adjusted EPS EPS • Adjusted profit for the year divided by the weighted average number of shares in issue during the year.
Adjusted Free
Cash Flow
Net Cash from
Operating Activities
• Net increase/(decrease) in cash and cash equivalents excluding dividends, restructuring costs, adjusting
items, acquisitions, movement in financial assets and movements in borrowings or share capital (but
including finance lease principal payments).
• This measure reflects the cash generated in the period excluding adjusting items and forms part of
management incentives.
Adjusted Return
on Operating
Assets
N/A • Adjusted Operating Profit divided by the sum of average of opening and closing Property, Plant &
Equipment, plus average of opening and closing net working capital.
• See table below for reconciliation.
Adjusted Return
on Capital
Employed (‘ROCE’)
N/A • Adjusted Operating Profit less amortisation of acquisition intangibles divided by the average of opening
and closing shareholders’ equity, Net Debt (including lease liabilities), pensions and environmental
provisions.
Group Net Debt Bank and Other
Borrowings
• Bank and other borrowings plus lease liabilities and EVP preference liability, less cash and cash equivalents.
• See table below for reconciliation.
Covenant Basis
Net Debt
Bank and Other
Borrowings
• Bank and other borrowings plus lease liabilities, less relevant financial assets and cash and cash equivalents.
• This is the measurement that our lenders use when assessing covenant compliance.
• See table below for reconciliation.
Covenant Basis
Leverage Ratio
Bank and Other
Borrowings
• Ratio of Covenant Basis Net Debt to Covenant Basis EBITDA (Adjusted EBITDA plus the impact of increasing
the contribution from acquisitions during the financial year to a full 12 months).
• See calculation in table below.
2022
£m
2021
£m
Adjusted EBITDA
Collections 130.7 98.5
Resources & Energy 73.4 40.7
Specialist Services 11.6 11.3
Group Business Function (20.7) (12.3)
Adjusted EBITDA 195.0 138.2
Depreciation and internally generated amortisation (96.0) (87.2)
Other impairments – (6.8)
IFRIC 12 timing adjustment (2.4) –
Adjusted Operating Profit 96.6 44.2
Adjusting items (75.6) (33.8)
Amortisation of acquisition intangibles (29.6) (27.4)
Impact of real discount rate changes to provisions 0.3 (20.6)
Operating Loss (8.3) (37.6)
Finance income 3.2 3.2
Finance charges (22.4) (17.6)
Share of results in joint venture (1.1) (0.8)
Loss before taxation (28.6) (52.8)
Biffa plc / Annual Report and Accounts 2022
Additional
Information
Strategic Report
Financial
Statements
Corporate
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221
Adjusting items
Group Business Function costs represent shared services and corporate costs (including, inter alia, Board and corporate costs, finance, HR, IT, legal and
insurance, external affairs and SHEQ) remaining after allocation to operating divisions. Adjusted EBITDA represents the profit earned by each division
without allocation of the share of depreciation and amortisation, adjusting items, finance costs, material impacts of changes in real discount rate
applied to the Group’s long-term provisions and income tax expense. Adjusted Operating Profit recognises the impact of depreciation and amortisation
excluding the amortisation of acquisition intangibles. These measures are both reported to the Group Executive Team for the purpose of resource
allocation and assessment of division performance.
Acquisition-related costs
Delivery of the Group’s strategy includes investment in acquisitions that enhance the quality of its operations. The exclusion of significant items arising
from M&A activity is designed by the Board to align short-term operational decisions with this longer-term strategy. Accordingly, amounts arising on
acquisitions are excluded from adjusted performance. The £9.4m (2021: £2.0m) of acquisition-related expenditure in the 52-week period ended 25 March
2022 relates to professional fees and other costs which are directly attributable to acquisitions.
Asset impairments
There is a £25.0m one-off cost related to the impairment of the goodwill that had been recognised in the current year on Company Shop Group, which
was acquired in February 2021. The prior financial period saw a total asset impairment charge of £21.9 million, which consisted of a one-off impairment
of £8.2m to the Poplars Anaerobic Digestion plant in the R&E division and a £13.7m impairment to the Project Fusion intangible asset within the Group
Business Function division.
Strategy-related and restructuring costs
Strategy-related costs of £4.8m (2021: £0.4m credit) arise from Group-wide initiatives to reduce the ongoing cost base and improve efficiency in the
business. These costs are substantial in scope and impact, and do not form part of activities that the Directors would consider part of our operational
performance. Adjusting for these charges provides a measure of operating profitability that is comparable over time. Within the strategy-related costs is
£4.6m relating to the Transformation Project which does not qualify for capitalisation (2021: £nil).
Amortisation of acquisition intangibles
This charge of £29.6m (2021: £27.4m) represents the amounts amortised by the Group in each period in respect of intangibles from prior acquisitions,
which are reported separately from the Group’s depreciation and amortisation charges. The performance of the acquired business is assessed as part of
the Group’s adjusted operational results. The Group uses this adjusting item to improve the comparability of information between reporting periods and
its divisions to aid the users of the Financial Statements in understanding the activities taking place across the Group. The current year charge includes
£2.0m of amortisation relating to the IFRIC 12 intangible asset recognised on the acquisition of the Viridor business.
Impact of real discount rate changes to long-term provisions
The impact of real discount rate changes on long-term provisions reflects the impact on provisions which arises wholly due to the change in
discountrate on provisions. Within the current financial period a credit of £0.3m was recognised (2021: £20.6m charge). This is not reflective of
operational performance.
EVP tax dispute
The Group has been engaged in a dispute with HMRC concerning historical landfill tax. Biffa was unsuccessful in its Court of Appeal hearing held in
March 2021 and has recently been refused leave to appeal by the Supreme Court. The amounts originally paid to HMRC are now deemed irrecoverable
and £17.8m will be payable to EVP preference shareholders and ex-management in the future.
The £20.8m charge to the income statement is the net impact of impairing the £63.6m prepayment to nil and reducing the corresponding liabilities
from £60.6m to £17.8m. A £15.5m taxation credit is recorded in the income statement following the recognition of a deferred tax asset arising from the
impairment of the prepayment balance.
HMRC Landfill Tax Enquiry
As set out in Note 29, Biffa Waste Services Limited (“BWSL”) is currently the subject of an enquiry by HMRC regarding certain aspects of its Landfill Tax
compliance (“the Enquiry”), as part of concerns HMRC has regarding the potential misclassification of waste across the industry. Biffa strongly refutes
HMRC’s concerns, is fully co-operating with HMRC in relation to the Enquiry and is receiving advice from Ernst & Young (“EY”). To date, no formal claim for
tax has been received from HMRC, there is no certainty that HMRC will bring a claim and it is likely that it will be some time before the Enquiry reaches a
conclusion.
In Biffa’s view, based on advice received to date, there are a range of possible outcomes to the Enquiry, and it is difficult to accurately ascertain the
quantum of any potential liability with any certainty or precision.
A provision of £20.0m has been recognised at March 2022, increasing from the £3.0m held at March 2021. The £17.0m charge in the current year has
been treated as an adjusting item.
IFRIC 12 adjustments
The adoption of IFRIC 12: Service Concession Arrangements, results in large accounting adjustments that are not reflective of the operational
performance of the contracts that are within the scope of this guidance. The purpose of these adjustments is to reverse the impact of IFRIC 12 in
theAdjusted Performance.
Under IFRIC 12 depreciation on reverting PPE items is reversed out. The adjustment below reinstates this depreciation.
Also under IFRIC 12 a provision for future capital expenditure that must be incurred in order to fulfil the contract is captured upfront and recognised as
a provision, with the corresponding discount unwind being recognised within net finance costs. The adjustment below reserves this charge from the
Adjusted Performance.
The net impact of these IFRIC 12 adjustments is a £1.0m credit to the Income Statement, which is treated as an adjusting item.
Appendix continued
222
Biffa plc / Annual Report and Accounts 2022
2022
£m
2021
£m
Adjusting items:
Acquisition-related costs 9.4 2.0
Onerous contracts – 10.3
Asset impairments 25.0 21.9
EVP Dispute 20.8 –
IFRIC 12 depreciation adjustment (1.4) –
Strategy-related and restructuring costs/(gain) 4.8 (0.4)
HMRC Landfill Tax Enquiry 17.0 –
75.6 33.8
Other adjusting items:
Amortisation of acquisition intangibles 29.6 27.4
Impact of real discount rate changes to provisions (0.3) 20.6
104.9 81.8
Finance income adjusting items:
Exceptional net interest income (1.1) –
Unwind of discounting on IFRIC 12 provision 0.4 –
(0.7) –
Total adjusting items before tax 104.2 81.8
Taxation impact of adjusting items (26.4) (18.7)
Total adjusting items, net of tax 77.8 63.1
During the current financial period the Group moved from recognising two operating divisions (Collections and Resources & Energy) to recognising
three operating divisions (Collections, Resources & Energy and Specialist Services). Operations including Company Shop Group, Hazardous Waste, IRM
and Biffpack which were formerly included in the Collections division are now reported in the Specialist Services Division. This represents a distinction
from the Municipal and Industrial & Commercial operations retained within the Collections division. The prior period comparatives by division have been
updated to reflect these allocations.
2022
£m
2021
£m
Divisional adjusting items:
Collections 9.4 12.0
Resources & Energy 23.6 55.7
Specialist Services 25.3 1.1
Group Business Function 46.6 13.0
104.9 81.8
2022
£m
2021
£m
Revenue
Collections 873.9 677.6
Resources & Energy 395.2 272.0
Specialist Services 174.1 92.4
1,443.2 1,042.0
Onerous contracts
Onerous contract costs reflect the additional profit and loss movements on legacy contracts that became onerous in prior years due to exceptional
circumstances. At the end of the financial year the Group had two onerous contract provisions for Mid-Kent and Leicester. Any utilisation of the provision
or cash settlement on those contracts is also treated as adjusting items accordingly. At the point at which a contract is no longer considered to be
onerous whether by completion or settlement it is no longer considered to be an adjusting item, and treated as part of business performance before
adjusting items.
223
Biffa plc / Annual Report and Accounts 2022
Additional
Information
Strategic Report
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Statements
Corporate
Governance Report
Overview
2022
£m
2021
£m
Revenue Reconciliation Statutory to Net Revenue
Statutory Revenue 1,443.2 1,042.0
Landfill Tax (79.3) (53.9)
Net Revenue 1,363.9 988.1
2022
£m
2021
£m
Net Revenue split by division
Collections 873.9 677.6
Resources & Energy 315.9 218.1
Specialist Services 174.1 92.4
Net Revenue 1,363.9 988.1
2022
£m Growth factor
FY21 Net Revenue 988.1
Acquisition revenue growth 179.9 18%
Organic revenue growth 195.9 20%
FY22 Net Revenue 1,363.9
2021
£m Growth factor
FY20 Net Revenue 1,102.8
Acquisition revenue growth 13.3 1%
Organic revenue growth (128.0) (12%)
FY21 Net Revenue 988.1
2022
£m
2021
£m
Depreciation
Collections 55.8 51.8
Resources & Energy 29.7 28.9
Specialist Services 6.2 2.1
Group Business Function 3.2 4.4
94.9 87.2
Amortisation
Collections 4.5 4.6
Resources & Energy 25.1 22.8
Specialist Services – –
Group Business Function 1.1 1.2
30.7 28.6
Total Amortisation and Depreciation 125.6 115.8
Included within the amortisation charge above is £29.6m (2021: 27.4m) amortisation of acquisition intangibles.
2022
£m
2021
£m
Adjusted Operating Profit/(Loss)
Collections 75.0 40.9
Resources & Energy 41.1 11.8
Specialist Services 5.4 8.2
Group Business Function (24.9) (16.7)
96.6 44.2
Appendix continued
Adjusting items continued
224
Biffa plc / Annual Report and Accounts 2022
2022
£m
2021
£m
Adjusted Return on Operating Assets
Adjusted Operating Profit
1
96.6 44.2
Average of property, plant and equipment
2
589.7 545.0
Average net working capital
3
(58.2) (58.8)
Total average of property, plant and equipment plus net working capital 531.5 486.2
Adjusted Return on Operating Assets 18.2% 9.1%
1 Operating Profit/(Loss) before finance costs, adjusting items and taxation.
2 Average of opening and closing net book value of property, plant and equipment.
3 Average of the opening and closing net of inventories, trade and other receivables, trade and other payables contract assets and contract liabilities.
4 Adjusted Operating Profit/(Loss) divided by the average of opening and closing PP&E plus net working capital.
2022
£m
2021
£m
Adjusted Return on Capital Employed
Adjusted Operating Profit 96.6 44.2
Amortisation of acquisition intangibles (29.6) (27.4)
Adjusted Operating Profit less amortisation of acquisition intangibles 67.0 16.8
Average of shareholders’ equity
1
470.6 434.4
Average Net Debt
2
547.0
482.5
Average retirement benefits
3
(139.1) (118.4)
Average environmental provisions
4
72.5 63.8
951.0 862.3
Adjusted Return on Capital Employed
5
7.0% 1.9%
1 Average of opening and closing shareholders’ equity in 2022 and 2021.
2 Average of opening and closing Net Debt in 2022 and 2021. The 2021 Net Debt Figure used within this calculation includes the £41.3m EVP Preference liability that is excluded from
the 2021 Group Net Debt figure (Note 24).
3 Average of opening and closing retirement benefits in 2022 and 2021 (Note 26).
4 Average of opening and closing environmental provisions in 2022 and 2021 (Note 19).
5 Adjusted Operating Profit less amortisation of acquisition intangibles divided by the average of opening and closing shareholders’ equity, net debt (including lease liabilities), pensions
and environmental provisions.
Other performance measures
In addition to the adjusting items disclosed above, the Group uses Adjusted Return on Operating Assets and Adjusted Return on Capital Employed
as performance measures. These are aligned to the strategy and are reported internally to the Board and Operating Committees to aid their decision
making. These are calculated as below:
225
Biffa plc / Annual Report and Accounts 2022
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Information
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Corporate
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Adjusted Earnings per Share
Basic Earnings per Ordinary Share are based on the Group profit for the year and a weighted average of 305,323,888 (2021: 294,645,659 ) Ordinary Shares
in issue during the year.
Adjusted Earnings per Ordinary Share has been presented to eliminate the effects of adjusting items, amortisation of acquisition intangibles and the
impact of the change in the real discount rate to landfill provisions. The presentation shows the trend in Adjusted Earnings per Ordinary Share that is
attributable to the trading activities of the Group. The reconciliation between these figures for the Group is as follows:
2022 2021
Loss for the
period
£m
Earnings
per Share
pence
Loss for the
period
£m
Earnings
per Share
pence
Basic earnings per share (17.6) (5.8) (40.5) (13.7)
Adjusting items 77.8 25.5 63.1 21.4
Adjusted basic earnings per share 60.2 19.7 22.6 7.7
2022 2021
Loss for the
period
£m
Earnings
per Share
pence
Loss for the
period
£m
Earnings
per Share
pence
Diluted earnings per share (17.6) (5.6) (40.5) (13.4)
Adjusting items 77.8 24.9 63.1 20.9
Adjusted diluted earnings per share 60.2 19.3 22.6 7.5
2022
£m
2021
£m
Total number of weighted Ordinary Shares 305.7 297.8
Shares held in employee benefit trust in respect of share options (0.4) (3.2)
Weighted average number of Ordinary Shares for the purposes of basic Earnings per Share 305.3 294.6
Effect of potentially dilutive Ordinary Shares:
Impact of share options 6.8 7.2
Weighted average number of Ordinary Shares for the purposes of diluted Earnings per Share 312.1 301.8
Appendix continued
226
Biffa plc / Annual Report and Accounts 2022
A
Acquisition
Net Revenue
Growth
Acquisition Net Revenue Growth in any period
represents the Net Revenue Growth in the relevant
period from (i) acquisitions completed in the relevant
period and (ii) acquisitions completed in the 12
months ended to the start of the relevant period
up to the 12-month anniversary of the relevant
acquisition date (to the extent such Net Revenue falls
in the current period). Acquisition Revenue Growth is
calculated on the same basis, using revenue in place
of Net Revenue
Adjusted
Earnings per
Share
Adjusted Earnings per Share is expressed as adjusted
profit after tax divided by the weighted average
number of shares in the year
Adjusted
EBITDA
Profit before depreciation and amortisation, adjusting
items, finance costs and taxation. Divisional Adjusted
EBITDA is stated after allocation of shared service costs
Adjusted
Operating
Profit
Profit before adjusting items, finance costs and
taxation. Divisional adjusted Operating Profit is stated
after allocation of shared service costs
Adjusted
Operating
Profit Margin
Adjusted Operating Profit Margin is expressed as
adjusted Operating Profit as a percentage of Statutory
Revenue
Adjusted Profit
after Tax
Adjusted Profit after Tax is the profit orloss for the
period before adjusting items
Adjusted
Free Cash Flow
The net increase/(decrease) in cash and cash
equivalents excluding dividends, adjusting items,
acquisitions, movement in financial assets and
movements in borrowings or share capital (but
including lease principal payments)
Adjusting
Items
Items of income and expense that are considered
by management for designation as adjusting
items include items such as significant corporate
restructuring costs, acquisition-related costs,
write-downs or impairments of non-current assets,
movements on onerous contract provisions and
strategy-related and restructuring costs
Admission The Company’s admission of its shares to the
UKListing Authority’s Official List and listing on the
Main Market of the London Stock Exchange on
20October 2016
Anaerobic
Digestion
Anaerobic digestion, a process that generates
renewable electricity using biogas created from
biodegradable waste material (primarily food waste) in
the absence of oxygen
APMs Alternative Performance Measures
1 Ellen MacArthur Foundation, Universal Circular Economy Goals 2021, Executive Summary page 6: https://emf.thirdlight.com/link/kt00azuibf96-ot2800/@/ preview/1?o
C
Circular
Economy
‘‘A circular economy offers opportunities for better
growth, through an economic model that is resilient,
distributed, diverse, and inclusive. It tackles the root
causes of global challenges such as climate change,
biodiversity loss, and pollution, creating an economy
in which nothing becomes waste, and which is
regenerative by design’’
1
Covenant Basis
Net Debt
Covenant Basis Net Debt is equal to Group Net
Debt less EVP preference liability and other financial
instruments
COe Carbon dioxide equivalent is a standard unit in carbon
accounting to quantify greenhouse gas emissions,
emissions reductions and carbon credits
E
EfW Energy from waste, typically from the incineration
ofRDF
ERF Energy recovery facility
ESG Environmental, Social and Governance
ESOS Energy Savings Opportunity Scheme – a mandatory
energy assessment scheme for organisations in the UK
that meet the qualification criteria
EV Electric Vehicle
EVP Engineered into the void permanently, related
to the use of certain material at a landfill site,
placed at specified depths immediately below the
geomembrane layer at the top of a landfill cell, for use
in capping the site
F
FTSE Financial Times Stock Exchange
FY Financial Year
G
GDPR General Data Protection Regulation
GHG Greenhouse gas
GRI Global Reporting Initiative
H
HDPE High-density polyethylene
I
I&C Industrial and commercial business
IPO Initial Public Offering
K
KPIs Key Performance Indicators
ktns or kt Thousand tonnes
L
Leverage Ratio Ratio of Group Net Debt to Adjusted EBITDA
LTI Lost Time Injury Frequency rate, a safety
benchmarking measure calculated as the number of
lost time injuries occurring in a workplace per 100,000
hours worked
Glossary
227
Biffa plc / Annual Report and Accounts 2022
Additional
Information
Strategic Report
Financial
Statements
Corporate
Governance Report
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M
M&A Mergers & Acquisitions
Materiality
Assessment
An assessment which determines an organisation’s
material sources of Environmental, Social and
Governance risk and opportunity to inform
sustainability reporting processes
MRF Materials recycling facility
MW Megawatt
MWh Megawatt hour
N
Net Capex Cash capex less proceeds from disposal of
tangibleassets
Net Revenue Statutory Revenue excluding landfill tax. Unless stated
otherwise, ‘revenue’ refers to Statutory Revenue
Net Zero Net zero refers to achieving a balance between the
amount of greenhouse gas emissions produced and
the amount removed from the atmosphere
O
Organic Net
Revenue
Growth
The increase/(decrease) in net revenue in the period
excluding net revenue from acquisitions completed
in the period and net revenue from acquisitions
completed in the prior period up to the anniversary
of the relevant acquisition date, to the extent such
net revenue falls in the current period. Organic net
revenue growth can be expressed both as an absolute
financial value and as a percentage of prior period
revenue
P
PET Polyethylene terephthalate
PP Polypropylene
PSP Performance Share Plan
R
RCF Revolving credit facility
RDF Refuse-derived fuel, produced by processing solid
waste to segregate largely combustible components
for incineration
Recyclate Raw material sent to, and processed in, a waste
recycling plant or materials recycling facility
Return on
Capital
Employed
(‘ROCE’)
Adjusted Operating Profit less amortisation of
acquisition intangibles divided by the average of
opening and closing shareholders’ equity, Group
Net Debt (including lease liabilities), pensions and
environmental provisions
Return on
Operating
Assets (‘ROOA’)
Adjusted Operating Profit divided by the average of
opening and closing Tangible Fixed Assets plus net
working capital
RIDDOR Reporting of Injuries, Diseases and Dangerous
Occurrences Regulations 2013
ROC Renewable Obligations Certificate
S
SASB Sustainability Accounting Standards Board
SDGs Sustainable Development Goals – a collection of
17 global goals (set by the UN) designed to be a
“blueprint to achieve a better and more sustainable
future for all”
Section 172
or s172
Section 172 of the Companies Act 2006
SHEQ Safety, health, environment and quality
SIP Share Incentive Plan
Stakeholder A stakeholder is a party that has an interest in a
company and can either affect or be affected by
thebusiness
Surplus The amount of an asset or resource that exceeds the
portion which is actively utilised
SWR Specialist Waste Services
T
TCFD Task Force on Climate-related Financial Disclosures
U
UN United Nations
V
Vlogs Video blogs
Void Measure of potential capacity of a landfill site in
cubicmetres
W
Working
Capital
Movement
Working Capital Movement represents the movement
from the previous period in relation to inventories,
trade and other receivables, trade and other payables
and provisions adjusted for the impact of acquisitions
on these balances
Glossary continued
Biffa plc / Annual Report and Accounts 2022
228
Corporate Information
Registered Office
Biffa plc
Coronation Road
Cressex
High Wycombe
Buckinghamshire
HP12 3TZ
Registrar
Equiniti Limited
Aspect House
Spencer Road
Lancing
West Sussex
BN99 6DA
Auditor
Deloitte LLP
2 New Street Square
London
EC4A 3BZ
Corporate Brokers
HSBC Bank plc
8 Canada Square
London
E14 5HQ
Numis Securities Limited
10 Paternoster Square
London
EC4M 7LT
Solicitors
Linklaters LLP
1 Silk Street
London
EC24 8HQ
Financial PR Advisers
Houston
The Leather Market
London
SE1 3ER
Certain statements made in this Annual Report are forward-looking
and are based on current expectations. The statements are subject
to assumptions, inherent risks and uncertainties, many of which
are beyond the Company’s control and which could cause actual
results to differ significantly from those expected. Unless required
by law, regulations or accounting standards, the Company does
not undertake to update or revise any forward-looking statement,
whether as a result of new information or future developments. Any
forward-looking statements made by or on behalf of the Group speak
only as of the date that they are made and are based on knowledge
and information available to the Directors on the date of this Annual
Report. Nothing in this Annual Report should be regarded as a profit
forecast or constitute an offer to sell or an invitation to buy any shares
in Biffa plc.
Website
The Company’s website www.biffa.co.uk/investors gives additional
information on the business. Notwithstanding thereferences made
in the Annual Report to the website, none of the information made
on the website constitutes part of this Annual Report or is deemed to
be incorporated byreference herein.
Forward-looking Statements
229
Biffa PLC / Annual Report and Accounts 2022
Strategic Report
Corporate
Governance Report
Overview
Financial
Statements
Additional
Information
Biffa plc Annual Report and Accounts 2022
Biffa plc
Coronation Road, Cressex,
High Wycombe
Buckinghamshire, HP12 3TZ
01494 521 221
ir@biffa.co.uk
www.biffa.co.uk/investors
Registration No: 10336040