We took swift, decisive action to protect our business focusing on the following three immediate priorities:

• Protecting the health, safety and wellbeing of our employees and the communities we serve
• Ensuring our business operations are able to continue with minimal disruption and that customers continue to receive the essential services that we provide
• Protecting the financial strength of the Group.

Our timeline shows our actions from March – June 2020:

*To view timeline click the thumbnail

Impact on business operations

In our Collections division, the Industrial & Commercial business is the most severely impacted part of Biffa’s business with revenues initially down around 50% from their position prior to COVID-19, however volumes are now beginning to recover with revenues now c. 40% down. The Municipal business has remained resilient, with revenues remaining stable.

The impact across Resources & Energy is varied, with the most notable impact being on Biffa’s landfill operations, which rely on the construction industry for a large proportion of their business and saw revenues reduce by around 50% from their position prior to COVID-19. Volumes are now beginning to recover with revenues now c.40% down. The other areas of the business, whilst impacted, are holding up well.

Protecting financial strength

Our balance sheet and liquidity planning is based upon a cautious base case scenario, which assumes lockdown restrictions continue to be imposed for the duration of Q1 FY21 and are followed by a subdued and incomplete recovery over the remainder of the year.

Under this scenario:

• The I&C division is expected to recover slowly as customers begin to renew activity, exiting the FY21 year with run rate revenues of ~80-90% of FY20, and remaining at these levels as we enter FY22.

• The Resources & Energy division is expected to experience a continued and more marked decline in Landfill Gas revenues during FY22, based on known volume reductions and current electricity prices. The Group expects its recycling business to continue to grow across FY21 and FY22, with the new Seaham PET plant coming on-line and Material Recycling Facility contract improvements.

The impact of reduced EBITDA would see leverage increase at the end of FY21 to c.3x on the base case and 4x on worst case scenario (both on a pre-IFRS 16 basis).

As a consequence of the covenant amendments agreed with lenders, we have agreed a number of restrictions, relating to levels of capex, M&A and shareholder distributions, which we expect to remain in place for c.12-18 months. The Company is therefore continuing to consider its funding options on an ongoing basis, including raising equity capital, to allow it to continue with all the previously outlined growth investment opportunities across I&C, closed loop plastic recycling and Energy from Waste, without delay.

Download more about the impact of coronavirus in our Annual Report available here