Annual Report and Accounts 2020 infrastructure and services Providing critical, sustainable sustainable critical, Providing Biffa Annual Report and Accounts 2020 Over the last 100 years, we have been at the forefront of the UK’s waste industry, collecting 15,000 tonnes of rubbish every day from 76,000 businesses and around 2.2 million households. But our skills and capabilities stretch well beyond the bins. Today our operations span the entire breadth of the waste management process including collection, recycling, treatment, disposal and energy generation. We believe our 8,000+ team can lead the way in achieving a sustainable future for the UK, helping to change the way people think about waste. Contents Strategic Report Performance Highlights 1 At a Glance 2 Our Stakeholders 4 COVID-19 Response 6 Chairman’s Statement 8 In Conversation with our CEO 10 Our Strategic Framework 12 KPIs 14 Financial Review 18 Operating Review 21 Read more about our new PET Sustainability 25 facility in our Strategic Review 13 Non-Financial Information Statement 27 Health & Safety 28 Our People 29 Corporate Governance Managing our Risks 32 Corporate Governance Report 40 Principal Risks 34 Chairman’s Introduction 41 Viability Statement and Going Concern 39 Board of Directors 42 Group Executive Team 44 Nomination Committee Report 54 Audit Committee Report 57 Directors’ Remuneration Report 62 Directors’ Report 84 Statement of Directors’ Responsibilities 87 Financial Statements Independent Auditor’s Report 88 Consolidated Financial Statements 102 Notes to the Consolidated Financial Statements 106 Parent Company Financial Statements 154 Additional Information Glossary 161 Corporate Information 163 In Conversation with our CEO 10-11 Strategic Report Strategic Corporate Governance Corporate Financial Statements Financial 2.47p per Share Dividend £53.6m Flow Cash Free Underlying £1,163.1m (£m) Revenue Statutory Highlights Financial growth Continued Highlights Performance 2018 6.7 2018 44.4 2018 1,076.7 2019 7.2 2019 47.7 2019 1,091.2 (pence) (pence) 2020 2.47 2020 53.6 2020 1,163.1 (£m) Additional Information Additional 2.4x (x) Ratio Leverage £1,102.8m (£m) Net Revenue 18.3p per Share Earnings Statutory 2018 12.4 2018 1.9 2018 1,006.1 2019 7.2 2019 2.1 2019 1,030.8 (pence) (pence) 2020 18.3 2020 2.4 2020 1,102.8 23.1p per Share Earnings Underlying £45.6m Tax after Profit Statutory £90.5m Profit Operating Underlying 2018 19.2 2018 31.1 2018 81.2 2019 20.6 2019 18.0 2019 81.7 (£m) (pence) 2020 23.1 2020 45.6 2020 90.5 (£m) 4. 3. 2. 1. 0.23% (%) Rate Injury Time Lost 58% Engagement Employee Non-Financial Highlights Non-Financial use to generate energy). energy). generate to use we (which gas landfill inless resulting landfill to waste less diverted we as reduced generated energy Our total period. time over a specified calculated employees of number the to relative injuries time lost of number the to refers rate injury time Lost 0.6x. is onleverage impact The £141m. by increased has Debt Net 0.5p. EPSby Underlying £1.1mand by Tax after Profit reduce £2.8m, by Profit Operating Underlying £18.9m, by EBITDA Underlying increase beento has results onFY20 IFRS16 of impact The 162. to 161 onpages glossary the to refer please abbreviations and terms technical For 2018 53 2018 0.27 2019 58 2019 0.39 2020 58 (%) 2020 0.23 (scope 1&2)(ktns) (scope 572ktns CO 423MW Generated Energy Renewable Total 2018 476 2018 782 2 e Emissions e Emissions 2019 441 2019 747 2020 423 2020 572 (MW) 1 Biffa Annual Report and Accounts 2020 At a Glance Creating value for our stakeholders Biffa has an efficient and sustainable business model. Our ability to capture value from the waste we collect and through recycling, energy recovery or safe disposal, is both profitable and environmentally sustainable. A business model with Collect sustainability at its core Our business is formed of two divisions: ‘Collections’ and ‘Resources We collect general waste and recyclate materials and Energy’ (R&E). Collections encompasses our Industrial and Commercial (I&C), Specialist Services and Municipal businesses and provides collection, disposal and other services for businesses and households. R&E which includes Recycling, Organics, Inerts and Landfill Gas, focuses on sorting, treating, processing and recycling waste streams. See pages 21 to 24. We have a strong track record of reinvesting in our business, people, infrastructure and systems and processes, whilst providing positive returns to our shareholders over the long-term. We believe our strong heritage, brand and reputation give us a competitive edge and makes it challenging for new and existing players to compete with us. As with most businesses across both the UK and the globe, COVID-19 is undoubtedly testing the resilience of our business model. However, we believe we have responded well to the challenges (as detailed on pages 6 to 7) and continue to be well placed. This is undoubtedly due to our swift response and the hard work our people put in every day. Revenue sources Revenue sources Revenue sources We have a deep and unrivalled understanding of the UK waste ■ Service fees for collection and disposal of commercial waste ■ Gate fees for processing and treating waste ■ Sale of commodity products market, which comes with over a century of experience. Our ■ Outsourced provision of household collection services ■ Sale of renewable energy expertise is often sought not only from our customers, but from the UK Government which values Biffa’s opinion at a local and national level. This, along with our scalable infrastructure, Costs Costs distinguishes us from our competitors and is why we believe we have an exciting growth journey ahead. ■ Gate fees payable to third-party operators ■ Processing and treatment costs (if waste cannot be processed at a Biffa facility) (including equipment and personnel costs) ■ Vehicle, personnel and associated support services ■ Landfill tax ■ Gate fee disposal costs for certain products 2 Biffa Annual Report and Accounts 2020 Strategic Report Strategic 70 I&C depots 100+ Leader 2 Polymers plastic recycling facilities years of heritage in industry health & safety 15 Soil treatment and composting facilities performance 38 I&C waste transfer stations 11 Hazardous waste facilities Corporate Governance Corporate No.1 2,800 9 Operating landfill sites for I&C collections vehicles 4 Materials recycling facilities 33 Landfill gas sites generating electricity 8,000+ 95% 3 Anaerobic digestion plants employees UK postcode coverage 35 Municipal collections contracts Financial Statements Financial Process Produce We process and treat waste and recycling We generate renewable energy and recycled materials Information Additional at our facilities Where we cannot recycle material at our sites, we send to Energy from Waste facilities or, as a last resort, dispose of to landfill Revenue sources Revenue sources Revenue sources ■ Service fees for collection and disposal of commercial waste ■ Gate fees for processing and treating waste ■ Sale of commodity products ■ Outsourced provision of household collection services ■ Sale of renewable energy Costs Costs ■ Gate fees payable to third-party operators ■ Processing and treatment costs (if waste cannot be processed at a Biffa facility) (including equipment and personnel costs) ■ Vehicle, personnel and associated support services ■ Landfill tax ■ Gate fee disposal costs for certain products Biffa Annual Report and Accounts 2020 3 Our Stakeholders Engaging our stakeholders Positive relationships with our stakeholders, We therefore engage with them to understand what matters to them and take this into account when setting strategy and who have an interest in our business and also in our day-to-day business operations. Our key stakeholder may be impacted by the decisions we make, groups are identified below. We have set out on these pages how the business engages with these stakeholders, the key are key to our long-term success. interests raised and the outcomes of that engagement. Employees Customers Shareholders Government and Regulators Suppliers Communities How we engage How we engage How we engage How we engage How we engage How we engage We regularly engage with our employees Ensuring that we work collaboratively The Executive Directors and Investor We have regular contact with Government We look to secure excellent value We are proud to give something back face-to-face and through a number of with our customers is of vital importance. Relations team meet (in person or and regulatory stakeholders and participate for money, whilst minimising risk in to the communities in which we serve. channels including our employee app, We communicate regularly via customer via conference call) with existing and in various expert working groups, our supply chain. Our Procurement We attend parish council and local employee roadshows, all employee calls, meetings, newsletters, blogs and social potential investors. We also provide Government consultations, waste sector team hosts events and ensures a positive liaison meetings, invite community newsletters and our intranet. We conduct media updates. webcasts, email blasts and events liaison groups and councillor training. two way communication process with members to visit our sites, provide regular an annual employee engagement survey throughout the year. our suppliers. community newsletters and participate in and hold focus groups to share results and volunteering and fundraising initiatives. gain feedback. Key interests raised Key interests raised