Annual General Meeting Wednesday, July 29, 2020 | Suresnes Sebastian Rudow, Chairman and Chief Executive Officer
Agenda 1 Opening of the General Meeting 2 Formalities and Agenda 3 2018 Developments and afterwards 4 2018 Key Performance Indicators 5 Consolidated Financial Statements and Key Figures of 2018 6 New Group Size and Outlook 7 Statutory Auditors’ Reports 8 Resolutions 2 Annual General Meeting Report | July 29, 2020 | CEO & Chairman of the Board
Agenda 1 Opening of the General Meeting 2 Formalities and Agenda 3 2018 Developments and afterwards 4 2018 Key Performance Indicators 5 Consolidated Financial Statements and Key Figures of 2018 6 New Group Size and Outlook 7 Statutory Auditors’ Reports 8 Resolutions 3 Annual General Meeting Report | July 29, 2020 | CEO & Chairman of the Board
1. Opening of the General Meeting Sebastian Rudow, Chairman and Chief Executive Officer Annual General Meeting Report | July 29,2020 | CEO & Chairman of the Board
Agenda 1 Opening of the General Meeting 2 Formalities and Agenda 3 2018 Developments and afterwards 4 2018 Key Performance Indicators 5 Consolidated Financial Statements and Key Figures of 2018 6 New Group Size and Outlook 7 Statutory Auditors’ Reports 8 Resolutions 5 Annual General Meeting Report | July 29, 2020 | CEO & Chairman of the Board
2. Formalities and Agenda Sebastian Rudow, Chairman and Chief Executive Officer Annual General Meeting Report |July 29, 2020 | CEO & Chairman of the Board
Agenda 1 Opening of the General Meeting 2 Formalities and Agenda 3 2018 Developments and afterwards 4 2018 Key Performance Indicators 5 Consolidated Financial Statements and Key Figures of 2018 6 New Group Size and Outlook 7 Statutory Auditors’ Reports 8 Resolutions 7 Annual General Meeting Report | July 29, 2020 | CEO & Chairman of the Board
3. 2018 Developments and afterwards Sebastian Rudow, Chairman and Chief Executive Officer Annual General Meeting Report |July 29, 2020 | CEO & Chairman of the Board
Review of major 2018 Developments (1/2) Technical improvements started to be implemented at Weser-Metall GmbH (deconsolidated in May 2020) did not reverse the cash flow deterioration of the Group ■ Following the start-up of the Reduction Furnace (« RF », new furnace), continuous technical difficulties of the Bath Smelting Furnace (« BSF », main furnace) operating in new batch mode for combined operations with the RF occured ■ Lower volumes of paste and metallic sold from Recylex S.A. to Weser-Metall GmbH due to the struggling operations of Weser- Metall GmbH’ (RF start-up and technical difficulties at the BSF) As consequence, financial covenants from the financing agreement of the German subgroup of December 2016 were breached in 2018 ■ Ongoing struggling operations of Weser-Metall GmbH’s main furnace finally caused the breach of covenants of the financing agreement from December 2016 and discussions with German financing parties were initiated 9 Annual General Meeting Report |July 29, 2020 | CEO & Chairman of the Board
Review of major 2018 Developments (2/2) Beginning with August 2018: ■ The German subgroup started discussions with its financing parties, including Glencore ■ Analysises of the situation were initiated ■ The Management of the German subgroup was replaced end of September 2018 ■ Missing know-how was identified and started to be built up step by step ■ Measures were developed and started to be implemented step by step The implementation of the restructuring measures in the German subgroup began successively in late October 2018 under new management ■ At the turn of 2018/2019, further measures were identified and prioritized ■ In addition, the use of external management support from the end of November 2018 noticeably improved planning, cash considerations and key figures reports of the German subgroup 10 Annual General Meeting Report | July 29, 2020 | CEO & Chairman of the Board
3. 2018 Developments and afterwards 3.1. Development of Results and Cash 11
Development of Results of French Group EBITDA of major entities (€m) 10 7 6 5 5 2 1 1 0 ULAB recycling plants C2P S.A.S. Recytech dividends 2016 2017 2018 Earnings from the French battery recycling activities cover globally the costs of the holding. C2P S.A.S activity is self sufficient in terms of earnings. 12 Annual General Meeting Report |July 29, 2020 | CEO & Chairman of the Board
Development of Results of German subgroup EBITDA of major entities (€m) 18 17 14 9 8 6 3 2 1 1 0 -1 0 0 -2 -2 -2 -3 -4 -13 -25 WMG PPM HZO HMG C2P RED Germany 2016 2017 2018 WMG, HZO and HMG zinc performance was not able to cover deterioration of earnings for WMG, HZO and PPM 13 Annual General Meeting Report | July 29, 2020 | CEO & Chairman of the Board
Cash Development of Recylex Germany Total debt Feb. 2020 (⁄ m) (1) 2018 2019 2020 Financing til 08/2018 J F M A M J J A S O N D J F M A M J J A S O N D J F Banks 59.4 2,4 0,9 1,5 1,1 2,0 1,2 1,3 1,6 4,2 3,1 4,7 4,4 1,8 1,4 1,6 1,1 2,4 3,3 3,2 1,4 1,7 1,5 3,8 4,0 1,9 3,8 G lencore - WC - financing 34.8 R ESA 15.7 Total - til A ugust 2018 109.9 -8 -9 -11 -12 -14 Bridge financing since 09/2018 Banks - -25 -24 79.5 G lencore 79.5 -32 -35 -40 -43 -48 -52 -57 R ESA - Total - since September 2018 79.5 Total debt 189.5 -62 Additional GlAG-bridge loans in the amount -69 -75 -76 of € m 25.6 until the end of June § Deterioration of earnings has expanded to an ongoing cash demand. § Cash requirements were covered by Glencore Acute cash demand of German subgroup since end of 2018. Financing via bridge loans and waivers from Financing Parties. (1) Without capitalized interests; incl. off-balance working capital financing 14 Annual General Meeting Report |July 29, 2020 | CEO & Chairman of the Board
3. 2018 Developments and afterwards 3.2. Conclusions 15
Conclusions on 2018 Despite well managed construction and commissioning, Identified need for restructuring of several departments WMG‘s Reduction Furnace project impacted by ■ Need to hire necessary skills (Group CFO, Managing Directors unforeseenable longstanding technical difficulties at the for German entities and adjusted staff organisation) BSF since combined with the RF ■ Need for modernisation for financing department processes ■ Search for skilled replacements and completions for several (Groups reporting processes, planning processes, CAPEX positions procedures and controlling, regular detailed cash forecast) ■ More than ten years of losses and negative cash flow in German C2P GmbH‘s polypropylene production led to shut Financing structure of German subgroup very tight, down after deep analysis in 4/2019 binding whole German subgroup with risk of immediate Need to modernize and strengthen Group processes domino effects in events of default ■ Enhance working capital management and business ■ Upcoming breach of Covenants of German financing development at French battery breaking sites agreement in 2018 ■ Increase communication between several group segments Target to improve whole operations and need to restructure organization as well as financing structure 16 Annual General Meeting Report |July 29, 2020 | CEO & Chairman of the Board
3. 2018 Developments and afterwards 3.3. Discussion Stream with German Financing Parties 17
Overview of discussion stream with Financing Parties of German subgroup (process ended in may 2020) 2018 Q1 2019 Q2 2019 Q3 2019 Oct-Nov 2019 Intense negotiations with financing parties; scenario analyses Waivers Bridge 3.0 12.0 10.0 7.0 5.7 4.5 6.2 4.7 financing GIAG 4.0 4.3 3.0 1.6 (in € m) Lender meeting § Breach of covenants of financing agreement between German subgroup and Financing Parties in Q3 2018. § Since August 2018: discussions with Deutsche Bank, Commerzbank, Lower Saxony and Glencore. Numerous financing meetings were held to develop a restructuring path. § Glencore covered need of fresh money with bridge financing. Banks and Lower Saxony supported the process by waiving redemptions and rights of termination of the financing agreement. § High complexity of the learning curve for operational measures caused delayed implementation, delays and updates of financing discussions to ensure further constructive discussions between all financing parties. Continuous discussion stream with financing parties to work out and resolve the situation. 18 Annual General Meeting Report |July 29, 2020 | CEO & Chairman of the Board
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