Financial Results Full year ended 30 June 2019 Fortify 23 August - PowerPoint PPT Presentation

Purpose Invest Grow Preserve Financial Results Full year ended 30 June 2019 Fortify 23 August 2019

Disclaimer The material contained in this document is a presentation of information about the Group’s activities (primarily: metal recycling, electronics recycling and municipal recycling) current at the date of the presentation, 23 August 2019. It is provided in summary form and does not purport to be complete. It should be read in conjunction with the Group’s periodic reporting and other announcements lodged with the Australian Securities Exchange (ASX). To the extent that this document may contain forward-looking statements, such statements are not guarantees or predictions of future performance, and involve known and unknown risks, uncertainties and other factors, many of which are beyond the control of the Group, and which may cause actual results to differ materially from those expressed in the statements contained in this release. This document is not intended to be relied upon as advice to investors or potential investors and does not take into account the investment objectives, financial situation or needs of any particular investor. 2

Agenda Results Overview Alistair Field, Group CEO Financial Results Stephen Mikkelsen, Group CFO Summary & Outlook Alistair Field, Group CEO 3

FY19 Themes Solid result in the face of challenging market conditions Strong cash flow Underlying EBIT 1 of $230.3 million, down 16.3% over prior year  Underlying NPAT 1 of $161.9 million, down 14.2% over prior year  FY19 final dividend of 19.0 cents per share, fully franked  Net cash of $347.5 million, up 16.6% on FY18 and 126% on 1H FY19  Second half improvement from the ANZ Metals, UK Metals, and Global E-recycling businesses and SA Recycling  investment Investing for long term growth Announcement of long term strategic growth plan  Quality initiatives commenced production (refer to slide 45 for listing of facilities)  Two state of the art Material Recovery Plants (MRPs)  Four zorba separation plants  Nine copper granulation plants  Navigating significant market challenges Low Turkish demand and volatile purchasing behaviour  Fall in ferrous and non-ferrous pricing compressing margins  Short term ferrous price volatility made for challenging trading conditions  Geopolitical disruption from tariffs and China/US trade tensions impacting global economic sentiment  4 1) Underlying earnings excludes significant non-recurring items and the impact of non-qualifying hedges.

Summary of Financial Outcomes Strong cash flow despite a contraction in margins Sales Revenue Sales Volumes $6,640.0 million 9.803 million tonnes 1H 4.30 million | 2H 4.25 million FY18 FY18 +3.0% -0.5% $6,448.0 million 9.856 million tonnes Underlying 1 EBITDA Net Cash $347.5 million $363.4 million 1H $61 million | 2H $123 million As at 30 Jne 2016 FY18 -7.4% 30 June 2018 +16.6% $392.3 million $298.1 million Underlying 1 EBIT Underlying Return on Capital 2 $230.3 million 8.6% 1H ($5) million | 2H $63 million 1H (0.4)% | 2H 5.5% FY18 -16.3% FY18 -18.1% $275.1 million 10.5% Underlying 1 NPAT Final Dividend $161.9 million 19.0 cents per share (100% franked) 1H ($18) million | 2H $56 million FY18 -14.2% FY18 -36.7% $188.6 million 30.0 cents per share (100% franked) 1) Underlying earnings excludes significant non-recurring items and the impact of non-qualifying hedges. 5 2) Return on capital = (underlying EBIT – tax at tax rate of 27.5%) / (net assets - net cash).

Employee Health & Safety Global commitment for zero harm today Safety performance Safety remains the most important priority  for both our employees and the community After nearly a decade without a fatality,  3.0 2.8 Total Recordable Injury Frequency Rate (TRIFR) 1 there were two fatalities in FY19. Immediate actions: 2.5 2.2 Eight weeks of stand-down meetings covering key risks  and controls 2.0 Assessment and continuous improvement of key site  1.5 1.5 traffic plans and maintenance activities 1.5 1.3 1.2 Global Perception Safety Survey Company-  1.0 wide underway. Followed by a deep dive into selected sites with both high and low 0.5 safety perception An increase in risk assessments and safety  0.0 self-audits conducted in FY19, 1,361 and 112,506 respectively, compared to FY18 6 1) Defined as total recordable injuries x 200,000 divided by number of hours worked.

Sustainability Sims integral role in the circular economy HP closed-loop hardware recycling program  Recycles ~10 million tonnes of metal (ferrous, aluminium, copper, etc) each year  Helps OEMs close the loop in their manufacturing process. For example, operating HP closed loop hardware recycling program Circular  Recycles ~500k tonnes of municipal material (plastic, metal and paper) each year Economy in action  Worked with the World Business Council of Sustainable Development on developing metrics to measure circularity of an organisation 7

Group Financial Performance Margin contraction partially offset by a lower Australian dollar A$m FY18 FY19 % Chg  Sales revenue up 3.0% over prior year but down 2.5% on a constant currency basis Sales revenue 6,448.0 6,640.0 3.0% Statutory EBITDA 395.8 358.1 -9.5%  Meaningful sales volume growth across Underlying EBITDA 1 392.3 363.4 -7.4% ANZ Metals and flat volumes in North Statutory EBIT 278.6 225.0 -19.2% American Metals Underlying EBIT 1 275.1 230.3 -16.3%  Tighter margins throughout FY19 due to: Statutory NPAT 203.5 152.6 -25.0%  Increased short term volatility Significant items (14.9) 9.3 NMF Underlying NPAT 1 188.6 161.9 -14.2%  Greater fall in non-ferrous shred sales price Statutory EPS (diluted) 98.7 74.2 -24.8% than shredder feed buy price Underlying EPS (diluted) 1 91.5 78.8 -13.9%  Requirement for higher quality product out of Dividend per share (cents) 53.0 42.0 -20.8% the UK  Higher domestic prices in the USA created competition for scrap in some areas Total Invested Capital 2 1,890.6 1,951.2 3.2%  Remain focused on lifting ROC above 10% Underlying ROC 3 10.5% 8.6% -18.1% 1) Underlying earnings excludes significant non-recurring items and the impact of non-qualifying hedges. 2) Total Invested Capital = Net Assets – Net Cash. 8 3) Return on capital = (underlying EBIT – tax at tax rate of 27.5%) / (net assets - net cash).

Markets Challenging market conditions Recycled Ferrous – Under pressure since July 2018 China Non-Ferrous Quotas 400  Chinese non-ferrous quotas applied from 1 July Turkey HMS 80:20 Price (US$) 2019 350  Confident that the parties we deal with are likely to 300 have sufficient quotas to meet their requirements  Impact on Sims anticipated to be lesser due to 250 strong record of shipping compliant product, high product quality and customer relationships 200 Jan-18 Mar-18 May-18 Jul-18 Sep-18 Nov-18 Jan-19 Apr-19 Jun-19 Aluminium – Under pressure since September 2018 Category 6 Total Quotas (at 14 (‘000 tonnes ) August) Zorba, Twitch and A380 Ingot Price 2,500 Copper 453 2,000 Aluminium 372 (US$ /tonne) 1,500 1,000 500 - Jan-18 Apr-18 Jul-18 Oct-18 Jan-19 Apr-19 Jul-19 Zorba Twitch Ingot 9 Source: Platts (top and bottom chart) Source: Reuters

Purpose Financial Results Grow Stephen Mikkelsen, Group CFO Preserve 10 Invest

Business Segment Financial Performance Overall stable volumes and strong growth from ANZ Metals Sales volumes Underlying EBIT 1 (A$m) FY18 FY19 Chg % FY18 FY19 Chg % (‘000 tonnes ) North America Metals 2 4,865 4,887 0.5% North America Metals 104.7 99.7 -4.8% ANZ Metals 2 1,585 1,763 11.2% UK Metals 2 1,691 1,602 -5.3% ANZ Metals 96.9 106.5 9.9% Global Trading 1,554 1,374 -11.6% Other Brokerage 161 177 9.9% UK Metals 35.3 20.3 -42.5% Total sales volumes 9,856 9,803 -0.5% Global E-Recycling 31.3 26.0 -16.9% Intake volumes FY18 FY19 Chg % (‘000 tonnes) SA Recycling 68.5 35.9 -47.6% North America Metals 2 4,996 4,770 -4.5% ANZ Metals 2 1,558 1,717 10.2% Global Trading (12.4) (15.1) -21.8% UK Metals 2 1,693 1,633 -3.5% Corporate & Other (49.2) (43.0) 12.6% Global Trading 1,558 1,384 -11.2% Other Brokerage 162 178 9.9% Underlying EBIT 275.1 230.3 -16.3% Intake volumes 9,967 9,682 -2.9% 1) Underlying earnings excludes significant non-recurring items, the impact of non-qualifying hedges and internal recharges. 11 2) Proprietary volumes exclude ferrous and non-ferrous brokerage volumes.