Interim Results 2019/20 Thursday 7 November 2019
Disclaimer This presentation contains certain forward-looking statements with respect to the operations, performance and financial condition of Renewi. These forward-looking statements are subject to risks, uncertainties and other factors which, as a result, could cause Renewi’s actual future financial condition, performance and results to differ materially from the plans, goals and expectations set out in the forward-looking statements. Such statements are made only as at the date of this presentation and, except to the extent legally required, Renewi undertakes no obligation to revise or update such forward-looking statements. 2
Key Points 1 Solid trading in H1 and outlook for year unchanged 2 Good performance in core Commercial Division 3 ATM scaling up capacity for manufacture of building materials and awaiting final regulatory approval for TGG having successfully completed the testing Deleveraging disposals completed for cash proceeds of up to €118m 4 5 Synergies on track and Renewi 2.0 will further simplify business 6 Executive Committee of Renewi strengthened with 4 key hires 3
Disposals completed on schedule delivering up to €118m cash Canada Reym • Sale for an enterprise value of €64m • Sale for CAD107m (c. €72m) to Convent to Remondis announced September Capital announced June 2019 2019 • Sale completed 30 September 2019 • Sale completed 31 October and gross • Sales price >10x EBITDA multiple cash of €50m received • €57m received September 2019 • Sales price 5.4x EBITDA multiple • €12m potential further proceeds in FY21 c20% reduction to year end net debt 4
Derby contract terminated and new agreement in place • Gasification facility for Derby and Derbyshire Councils • Joint Venture with Interserve • Build and commissioning over two years late and facility had not passed performance tests • Impaired in March 2019, anticipating termination • Contract ended in August 2019 in line with provisions taken • New continuity services contract in place Significant risk reduction 5
ATM – secondary building materials production 1 2 3 4 5 6 FY19 FY20 FY21 FY22 Today • December 2017: Acquired facility from MvO 1 • March 2019: Installed pilot sieve. Trials with multiple potential 2 Completed customers with promising results • October 2019: TRI sieve installed separating c.900kt 3 decontaminated soil into gravel, sand and filler • November 2019: Acquired full ownership of joint venture 4 • February 2020: Tests for product certification ongoing and 5 Ongoing expected early 2020 • September 2020: Investment of c€10m for filler silos, storage 6 facilities and product quality improvement. Capacity to sort 100% of TGG production 6
ATM – resuming production of TGG What have we done Soil resumption: path forward ✓ • Negotiations ongoing – expectation remains that TGG will Agreed with regulators what to test be approved for use by the national regulator, IL&T, this financial year ✓ Agreed with regulators on • Local regulatory bodies in the Netherlands then need to how to collect samples and approve specific site applications in their region define variability • Future TGG production may continue to be tested ✓ Sampled and tested all according to stringent specifications and released as batches batches in the short-term • ✓ Further recovery actions longer-term include: All tests passed • Improve the TGG certificate together with certifying body and ✓ Current stock production does branch partners not contain any substances at • Lobby for legal definition of the ‘duty of care’ requirement for TGG levels which prevent its use producers • Restore confidence in TGG and improve image Awaiting final confirmation from regulators having successfully completed testing 7
Management team completed Executive Board Members Otto de Bont Toby Woolrych CEO CFO Division Managing Directors Meinderdjan Botman Wim Geens Bas Blom James Priestley Theo Olijve Commercial Netherlands Commercial Belgium Monostreams Municipal Hazardous Functional Leaders Bas van Ginkel Baukje Dreimuller Helen Richardson Maarten Buikhuisen* Patrick Deprez Strategy & Bus. Development General Counsel Human Resources Information Technology Product Sales 8 New executive committee member since FY20 * Starting full-time 1 January 2020
Results & Guidance
2019/20 Interim Results • IFRS 16 has a material impact on our reported results. For like for like comparatives, the Basis of 2019 results have also been presented in accordance with IAS 17 results • Total operations includes continuing and discontinued operations • Revenue from total operations up 3% to €926m • Divisional performance in line with expectations • Underlying EBIT from total operations up 3% like for like to €46.3m, and €50.9m on a Revenue & reported basis, including positive impact of IFRS 16 (€4.6m) and suspension of depreciation Profits of disposed businesses (€6.9m) • Interest costs increased by €6.3m, due to higher leverage and IFRS 16 (€2.7m) • Exceptional costs (mainly disposals) led to statutory loss before tax • Strong cash- flow performance. UFCF of 129%, with €22.9m improvement in working capital and tight capital expenditure control. Some catch-up investment in H2 Cash Flow & • Up to €118m raised through disposals, €57m received on 30 September: core net debt Financing reduced to €514m, leverage reduced to 2.88x • €100m 4.23% retail bond replaced by €75m 3.00% Green retail bond • Underlying EPS from total operations down 7% to 2.9c per share EPS & • Interim dividend of 0.45p per share (2018: 0.95p), reflecting previously announced planned Dividend maintained total dividend of 1.45p for FY20 10 All performance metrics, particularly including EBIT, are stated on an IAS 17 basis excluding the impact of IFRS 16
Commercial Waste Netherlands Netherlands Sep 19 Sep 19 Sep 18 Change basis IFRS16 IAS17 IAS17 IAS17 €m €m €m €m % • Revenue Volumes down 3%: lower C&D intake and loss of Netherlands Commercial 395.2 395.2 375.8 19.4 5% some secondary disposer volumes. Overall Belgium Commercial 222.9 222.9 210.9 12.0 6% economy showing signs of slowdown Intra-segment revenue (0.6) (0.6) (0.4) (0.2) Total Revenue 617.5 617.5 586.3 31.2 5% • Recyclate prices remain weak: down 15% on prior year in paper and ferrous Underlying EBIT Netherlands Commercial 29.6 28.8 25.3 3.5 14% • EBIT up 14% and net margin increased 60bps to Belgium Commercial 17.2 16.9 15.2 1.7 11% Total Underlying EBIT 46.8 45.7 40.5 5.2 13% 7.3%, due mainly to net pricing gains and synergies Underlying EBIT Margin Netherlands Commercial 7.5% 7.3% 6.7% • Return on assets increased 260bps to 19.6% Belgium Commercial 7.7% 7.6% 7.2% which translates to 18.0% post IFRS 16 Total Underlying EBIT Margin 7.6% 7.4% 6.9% • Unplanned shutdown at AEB well managed: Return on operating assets credit provision against some outstanding costs Netherlands Commercial 18.0% 19.6% 17.0% Belgium Commercial 34.4% 39.3% 29.5% Total Return on operating assets 22.0% 24.2% 20.2% 11
Commercial Waste Belgium Belgium Sep 19 Sep 19 Sep 18 Change basis IFRS16 IAS17 IAS17 IAS17 €m €m €m €m % • Similar market conditions to NL in terms of Revenue slower volumes and recyclates Netherlands Commercial 395.2 395.2 375.8 19.4 5% • Belgium Commercial 222.9 222.9 210.9 12.0 6% Further headwind from closure of Cetem landfill Intra-segment revenue (0.6) (0.6) (0.4) (0.2) as scheduled Total Revenue 617.5 617.5 586.3 31.2 5% • Underlying EBIT growth of 11% and margin Underlying EBIT growth of 40bps mainly based on net pricing and Netherlands Commercial 29.6 28.8 25.3 3.5 14% synergies Belgium Commercial 17.2 16.9 15.2 1.7 11% Total Underlying EBIT 46.8 45.7 40.5 5.2 13% Underlying EBIT Margin Netherlands Commercial 7.5% 7.3% 6.7% Belgium Commercial 7.7% 7.6% 7.2% Total Underlying EBIT Margin 7.6% 7.4% 6.9% Return on operating assets Netherlands Commercial 18.0% 19.6% 17.0% Belgium Commercial 34.4% 39.3% 29.5% Total Return on operating assets 22.0% 24.2% 20.2% 12 The return on operating assets for Belgium excludes all landfill related provisions
Hazardous Waste ATM Sep 19 Sep 19 Sep 18 Change basis IFRS16 IAS17 IAS17 IAS17 €m €m €m €m % • Revenues down 11% as expected due to lower Revenue 112.6 112.6 108.0 4.6 4% volumes in soil production • Underlying EBIT 10.5 8.3 5.9 2.4 41% Good performance from waterside, in line with a strong prior year performance Underlying EBIT Margin 9.3% 7.4% 5.5% • Pyro performance as expected Return on operating assets 15.0% 14.4% 14.0% Reym • Disposal completed on 31 October 2019 • €5.1m EBIT benefit from suspension of depreciation as the business was held for sale • Good performance in first half with revenues and earnings increased 13
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