REG-Renewi plc Renewi plc: Final Results
24/05/2022 07:15
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Renewi plc (RWI)
Renewi plc: Final Results
24-May-2022 / 07:00 GMT/BST
Dissemination of a Regulatory Announcement that contains inside information according to
REGULATION (EU) No 596/2014 (MAR), transmitted by EQS Group.
The issuer is solely responsible for the content of this announcement.
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24 May 2022
VERY STRONG performance IN FY22
outlook for fy23 ahead of management’S previous expectations
Renewi plc (LSE: RWI), the leading European waste-to-product business, announces its
results for the year ended 31 March 2022.
Financial Highlights
• Revenue up 10% to €1,869m
• Underlying EBIT1 up 83% to €133.6m, with net impact of customer pricing, recyclate
pricing and cost inflation delivering a year-on-year benefit of €45m
• Commercial Division increased underlying EBIT1 margins by 380bps to 10.0%, with the
return on operating assets increasing to 31.6%
• Underlying EBIT1 up 77% compared with the pre-Covid FY20 reference period
• Underlying EPS1 up 118% to 98 cents, basic EPS increased from 7 cents to 93 cents
• Statutory profit of €75.4m (FY21: €5.5m#)
• Core net debt* reduced to €303m (FY21: €344m) and net debt to EBITDA reduced to 1.4x
from 2.2x
Strategic and Operational Highlights
• Group’s end markets continue to grow, driven by positive legislative changes which
promote recycling and increased demand for high quality secondary materials
• Commercial business performed very strongly, managing Covid shutdowns and inflationary
pressures with ongoing tight control of costs
• Good progress made on our key strategic initiatives to deliver €60m of additional EBIT
in FY26, with €10m delivered in FY22:
◦ Over €100m of capital investment now committed to increasing the Group’s
recycling capacity at attractive rates of return
◦ Mineralz & Water recovery underway, with further improvements to follow over
the next 3 years
◦ Renewi 2.0 programme on track to conclude next year and deliver full benefits
from FY24
• 8.4m tonnes of materials put back into reuse up 5% on the prior year, with a recycling
rate of over 67%, up 1.4pps
• Although recyclate prices are expected to moderate in FY23, we expect prices to
stabilise above pre-Covid levels for the medium term, reflecting the structural
growth of the circular economy
• Conditional agreement to acquire “Paro”, an Amsterdam based commercial waste and
recycling business, for an enterprise value of €67m, announced separately today.
• The Board now anticipates the Group’s performance in FY23 to be ahead of its previous
expectations
1 The definition and rationale for the use of non-IFRS measures are included in note 16.
# The statutory profit for March 2021 has been restated to reflect a prior year adjustment
set out in note 1.
* Core net debt used for banking leverage calculations excludes the impact of IFRS 16
lease liabilities and UK PPP net debt.
Otto de Bont, Chief Executive Officer, said:
“Renewi delivered a record performance in the year, with revenues, profits and returns all
significantly ahead of the prior year. This is thanks to the tremendous commitment of our
employees, who continued to service our customers in challenging conditions. Our end
markets have continued to grow, with climate-driven legislation and corporate strategies
supporting increased recycling and demand for high quality secondary materials which, in
turn, is driving a sustained increase in recyclate prices. Our Commercial Division, which
represents over 70% of Group revenues, has therefore been able to accelerate its journey
towards double digit margins, supported by tight control of costs and appropriate price
increases reflecting wider inflationary pressures.
We made good progress on our key strategic initiatives and have committed over €100m of
capital into our innovation portfolio. We remain on track to deliver the full €60m of EBIT
we targeted for FY26 across our three value drivers: our innovation pipeline, the
recovery of earnings at Mineralz and Water and the Renewi 2.0 programme.
“There is no doubt the transition to circular economies in our end markets will continue
to increase demand for recycling and higher quality secondary materials, supporting our
business model in the short and long term. The sustainability agenda pursued by the EU and
national governments will also present increasing opportunities for Renewi to convert
waste into a wider range of high-quality secondary materials.
“Looking ahead, whilst recyclate prices are expected to remain strong but moderate in
FY23, the Board now anticipates the Group’s performance in FY23 to be ahead of its
previous expectations.”
Results
FY22 FY21# % change
UNDERLYING NON-STATUTORY
Revenue €1,869.2m €1,693.6m +10%
Underlying EBITDA1 €262.6m €195.7m +34%
Underlying EBIT1 €133.6m €73.0m +83%
Underlying profit before tax1 €105.2m €47.4m +122%
Underlying EPS1 (cents per share) 98c 45c +118%
Adjusted free cash flow €90.6m €113.5m
Free cash flow1 €60.5m €145.7m
Core net debt* €303.0m €343.6m
STATUTORY
Revenue €1,869.2m €1,693.6m
Operating profit €124.0m €36.1m
Profit before tax €95.7m €10.9m
Profit for the year €75.4m €5.5m
Basic EPS (cents per share) 93c 7c
Cash flow from operating activities €188.0m €253.5m
Total net debt €604.0m €668.1m
1The definition and rationale for the use of non-IFRS measures are included in note 16.
# Certain March 2021 values have adjusted to reflect prior year adjustments as referred to
in note 2.
* Core net debt used for banking leverage calculations excludes the impact of IFRS 16
lease liabilities and UK PPP net debt.
For further information:
Paternoster Communications Renewi plc
+44 20 3012 0241 +44 7976 321 540
Tom Buchanan Adam Richford, Head of Investor Relations
+44 20 3012 02414 +44 7814 06 0457
Ben Honan Claire Tompkins, Communications
Notes:
1. A copy of this announcement is available on the Company’s website, ( 1 www.renewi.com)
2. Renewi will hold an analyst presentation at 9.30 a.m. GMT / 10.30 a.m. CET today
3. Webcast: To watch and listen to the live webcast please pre-register 2 via this
link.
4. Today’s results presentation will also be available on the website.
Forward-looking statements
Certain statements in this announcement constitute “forward-looking statements”.
Forward-looking statements may sometimes, but not always, be identified by words such as
“will”, “may”, “should”, “continue”, “believes”, “expects”, “intends” or similar
expressions. These forward-looking statements are subject to risks, uncertainties and
other factors which, as a result, could cause Renewi plc’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 announcement and, except to the extent legally required, Renewi plc
undertakes no obligation to revise or update such forward-looking statements.
Chief Executive Officer’s Statement
Overview
Renewi delivered a record performance in FY22 with revenues, profits and returns all
increasing significantly ahead of the previous year. Our end markets continue to grow,
with legislation and corporate strategies supporting increased recycling and demand for
high quality secondary materials. This contributed to the increase in recyclate prices
over the past eighteen months. We have also managed the aftershocks of the Covid crisis
with ongoing tight control of costs and an ability to cover inflationary pressures from
recyclate prices and customer pricing. We made good progress on our key strategic
initiatives to deliver sustained growth for Renewi, notably with the commitment of over
€100m of capital to build new state-of-the-art recycling capacity. Underlying EBIT
increased by 83% to €133.6m. Statutory profit increased by €69.9m to €75.4m. Core net
debt reduced by €41m to €303m and our leverage ratio reduced below the Board’s target to
1.4x (FY21: 2.2x).
Sustainability is at the heart of our business model. Our purpose of giving new life to
used materials enables us to deliver secondary materials to our end customers with a lower
carbon footprint than the primary materials they replace. This helps our customers get to
their net zero ambitions and supports the development of a circular economy, which is
essential if society is to meet its carbon reduction goals. We have therefore maintained
our focus on the longer-term strategic drivers for Renewi: increasing our recycling rate;
increasing the quantity and quality of the secondary materials we supply; expanding our
market share and improving both efficiency and customer service through our Renewi 2.0
programme. We have continued to advance this strategy and we remain well positioned to
benefit from the adoption of circularity by European economies which ensures resources
such as products, materials and energy are reused for as long as possible at the highest
value.
Group financial performance
Group Summary Revenue Underlying EBIT
FY22 FY21 Variance FY22 FY21 Variance
€m €m % €m €m %
Commercial Waste 1,360.5 1,240.6 10% 135.7 76.8 77%
Mineralz & Water 193.9 182.8 6% 5.8 0.3 N/A
Specialities 350.1 300.8 16% 4.1 2.4 71%
Group central services - - (12.0) (6.5) -85%
Inter-segment revenue (35.3) (30.6) - -
Total 1,869.2 1,693.6 10% 133.6 73.0 83%
The underlying figures above are reconciled to statutory measures in note 3 of the
consolidated financial statements.
Revenue was up 10% to €1,869m and underlying EBIT was up 83% to €133.6m. Underlying
profit before tax increased by €57.8m to €105.2m. Underlying earnings per share increased
by 118% to 98 cents (FY21: 45 cents).
The Commercial Division, which represents over 70% of Group revenues, increased revenues
by 10% and underlying EBIT by 77%. EBIT margin increased 380 bps to 10.0% driven by a
year-on-year benefit of €35m from increased quality and pricing of recyclates and ongoing
cost control. EBIT was 73% higher than the pre-Covid FY20 reference period.
The Mineralz & Water Division saw revenues increase by 6%, and underlying earnings
increase by €5.5m to €5.8m. The Specialities Division increased revenues by 16% and
underlying EBIT increased by €1.7m to €4.1m.
Group central services costs have increased in the year as a result of investment in a
number of areas and higher costs for long term incentive plans.
The business delivered adjusted free cash flow of €90.6m (FY21: €113.5m) partly reflecting
an underlying reduction in payables. Free cash at €60.5m was lower than last year which
included the €55m benefit of deferred payroll and other taxes in the Netherlands. Core
net debt at 31 March 2022 was €303m (2021: €344m). Leverage fell to 1.4x (FY21: 2.2x),
comfortably below the Board’s long-term target of 2.0x. Liquidity headroom including cash
and undrawn facilities was also strong at €428m (FY21: €364m).
Recognising the Group’s significant growth investment programme and the resultant cash
flow profile in the short term, the Board is not recommending a dividend for FY22, however
it will keep the Group’s dividend policy under review for FY23.
Sustainability means a need for circularity
Our purpose is to protect our planet by giving new life to used materials, and our vision
is to be the leading waste-to-product company in Europe’s most advanced circular
economies. This differentiates Renewi as a company that focuses on reuse: supplying
high-quality secondary materials, which we believe is the best way to extract value from
waste. We are a key player in the rapidly emerging circular economy and a pioneer in
deploying innovative technologies that turn waste that would have been incinerated or sent
to landfill into high quality secondary materials.
In the past year we have seen the world’s governments, companies and investors continue to
advance the agenda to reduce carbon emissions very significantly, with the EU playing a
leading role. In November 2021, COP26 set out the necessary steps to avoid catastrophic
increases in global temperatures by the end of the century. Production of more secondary
materials to reduce virgin material use and the associated carbon emissions is a key
requirement to meet these goals. Becoming more circular and cutting virgin materials use
by 28% within nine years could lead to a reduction in global greenhouse gas emissions by
39% according to the 3 Circularity Gap Report.
Recycling plays a key role in enabling a circular economy by converting waste back into
secondary materials and is therefore increasingly supported by fiscal and regulatory
governmental policy. Recycling, like most markets, needs balanced supply and demand.
Supply is stimulated by disincentivising landfill and incineration through taxations and
prohibitions to create an environment in which sorting and processing to produce
recyclates is economically competitive. This is already in place in the Netherlands and
Belgium and has been further strengthened in Flanders by the government’s announcement to
double the incineration tax to €25 per tonne. Further stimulation of recycling is
fundamental new legislation in Flanders which comes into effect in January 2023. The most
recent amendment to Vlarema (#8) effectively introduces the mandatory pre-sorting of waste
to remove recyclates before residues are incinerated, and this legislation is the key
driver of our decision to invest in three large state-of-the-art sorting lines in
Flanders.
Demand is stimulated by setting targets for minimum recycled content for government
tenders, or indeed simply mandating certain levels of recycled content in all materials.
For example, the Netherlands has a longstanding policy commitment to be 50% circular by
2030, and Belgium has similar circularity ambitions in both Flanders and Wallonia. This
is further backed by trends in consumer demand where a sustainable solution appeals to a
growing segment of customers.
Looking forward, legislators in Renewi’s end markets and beyond are considering further
action, including carbon taxes on incineration, minimum recycled content levels and
producer responsibility for the management of closed loops. All these measures will
accelerate the transition to increased recycling rates and, crucially, increase demand for
secondary materials.
Putting sustainability at the centre of our strategy
Sustainability is at the heart of what we do. Our purpose, our vision and our business
strategy are all about sustainability. In keeping with our purpose, our business and
sustainability strategies are inextricably linked and mutually supportive. Starting from
the UN Sustainable Development Goals, we focus on three key objectives: Enable the
circular economy; Reduce carbon emissions; and Care for people.
During the last year we have made good progress with our strategy, including the following
highlights:
Enable the circular economy
• Increased recycling rate from 65.8% in March 2021 to 67.2% (+1.4% points), with
positive progress across all divisions.
• Total recyclate output amounted to 8.4m tonnes, 5% higher than prior year
• Carbon avoidance of 3.1m tonnes, similar to last year
Reduce carbon emissions
• Reduced our carbon intensity from processing 23% per tonne, driven for example by our
Commercial Waste Netherlands Division having switched to 100% green electricity
• Reduced total scope 1 and scope 2 emissions by 7% to 0.5m tonnes of CO2 equivalent
Care for people
• Significantly improved safety results: Lost time injuries (LTIs) are down 36% and
major fires are down 25%
• Established a Diversity & Inclusion committee, aimed at making Renewi an even more
rewarding and inclusive place to work
This year we report specifically about climate change risk according to the guidelines of
the Taskforce for Climate related Financial Disclosure (TCFD). Within our climate roadmap
we intend to strengthen our sustainability strategy and will start building a net-zero
carbon emissions roadmap this year.
Progress against each of our specific targets is detailed in full in both our forthcoming
Annual Report and our Sustainability Review.
Increased value for the high quality recyclate products that we make
A prominent feature of our strong performance since Covid has been the recovery of
recyclate prices from ten-year lows to their current high levels, which have now been
sustained for nearly eighteen months.
Different recyclate streams are subject to specific supply and demand factors. However,
at a more fundamental level we believe that environmental policies to stimulate the use of
secondary materials mean that recyclates will over time become scarce materials.
Furthermore, we believe prices may ultimately increase to a sustainable premium, or a
reduced discount, to virgin materials. In addition to the supply and demand factors, we
are increasing the quality of our recyclates. This allows our end-customers to replace
virgin materials by our recyclates and allows us to demand higher prices.
Other factors that support the increased pricing for recyclates include:
• Demand for paper and cardboard in Europe is being driven by the growth in e-commerce
as well as the transition to cardboard as the preferred packaging material including
for example replacing plastic inside delivery boxes. At the same time, reduced office
working as a result of Covid has resulted in lower volumes of source segregated
commercial paper for recycling;
• High energy prices make the use of recycled metals, glass and plastic cheaper compared
to production from virgin materials;
• There is a strong increase in demand for waste wood for a range of applications
including conversion to wood products, methanol and bio-fuels in addition to biomass;
and
• Consumer demand for recycled plastics has led to major plastics manufacturers looking
for long-term supply agreements to meet their growing need.
In the short-term recyclate prices may still fluctuate and, whilst we expect that
recyclate prices will moderate in FY23, we expect prices to stabilise above pre-Covid
levels for the medium term, reflecting the structural growth of the circular economy.
Our strategy for long-term profitable growth
We have a clear and consistent business strategy to deliver long-term growth in both
margins and volumes. This strategy has initially focused on margin expansion through
increased recycling rates and the production of higher quality materials. We are now
focusing increasingly on how to expand our market share both domestically and
internationally. Our strategy is based on three pillars:
1. Leader in recycling: increase our recycling rate. Our ambitious goal, launched as
“Mission75”, is to increase our recycling rate within five years to 75% from the
current 67.2%, which we believe is already the highest in the industry.
2. Leader in secondary material production: Enhance the quality and value of the products
we produce. To build a circular economy, the usage of secondary raw materials must
increase. For production companies currently using primary raw materials, the easiest
way to convert is by using high quality secondary raw materials that they can
“drop-in”. Accordingly, we are investing in advanced processing facilities.
3. Selectively gain market share. Our primary focus in the Netherlands and Belgium is on
driving margin expansion from existing waste flows through the first two pillars of
our strategy. In addition, there are consolidation opportunities in our sector, and
we intend to participate both in complementary acquisitions in our core markets and in
due course to enter into new territories with strong growth potential for our
waste-to-product model.
This strategy is further underpinned by our Renewi 2.0 modernisation programme.
Our innovation portfolio: investing for higher returns
We are investing in innovative solutions to increase recycling rates and product quality,
the first two pillars of our growth strategy, with a view to delivering an additional EBIT
of €20m by FY26. In FY22 we committed to invest over €100m over the next three years in
order to achieve our target and exceed our threshold for return on assets of 16%. More
details on the timing of investment and returns are given in the Finance Review below.
Project Partner Opportunity Status
Advanced residual waste Three lines approved. Programme
sorting Flanders Stand-alone €€€€€ progressing in line with
expectations
Organics: expanded Stand-alone € Construction complete and plant
depackaging capacity operational
Organics: bio-gas to Shell & Nordsol €€ New plant commissioned and
bio-LNG operational
New facilities: fourth facility
completed and fifth in planning.
Mattress recycling IKEA group €€€ Chemical recycling plant to be
commissioned mid 2022. Exploring
opportunities to expand activities
outside NL.
Ghent and Waalwijk investments
Plastic recycling Stand-alone €€ complete. Acht to be commissioned in
2023
Polyurethane recycling Chemical recycler € - €€€ Technical and commercial feasibility
studies ongoing
Filler storage capacity installed,
ATM recovery Stand-alone €€€ and product certifications
expected. Project to increase
capacity at waterside commenced
Partner is preparing for industrial
Wood flake for Arcelor-Mittal €€ - €€€€ performance testing early next year
low-carbon steel and subsequent commercial
contracting discussions
We continue to have a dialogue with a number of plastics recyclers concerning the
provision of plastics streams for chemical recycling. Other new innovation ideas have
been identified during the past year and are passing through our disciplined investment
process.
Renewi 2.0 programme
FY22 was the second year of our Renewi 2.0 programme: a three-year programme to make the
company simpler, more customer-focused, more efficient and a better place to work. This
comprises multiple projects, based around two key themes:
• Digitisation of the business. We have developed and launched a new front-end
interface for customers that allows them to place and amend orders, have full
visibility of services and related costs and the circular benefits their waste is
creating. This digitisation is already delivering a better 24/7 customer experience,
while reducing our cost to serve.
• Simplification and harmonisation of processes. Our core business processes are being
simplified and standardised across our divisions to save costs, reduce errors, and
improve customer, supplier and employee experiences. We are implementing global
process owners for our core processes and centres of excellence to simplify our
service offering, improve our master data and eliminate non-value add activity.
As previously indicated, the programme is expected to deliver a minimum of €20m of annual
cost benefits on a run-rate basis after completion of this three-year programme for a
total cash cost of €40m. €5.0m of net benefit was reported in FY22, in line with our
plan. We remain confident that we will achieve the targeted savings on schedule.
More than 65,000 customers are logging into MyRenewi, our customer platform, and we see
adoption rates increase every month. Our “scaled agile” framework approach has allowed
for faster time to market for new developments and features for MyRenewi, delivery of our
broader commercial offering and in driving efficiency in sales and back-office
operations. A dedicated team is working on a project called ‘Help Customer’ to further
improve our service delivery when customers have queries. During the year we have seen
call and complaint volumes drop by 20% in some parts of our business through these
frictionless interactions.
The procurement application Coupa has been fully implemented in our Commercial Waste
division as well as for central functions and use is increasing on a daily basis.
Mineralz & Water recovery
Profits at ATM, our major site that cleans contaminated soil and water, are recovering
well but slower than initially planned. Ongoing uncertainty by regulators on the adequacy
of the current environmental regime has reduced intake of contaminated soil and continues
to hamper obtaining necessary permits to dispose of TGG. This situation is expected to be
resolved when proposed amendments to current legislation are brought forward and should
bring much needed clarity to this important part of our business.
Despite these challenges, good underlying progress was made during FY22, with the
production of secondary building materials like gravel, sand and filler replacing TGG.
There is a growing interest in these secondary building materials from cement and asphalt
producers as the construction industry is converting to circularity. ATM’s profit
improvement is also supported by growth in water treatment where we plan to expand our
treatment capacity. We therefore anticipate that, as the regulatory environment for soil
becomes clearer, as our building materials achieve their certification, and as we expand
our water treatment, ATM will be able to restore EBITDA margins.
Potential for market share growth
Following the formation of Renewi in 2017 our focus was on integration and successfully
delivering the merger synergies while maintaining market share. This has been achieved in
full.
With leverage now reduced to comfortably below the Board’s target of 2.0x, we have
increased our pursuit of long-term top line growth opportunities, both organic and through
acquisition. Accordingly, we have revisited our M&A pipeline activities, cultivating
potential targets and reinvigorating internal evaluation processes. We note that M&A
activity within the Netherlands and Belgium is picking up and Renewi intends to
participate in sector consolidation opportunities, providing there are good strategic and
sustainability synergies that offer appropriate financial returns.
Within the Netherlands and Belgium we will continue to expand our share organically, with
an unmatched combination of breadth of services and proven sustainable treatment of
waste. Renewi 2.0 will further improve our customer service and offer customers
convenient digital interaction.
Renewi also has a two-stage strategy for further international expansion. In the
immediate term there are opportunities to expand in niche waste segments where collection
is not a required part of the business model: glass, white goods and mattresses being good
examples. Longer term, we believe our model can be replicated in other advanced circular
economies. We have created the “Renewi Advanced Circular Economy” (RACE) index of all
European countries, assessing their suitability for our services based on factors such as
material recycling rate, use of secondary materials, regulation, and taxonomy related to
material usage. The RACE index confirms the Netherlands and Belgium as two of the most
advanced circular economies. It further allows us to focus on a number of countries,
including Denmark, Sweden, Germany, and the UK, where we see scope for successful and
profitable expansion in the long-term.
Resilience in an uncertain world
The end of Covid has triggered significant inflation, supply chain disruptions and a
tightness in European labour markets, exacerbated by geopolitical uncertainty arising from
the war in Ukraine and the potential for macroeconomic impact. In response we have
created teams to monitor and address emerging issues. We are monitoring the situation
closely and while a significant and widespread economic slowdown could eventually impact
Renewi, we have experienced no material adverse impact to our business since the war in
Ukraine.
More broadly, Renewi has a resilient business model in that it:
• Provides an essential service across all sectors of the Dutch and Belgian economies,
with no material exposure to any one sector;
• Has demonstrated an ability to pass inflationary costs through to customers. Price
increases implemented on 1 January 2022 are expected to cover 2022 inflation;
• Hedged the majority of its energy and diesel requirements for 2022; and
• Has guidance for FY23 that anticipates a reduction in recyclate prices from their
current highs.
Group Outlook
Recyclates strength has so far continued into FY23. Although a reduction from the high
prices is expected, a sustained benefit from structural changes to recyclate quality and
price is also anticipated. Looking ahead, the Board now anticipates the Group’s
performance in FY23 to be ahead of its previous expectations given the Group’s strong
results in FY22 and continuing recyclate price strength.
The transition to a circular economy will increase demand for recycling and higher quality
recyclates, which supports our business model. The sustainability agenda and the
potential for a “green recovery” driven by the EU and national governments are expected to
present further attractive opportunities for Renewi to convert waste into a wider range of
high-quality secondary materials. We remain confident our three strategic growth
initiatives – our innovation pipeline, Mineralz & Water recovery and Renewi 2.0 programme
– will deliver significant additional earnings over the next three years and beyond.
Operating Review for the year ended 31 March 2022
Commercial Waste
Financial performance
The Commercial Division increased revenues by 10% to €1,360m and underlying EBIT by 77% to
€135.7m, representing an EBIT margin of 10.0%. EBIT margin increased 380bps driven by a
year-on-year benefit of €35m from increased quality and pricing of recyclates and ongoing
cost control. EBIT was 73% higher than the pre-Covid FY20 reference period. Return on
operating assets increased from 17.6% to a strongly accretive 31.6%.
Commercial Waste Revenue Underlying EBITDA Underlying EBIT
FY22 FY21 FY22 FY21 FY22 FY21
Netherlands Commercial 896.2 828.4 148.9 113.9 93.1 53.7
Belgium Commercial 466.9 412.9 77.5 52.5 42.6 23.1
Intra-segment revenue (2.6) (0.7) - - - -
Total (€m) 1,360.5 1,240.6 226.4 166.4 135.7 76.8
Year on year variance %
Netherlands Commercial 8% 31% 73%
Belgium Commercial 13% 48% 84%
Total 10% 36% 77%
Return on Underlying Underlying
operating assets EBITDA margin EBIT margin
FY22 FY21 FY22 FY21 FY22 FY21
Netherlands Commercial 27.6% 15.7% 16.6% 13.7% 10.4% 6.5%
Belgium Commercial 46.2% 24.2% 16.6% 12.7% 9.1% 5.6%
Total 31.6% 17.6% 16.6% 13.4% 10.0% 6.2%
The return on operating assets for Belgium excludes all landfill related provisions. The
underlying figures above are reconciled to statutory measures in notes 3 and 16 in the
consolidated financial statements.
Revenues in the Netherlands grew by 8% to €896.2m and underlying EBIT increased by 73% to
€93.1m. Underlying EBIT margins increased by 390bps to 10.4% and return on operating
assets increased significantly to 27.6%. Volumes in the Netherlands were less impacted by
Covid-19 than in Belgium and the UK. Volumes in FY22 were 5% lower than the prior year
and were around 10% below pre-Covid levels. Compared to the prior year, there was a small
recovery in commercial volumes offset by the expected contraction in construction and
bulky waste. Inbound revenues in the Netherlands increased by 2% and outbound revenues by
64%, reflecting the strength of recyclate prices and increase of recyclate quality. As
reported earlier, paper/cardboard and ferrous metal prices have been particularly strong
throughout the year. Around €26m or 66% of the uplift in underlying EBIT was attributable
to extra margin on recyclates, supported by continuing tight control of costs.
In Belgium, revenue increased by 13% to €466.9m and underlying EBIT by 84% to €42.6m.
Underlying EBIT margins increased by 350bps to 9.1% and return on operating assets
increased significantly to 46.2%. Core volumes increased by 5% compared to the prior year
and recyclates by 1%, although these volumes also remain around 7% below pre-Covid
levels. The increase in underlying EBIT was a result of volume recovery, strong recyclate
prices, improved price-mix and ongoing operational cost savings. Around €9m or 46% of the
uplift in underlying EBIT was attributable to extra margin on recyclates.
Operational review
Our Commercial Division had a year of strong delivery despite the impact of Covid-19 and,
more recently, the war in Ukraine. We have seen improvements in our commercial
effectiveness driven by operational efficiencies and dynamic management of off-take
markets. Safety performance has also significantly improved, driven by several leadership
and culture initiatives, driver training and further investments in fire detection and
suppression systems.
Commercial contracting margins have improved through the streamlining of our product
offering. By removing less profitable lines we have sharpened our focus on the remaining
core portfolio. This tailored portfolio is now more closely aligned with industry
requirements. In construction and demolition (C&D), we have responded to weaker volumes by
improving our customer offering. This has led to increased market share. Customer service
has been further improved via the Renewi 2.0 programme and MyRenewi platform which allows
digital engagement with customers in a more flexible, responsive and interactive way. We
gained momentum in our specialist hazardous waste business in Belgium and secured more
out-of-date food waste off-take agreements with retailers in the Netherlands. Building on
our partnership with Greencycl, we have become a leader in the medical sector, with new
contracts secured with several hospitals and medical centres. Our commercial teams have
also been able to optimise pricing with our customers, reflecting dynamic off-take prices,
and create value for our services in tandem. For example, in Belgium where we are
preparing for Vlarema 8 legislation, we are offering advanced sorting services that
improve recycling rates, and so helping our customers to avoid paying higher taxes for
waste that would otherwise go to incineration. This has resulted in new commercial
contracts in a competitive market and a higher mass balance margin, while contributing
positively to society’s sustainability challenges.
We have seen demand shift from the front to the back end of the business, with very high
demand for our secondary materials. We have observed an increasing trend of end-users
looking for long-term contracts which has enabled us to establish secure partnerships with
some of our main off-take customers. We have established multi-year framework agreements
for several product categories including combustible waste, paper, plastics and wood
off-take. This shift has also enabled us to extend the application of value-based pricing
to our commercial customers and partners, who are increasingly looking to transition to
longer term contracts.
Within collections, we have focused on optimising existing trucks, collection routes and
site asset utilisation, improving our efficiency and cost base. For our roller bin
collections, we continually focus on improving route density, eliminating ‘loose stops’
(where no bins are available), improving customer performance and reducing miles driven,
CO2 emissions, as well as our cost.
Organic Investments
Significant growth investments in plastics recycling, organic waste valorisation and
advanced sorting in Flanders were approved by the Board at attractive levels of return.
Important milestones were achieved on each of these and other projects during the year:
• Good progress has been made preparing our €60m investment in advanced sorting across
three sites in Flanders to meet the needs of the Vlarema 8 legislation. The sites
will process 375,000 tonnes of waste and triple the volume of waste recycled and at
the same time halve the waste incinerated. At our first site in Ghent the building
has been prepared for the sorting line installation which will be completed in FY23.
Preparations for both Puurs and Beringen are ongoing. These installations will begin
during 2023 and are expected to be operational in late FY24;
• Supporting the Vlarema 8 pre-sorting and reporting requirement an initial 80 trucks in
Belgium have been equipped with cameras using artificial intelligence to allow
identification of non-compliant waste at source. A total of 200 trucks will be
equipped with these systems during the course of the next year;
• Site preparations have begun and contractors have been appointed for a €13m investment
in Acht to recycle rigid plastics. The site is expected to be commissioned in 2023;
• Construction of the €10.5m out-of-date food waste depackaging facility was completed
in Amsterdam and has been in operation since November 2021, providing feedstock to our
anaerobic digester;
• Construction of the bio-LNG facility in Amsterdam was completed together with Shell
and Nordsol and opened by His Majesty King Willem-Alexander in October 2021. The
plant takes bio-gas from our anaerobic digester and converts it to 3m litres per year
of bio-LNG for zero carbon transportation, and bio-CO2 for the agriculture industry;
• Our RetourMatras joint venture with the IKEA Group continues to expand rapidly.
During the last year the fourth facility was commissioned. The first site outside the
Netherlands is expected during FY23 as part of the international expansion. A new
closed loop polyurethane foam recycling processing facility is being constructed. In
the second half of 2023 it is expected to deliver the first “re-polyol” material to
form new mattress foams;
• At Mont-Saint-Guibert in Belgium we have invested €2.4m to upgrade the sand washing
and water treatment facility to a fully automated technology capable of producing over
160,000 tonnes a year of clean sand using 25% less water;
• The Renewi Rockwool recycling initiative (‘Rockcycle’), which creates an opportunity
for unlimited recycling of rockwool instead of landfill, has gained traction and is
being rolled out nationwide in the Netherlands; and
• The partnership with Greencycl-Van Straten Medical was extended to recycle stainless
steel and plastic medical instruments.
Clean and green collection
The efficient collection of waste provides an essential service to customers and provides
us with the raw materials from which to create new products. We aim to optimise our
capital-intensive logistical activity while preserving our customer relationships and
service. Our approach seeks to minimise pollution and traffic impact to become cleaner,
greener and more efficient, in support of our primary focus to increase recycling and
close the loop in the circular economy.
We continue to reduce pollution by investing in the latest technologies. During the year
we placed orders for over 200 Euro VI trucks with the lowest emissions and took delivery
of 49 (FY21: 272). Our investment of €9m (FY21: €39m) was lower than previous years
reflecting supply chain delays. These trucks reduce pollutants significantly compared to
the older trucks they are replacing, significantly improving the air quality of the cities
in which they operate. 67% of our fleet is now Euro VI and we are on track for 100% by
2025.
Over the next decade, we expect a step change in the reduction of carbon emissions from
waste collection through two approaches. The most significant will be a transition to use
of zero emission vehicles (ZEV) in response to zero emissions zones in major cities. We
have Volvo and DAF’s first production electric rear end loaders operating in our fleet and
are monitoring operational performance in conjunction with the manufacturers as part of
our roadmap to zero emissions. The second is an opportunity for waste companies to
cooperate to collect waste in single “white label” truck fleet in each town, increasing
route efficiency and reducing the number of vehicles. Our Green Collective joint venture
with PreZero is the first and leading white label commercial waste collection initiative
in the Netherlands and is now operational in 10 municipalities and is expected to grow to
over 30 cities in future years.
Mineralz & Water
Financial performance
Mineralz & Water FY22 FY21 Variance
€m €m %
Revenue 193.9 182.8 6%
Underlying EBITDA 22.4 15.0 49%
Underlying EBITDA margin 11.6% 8.2%
Underlying EBIT 5.8 0.3 N/A
Underlying EBIT margin 3.0% 0.2%
Return on operating assets 11.3% 0.8%
The return on operating assets excludes all landfill related provisions. The underlying
figures above are reconciled to statutory measures in notes 3 and 16 in the consolidated
financial statements.
The Mineralz & Water Division made underlying progress and saw revenues increase by 6% to
€193.9m and underlying EBIT increased by €5.5m to €5.8m. Volumes at the waterside
increased 6% to 811kT showing recovery post Covid and accounting for an additional €3m of
contribution margin. Other activities in the Division performed well with good volumes and
the benefit of higher values for metal recyclates.
Operational review
As previously indicated, the resumption of full soil treatment production requires
progress in three interlinked areas: revitalisation of the inbound soil pipeline,
placement of historic cleaned TGG stocks in the market, and establishing sand, gravel and
filler as certified products for the construction markets.
The revitalisation of the inbound soil pipeline has been delayed. Inbound deliveries of
contaminated soil have been lower than expected due to short-term reductions in active
projects in the market as well as delays in securing import permits from the authorities.
As a result, we did not further increase our throughput. We are working closely with IL&T
to unlock the international contaminated soil market.
Good progress was made reducing our TGG inventory by 54% with the shipment of 0.7m tonnes
during the year. We continue to explore outlet opportunities for the remaining stock and
have taken an additional disposal cost charge of €2m.
As previously noted, the preferred applications for decontaminated soils are as separated
and refined filler, sand and gravel which are each secondary construction materials. We
continue to experience strong interest in these secondary building materials as the
construction market seeks to become more circular. We are working to obtain full
certification and end-of-waste status for the secondary building materials. Testing of
the products with customers in the infrastructure and concrete industries are ongoing.
Gravel certification and end-of-waste status have been achieved. Certification for sand
and filler for concrete applications are expected as early as 2023. Our commercial
pipeline for each product is growing and once the regulatory environment becomes clearer
our fully certified secondary materials will have long-term outlet markets and customers.
The remainder of the division performed well. Our metals extraction facilities saw growth
on the prior year helped by increases in metal prices. With sustained increased demand we
see good growth opportunities in the water treatment market. We saw lower profits in the
landfill segment, as expected following the scheduled closure of the Braine landfill from
1 January 2021.
Specialities
Financial performance
Specialities FY22 FY21 Variance
€m €m %
Revenue 350.1 300.8 16%
Underlying EBITDA 14.5 12.0 21%
Underlying EBITDA margin 4.1% 4.0%
Underlying EBIT 4.1 2.4 71%
Underlying EBIT margin 1.2% 0.8%
Return on operating assets 28.9% 5.4%
Underlying EBIT includes utilisation of €7.0m (FY21: €11.4m) from onerous contract
provisions. The return on operating assets excludes the UK Municipal business. The
underlying figures above are reconciled to statutory measures in notes 3 and 16 in the
consolidated financial statements.
The Specialities Division grew revenues by 16% to €350m and underlying EBIT was up 71% to
€4.1m. The recovery at Coolrec has continued, benefiting from operational improvements,
investments and strong recyclate prices. Maltha volumes recovered during the year to pre
Covid levels and up on prior year, including good volumes in both France and Portugal. UK
Municipal saw the benefits of high recyclate prices offset by higher Council volumes, an
accounting adjustment in one contract as referenced with the interim results and €2m costs
relating to a fire at one of our facilities in Cumbria with insurance recovery possible in
FY23.
Operational review
Coolrec performed very well in the year and is the national leader in recycling fridges in
the Netherlands and Belgium as a key partner to the national white goods collection
schemes. Volumes increased 4% benefiting from Belgium contracts and achieving double
digit underlying EBIT margin. A further investment was completed at Waalwijk where
electrostatic separators now increase the purity of our PS and ABS post-consumer plastic
materials to >95% to achieve a significantly better offtake price.
Maltha volumes recovered during the year to pre Covid levels and up 15% on prior year.
The business benefited from higher metal prices and is assessing exit options for the
small unprofitable operation in Hungary.
In UK Municipal we continue to operate the loss-making contracts within the aggregate
provisions taken in previous years. Continuous improvement initiatives delivered a
further €1.4m of annualised savings across the various contracts. Underlying improvements
have continued at the ELWA contract. The ongoing activity at Derby to manage the
Councils’ waste remains in place through the second half of 2022 under short term
contracts pending their long-term plans.
FINANCE REVIEW
Financial Performance FY22 FY21 Variance
€m €m %
Revenue 1,869.2 1,693.6 10%
Underlying EBITDA 262.6 195.7 34%
Underlying EBIT 133.6 73.0 83%
Operating profit 124.0 36.1 243%
Underlying profit before tax 105.2 47.4 122%
Non-trading & exceptional items (9.5) (36.5)
Profit before tax 95.7 10.9
Total tax charge for the year (20.3) (5.4)
Profit for the year 75.4 5.5
The underlying figures above are reconciled to statutory measures in notes 3 and 16 in the
consolidated financial statements.
FY21 statutory profits and non-trading and exceptional items have been restated to reflect
the change in accounting for cloud computing costs as referenced in note 2.
Renewi delivered a strong performance, with revenues and underlying EBIT up 10% and 83%
respectively. We have retained some of the structural cost savings made in response to
Covid and these, combined with a strong prices benefit, have contributed to a significant
increase in margins and profits. Underlying EBIT was €60.6m higher than the prior year,
of which €44.6m resulted from the net impact of increased waste producer pricing,
recyclate prices, less cost indexation and €9.2m from volume and mix changes, and €8.7m
from cost savings, with balancing €1.9m from others. Underlying EBIT increased by 83% and
underlying EBITDA increased by 34% as the level of non-cash items of depreciation,
amortisation and impairment charges only increased by 6% year-on-year.
The level of exceptional and non-trading items in the current year was again significantly
reduced to €9.6m resulting in a statutory operating profit of €124.0m compared to €36.1m
last year, as adjusted for the prior year restatement for the change in cloud computing
charges as referred to below.
Following on from an IFRS clarification on the accounting treatment of costs associated
with the configuration and customisation incurred in cloud computing or Software as a
Service (SaaS) arrangements, the Group has reviewed its accounting policy. The revised
policy, applied retrospectively, aligns with the clarification whereby configuration and
customisation costs are recognised as an expense as incurred, except in the limited
instances where these costs result in a separately identifiable intangible asset. We have
determined that €3.9m of costs incurred and capitalised during the current financial year
and €7.3m of intangible assets held at 31 March 2021 no longer meet the criteria for
recognition under IAS 38 Intangible Assets. The impact relating to the year ended March
2020 and prior was not material and has therefore been included in the 31 March 2021
comparative adjustment. Accordingly, €3.9m (FY21: €7.3m) has been expensed and disclosed
as a non-trading and exceptional administrative expenses item because it arises from the
one-off introduction of interpretations to accounting policy guidance and is material in
size. The prior year balance sheet has been adjusted with a reduction of €7.3m of
intangibles with an increase in deferred tax assets of €1.8m and a reduction in retained
earnings of €5.5m.
Non-trading and exceptional items excluded from underlying profits
To enable a better understanding of underlying performance, certain items are excluded
from underlying EBIT and underlying profit before tax due to their size, nature or
incidence. Total non-trading and exceptional items excluding tax were reduced by 74% to
€9.5m (FY21: €36.5m as adjusted for the change in accounting policy restatement). As
previously reported, we have accounted for the cost of the Renewi 2.0 programme as
exceptional due to its size and nature. The programme is forecast to deliver cost
benefits at an annualised run rate of €20m in FY24. The cost of the programme is still
expected to be €40m, split between capital and an exceptional charge. Benefits of €5.0m
were secured in the year, with cash spend of €6.6m which was lower than expected. As a
result we now expect €8m of the programme costs to be incurred later, falling in to FY24.
The table below sets out the expected costs and benefits over later periods.
Renewi 2.0: expected costs and benefits FY21 FY22 FY23 FY24
€m €m €m €m
Annual net benefit 2 5 12 20
Exceptional costs (7) (7) (8) (8)
Capital spend* (5) (2) - -
Net cash flow (10) (4) 4 12
*The capital spend of €7m includes €5m of items which are now classified as exceptional
charge as a result of the change in policy relating to cloud computing related spend.
In the prior year, in response to Covid-19 and ongoing lower economic activity we took
action to reduce capacity in the Commercial division. Further details are provided in
note 5 to the consolidated financial statements.
Operating profit, after taking account of all non-trading and exceptional items, was
€124.0m (FY21: €36.1m as adjusted for the change in accounting policy restatement as
referred to above).
Net finance costs
Net finance costs, excluding exceptional items, increased by €1.7m to €28.9m (FY21:
€27.2m) due to a lower level of finance income. With regard to finance charges the new
Belgian retail bond launched in July 2021 increased costs by €2.7m offset by lower
borrowings on the RCF facility. Further details are provided in note 6 to the
consolidated financial statements.
Profit before tax
Profit before tax on a statutory basis, including the impact of non-trading and
exceptional items, was €95.7m (FY21: €10.9m as adjusted for the change in accounting
policy restatement).
Taxation
Total taxation for the year was a charge of €20.3m (FY21: €5.4m as adjusted for the change
in accounting policy restatement). The effective tax rate on underlying profits was 25%
at €26.4m, unchanged from previous expectations and 24.5% in the prior year. An
exceptional tax credit of €6.1m includes €2.4m attributable to the non-trading and
exceptional items of €9.5m and €3.7m as a result of tax rate changes in the UK which were
enacted during the first half.
Looking forward, we anticipate the underlying tax rate to remain around 26% given the
recent changes in the Netherlands and the UK.
The Group statutory profit after tax, including all non-trading and exceptional items, was
€75.4m (FY21: €5.5m as adjusted for the change in accounting policy).
Earnings per share (EPS)
Following the one for ten share consolidation in July 2021, EPS comparatives have been
restated to reflect the change in the number of shares. Underlying EPS excluding
non-trading and exceptional items was 98 cents per share, an increase of 53 cents. Basic
EPS was 93 cents per share compared to 7 cents per share in the prior year as adjusted for
the restatement of FY21 for the change in accounting policy.
Dividend
Recognising the Group’s significant growth investment programme and the resultant cash
flow profile in the short term, the Board is not recommending a dividend for FY22, however
it will keep the Group’s dividend policy under review for FY23.
CASH FLOW PERFORMANCE
The funds flow performance table is derived from the statutory cash flow statement and
reconciliations are included in note 16 in the consolidated financial statements.
The table shows the cash flows from an adjusted free cash flow to total cash flow. The
adjusted free cash flow measure was introduced in March 2021 and focuses on the cash
generation excluding the impact of Covid-19 tax deferrals, settlement of ATM soil
liabilities and spend relating to the UK PPP onerous contracts. Adjusted free cash flow
includes lease repayments for IFRS 16 leases.
Funds flow performance FY22 FY21
€m €m
EBITDA 262.6 195.7
Working capital movement (38.0) 35.4
Movement in provisions and other 4.5 8.9
Net replacement capital expenditure (68.2) (50.7)
Repayments of obligations under lease liabilities (44.2) (40.4)
Interest, loan fees and tax (26.1) (35.4)
Adjusted free cash flow 90.6 113.5
Deferred Covid taxes (10.6) 54.1
Offtake of ATM soil (10.3) (2.6)
UK Municipal contracts (9.2) (19.3)
Free cash flow 60.5 145.7
Growth capital expenditure (13.1) (6.9)
Renewi 2.0 and other exceptional spend (11.0) (17.4)
Other (7.0) (3.9)
Total cash flow 29.4 117.5
Free cash flow conversion 45% 200%
Free cash flow conversion is free cash flow as a percentage of underlying EBIT. The
non-IFRS measures above are reconciled to statutory measures in note 16 in the
consolidated financial statements. The 2021 values for net replacement capital
expenditure and other exceptional spend have been adjusted by €4.7m to reflect the element
of SaaS related capital expenditure now restated as an exceptional item.
Adjusted free cash flow was lower at €90.6m despite the strong EBITDA improvement in the
year. As noted with the Group’s interim results, there has been an outflow on working
capital in the year driven by an underlying reduction in payables along with increased
outstanding receivables as a result of higher revenues and delays in billing from recent
process changes. Days sales outstanding have remained unimpacted by Covid-19.
Replacement capital spend at €68.2m has remained well controlled and ahead of last year
due to catch ups. In addition, €27.1m of new leases have been entered into which are
reported as right-of-use assets with a corresponding lease liability. These leases
include the continuation of the truck replacement programme, property lease renewals or
extensions and other assets. Growth capital spend included spend on the €10m facility to
process out-of-date food waste in Amsterdam and some initial spend on the advanced
residual waste sorting projects in Flanders reflecting a slightly later cash phasing than
originally anticipated.
Interest payments were lower than last year given reduced bank borrowings and the first
interest payment on the new retail bond being payable in July 2022. Tax payments were
also lower as a result of phasing as some payments have moved out to April 2022.
Looking at the three components that are shown below adjusted free cash flow, there has
been an initial €10.6m repayment on Covid-19 tax deferrals as forecast. The total tax
deferrals were €60m at the end of March 2021 and the Dutch elements will be settled in 36
monthly instalments as from October 2021. Cash spend for placement of TGG soil stocks
placed in the market was €10.3m. The balance of the liability of up to €15m is expected
to be placed in the market over the next 12 to 24 months. Cash outflow on UK PPP
contracts was €9.2m due to an improved operational performance driven by volumes and
continuous improvement initiatives, as well as benefits from higher recyclate prices.
Renewi 2.0 and other exceptional spend includes €4m relating to cloud computing
arrangements in both years and €7m relating to Renewi 2.0 (2021: €8m). Other cash flows
include the funding for the closed UK defined benefit scheme and the purchase of
short-term investments in the insurance captive net of sundry dividend income from other
investments.
Net cash inflow from operating activities decreased from €238.7m in the prior year to
€180.4m in the current year. A reconciliation to the underlying cash flow performance as
referred to above is included in note 16 in the consolidated financial statements.
INVESTMENT PROJECTS
Expenditure in FY23
The Group’s long-term expectations for replacement capital expenditure remain around 80%
of depreciation. FY23 replacement capital spend is expected to be around €80m which
represents a significant increase over recent years. It includes some catch-up from the
prior two years and some one-offs for fire safety and office improvements in Commercial,
the Green Gas project and jetty works at ATM. In addition, up to €45m of IFRS 16 lease
investments principally in replacement trucks are anticipated, although some production
delays are now expected given supply chain issues caused by the war in Ukraine.
Expenditure on the circular innovation pipeline will increase as elements of the advanced
sorting investments in Belgium for Vlarema 8 and expansion in plastics sorting at Acht in
the Netherlands progress through the construction phases. Timing of the investment
expenditure is now slightly later than originally expected: €12m lower in FY22,
correspondingly increasing expectations for FY23 to €50m and for FY24 to €35m
respectively. The returns expected are still more than €20m by FY26. In addition growth
capital expenditure of around €14m is expected for other large one-off projects.
Return on assets
The Group return on operating assets, excluding debt, tax and goodwill, increased from
22.6% at 31 March 2021 to 42.6% at 31 March 2022. The Group post-tax return on capital
employed was 11.6% (FY21: 6.3%).
Treasury and cash management
Core net debt and leverage ratios
Core net debt excludes IFRS 16 lease liabilities and the net debt relating to the UK PPP
contracts which is non-recourse to the Group and secured over the assets of the special
purpose vehicles. Core net debt was better than management expectations at €303.0m (FY21:
€343.6m), which resulted in a net debt to EBITDA ratio of 1.4x. Liquidity headroom
including cash and undrawn facilities was also strong at €428m (FY21: €364m).
Debt structure and strategy
Borrowings, excluding PPP non-recourse borrowings, are mainly long-term with the exception
of the €100m Belgian retail bond maturing in July 2022. All our core borrowings of bonds
and loans are green financed. During the year all term loans and revolving credit
facilities denominated in Sterling were repaid and the related cross-currency interest
rate swaps were cancelled. We have extended the Group’s main banking facility, with most
commitments now maturing in May 2025. At the same time, the size of the facility has been
reduced to €400m from €495m, removing excess liquidity following the Green Bond issuance
completed in 2021.
Debt Structure FY22 FY21 Variance
€m €m €m
€100m Belgian Green retail bonds (100.0) (100.0) -
€75m Belgian Green retail bonds (75.0) (75.0) -
€125m Belgian Green retail bonds (125.0) - (125.0)
€400m Green RCF (15.0) (185.0) 170.0
Green EUPP (25.0) (25.0) -
Gross borrowings before lease liabilities (340.0) (385.0) 45.0
Historical IAS 17 lease liabilities and other (8.7) (13.6) 4.9
Loan fees 3.2 3.5 (0.3)
Core cash and money market funds 42.5 51.5 (9.0)
Core net debt (as per covenant definitions) (303.0) (343.6) 40.6
IFRS 16 lease liabilities (221.9) (236.7) 14.8
Net debt excluding UK PPP net debt (524.9) (580.3) 55.4
UK PPP restricted cash balances 21.1 17.3 3.8
UK PPP non-recourse debt (100.2) (105.1) 4.9
Total net debt (604.0) (668.1) 64.1
The Group operates a committed invoice discounting programme. The cash received for
invoices sold at 31 March 2022 was €80.5m (FY21: €80.3m).
The introduction of IFRS 16 in 2019 brought additional lease liabilities onto the balance
sheet with an associated increase in assets. Covenants on our main bank facilities remain
on a frozen GAAP basis and exclude IFRS 16 leases.
Debt borrowed in the special purpose vehicles (SPVs) for the financing of UK PPP
programmes is separate from the Group core debt and is secured over the assets of the SPVs
with no recourse to the Group as a whole. Interest rates on PPP borrowings were fixed by
means of interest rate swaps at contract inception. At 31 March 2022 this net debt
amounted to €79.1m (FY21: €87.8m). As set out in note 2 in the consolidated financial
statements the presentation of cash held in the UK PPP entities has been restated to show
gross in cash and cash equivalents rather than netted off the non-recourse debt balance.
PROVISIONS AND CONTINGENT LIABILITIES
Around 90% of the Group’s provisions are long-term in nature, with landfill provisions
being utilised over more than 20 years.
Onerous contract provisions were increased between 2017 and 2020 to a peak of €109.5m in
2018 and have now reduced to €79.9m. Of the outstanding balance €9.2m is in current
provisions and the remainder will mainly be used for BDR and Wakefield over the remaining
15+ years of these contracts.
The total current element of provisions amounts to €31m, including onerous contracts, €4m
for restructuring, €6m for landfill related spend and €12m for environmental, legal and
others. Additional detail of the non-current element of provisions is given in note 12 in
the consolidated financial statements.
The position on the alleged Belgian State Aid claim remains unchanged since last year,
with a gross potential liability of €63m as at 31 March, against which we have provided
for €15m. We expect a ruling from the European Commission during FY23 but no monies would
likely become payable until early in FY24. Details of contingent liabilities are set out
in note 15 of the financial statements and the Group does not expect any of these to
crystallise in the coming year.
Retirement benefits
The Group has a closed UK defined benefit pension scheme and at 31 March 2022, the scheme
had an accounting surplus of €8.6m (FY21: €4.0m deficit). The change in the year was due
to an increase in the discount rate assumption reduced by a decrease in asset returns.
The latest triennial actuarial valuation of the scheme was completed at 5 April 2021 and
the future funding plan has been maintained at the current level of €3.6m per annum until
December 2024.
There are also several defined benefit pension schemes for employees in the Netherlands
and Belgium which had a retirement benefit deficit of €6.3m at 31 March 2022, a €1.1m
decrease from 31 March 2021.
Changes to accounting standards
From 1 April 2022, the company will apply the Amendments to IAS 37, "Onerous contracts -
costs of fulfilling a contract." Consequently, all costs required for the fulfilment of a
contract should be included when assessing the onerous contract provision, including an
allocation of divisional central overheads. The Group is in the process of finalising the
impact which is estimated to increase reported annual underlying EBIT from 1 April 2022 by
c. €5m. An increase of approximately €53m will be recorded in the onerous contract
provisions, which have up to 18 years still to run. This increase is taken as an
adjustment to retained earnings on 1 April. There is no impact on cash and this adjustment
reflects no change in the underlying performance of the contracts.
Consolidated Income Statement
For the year ended 31 March 2022
2022 2021
Restated*
Non-trading
Non-trading
&
Note Underlying exceptional Underlying &
items Total exceptional Total
€m €m items
€m €m €m
€m
Revenue 3,4 1,869.2 - 1,869.2 1,693.6 - 1,693.6
Cost of sales 5 (1,512.5) 0.1 (1,512.4) (1,408.5) (15.7) (1,424.2)
Gross profit 356.7 0.1 356.8 285.1 (15.7) 269.4
(loss)
Administrative 5 (223.1) (9.7) (232.8) (212.1) (21.2) (233.3)
expenses
Operating 3 133.6 (9.6) 124.0 73.0 (36.9) 36.1
profit (loss)
Finance income 5,6 9.3 0.2 9.5 10.9 0.4 11.3
Finance charges 5,6 (38.2) (0.1) (38.3) (38.1) - (38.1)
Share of
results from 0.5 - 0.5 1.6 - 1.6
associates and
joint ventures
Profit (loss) 3 105.2 (9.5) 95.7 47.4 (36.5) 10.9
before taxation
Taxation 5,7 (26.4) 6.1 (20.3) (11.6) 6.2 (5.4)
Profit (loss) 78.8 (3.4) 75.4 35.8 (30.3) 5.5
for the year
Attributable
to:
Owners of the 77.9 (3.4) 74.5 35.9 (30.3) 5.6
parent
Non-controlling 0.9 - 0.9 (0.1) - (0.1)
interests
78.8 (3.4) 75.4 35.8 (30.3) 5.5
*The comparatives have been restated due to prior period adjustments as explained in note
2 Basis of preparation.
Restated*
2022
Earnings per share Note 2021
cents
cents
Basic 8 93 7
Diluted 8 93 7
Underlying basic 8 98 45
Underlying diluted 8 98 45
*The comparatives have been restated in accordance with the requirements of IAS 33
Earnings per share following the share consolidation and also due to prior period
adjustments as explained in note 2 Basis of preparation.
Consolidated Statement of Comprehensive Income
For the year ended 31 March 2022
Restated*
2022
2021
€m
€m
Items that may be reclassified subsequently to profit or loss:
Exchange differences on translation of foreign subsidiaries (0.2) (3.1)
Fair value movement on cash flow hedges 16.5 14.3
Deferred tax on fair value movement on cash flow hedges (1.9) (2.4)
Share of other comprehensive income of investments accounted for using the 0.5 0.3
equity method
14.9 9.1
Items that will not be reclassified to profit or loss:
Actuarial gain (loss) on defined benefit pension schemes 10.5 (23.3)
Deferred tax on actuarial gain (loss) on defined benefit pension schemes (2.4) 4.4
8.1 (18.9)
Other comprehensive income (loss) for the year, net of tax 23.0 (9.8)
Profit for the year 75.4 5.5
Total comprehensive income (loss) for the year 98.4 (4.3)
Attributable to:
Owners of the parent 97.5 (4.2)
Non-controlling interests 0.9 (0.1)
Total comprehensive income (loss) for the year 98.4 (4.3)
*The comparatives have been restated due to prior period adjustments as explained in note
2 Basis of preparation.
Consolidated Balance Sheet
As at 31 March 2022
Restated*
31 March
31 March
Note 2022
2021
€m
€m
Assets
Non-current assets
Goodwill and intangible assets 10 592.8 594.9
Property, plant and equipment 10 553.6 560.7
Right-of-use assets 10 213.8 233.8
Investments 14.3 17.2
Financial assets relating to PPP contracts 135.7 142.4
Derivative financial instruments 14 0.4 7.9
Defined benefit pension scheme surplus 13 8.6 -
Other receivables 5.1 4.1
Deferred tax assets 41.6 51.3
1,565.9 1,612.3
Current assets
Inventories 22.5 20.6
Investments 14 11.1 9.3
Loans to associates and joint ventures 0.9 0.9
Financial assets relating to PPP contracts 7.7 6.7
Trade and other receivables 269.3 247.7
Derivative financial instruments 14 6.6 1.2
Current tax receivable 0.9 0.5
Cash and cash equivalents – including restricted cash 11 63.6 68.8
382.6 355.7
Assets classified as held for sale 10 3.3 -
385.9 355.7
Total assets 1,951.8 1,968.0
Liabilities
Non-current liabilities
Borrowings 11 (518.7) (689.1)
Derivative financial instruments 14 (14.6) (25.3)
Other non-current liabilities (36.2) (54.4)
Defined benefit pension schemes deficit 13 (6.3) (11.4)
Provisions 12 (258.1) (252.6)
Deferred tax liabilities (47.0) (50.9)
(880.9) (1,083.7)
Current liabilities
Borrowings 11 (148.9) (47.8)
Derivative financial instruments 14 (0.1) (0.2)
Trade and other payables (528.4) (546.2)
Current tax payable (24.2) (13.8)
Provisions 12 (31.1) (38.7)
(732.7) (646.7)
Total liabilities (1,613.6) (1,730.4)
Net assets 338.2 237.6
Issued capital and reserves attributable to the owners of the
parent
Share capital 99.5 99.5
Share premium 473.8 473.6
Exchange reserve (15.0) (14.8)
Retained earnings (227.1) (326.8)
331.2 231.5
Non-controlling interests 7.0 6.1
Total equity 338.2 237.6
*The comparatives have been restated due to prior period adjustments as explained in note
2 Basis of preparation.
Consolidated Statement of Changes in Equity
For the year ended 31 March 2022
Restated* Restated*
Share Share Exchange Retained Non-controlling
reserve Total
capital premium earnings interests
€m equity
€m €m €m €m
€m
Balance at 1 April 2021 – 99.5 473.6 (14.8) (326.8) 6.1 237.6
restated*
Profit for the year - - - 74.5 0.9 75.4
Other comprehensive (loss)
income:
Exchange loss on translation - - (0.2) - - (0.2)
of foreign subsidiaries
Fair value movement on cash - - - 16.5 - 16.5
flow hedges
Actuarial gain on defined - - - 10.5 - 10.5
benefit pension schemes
Tax in respect of other - - - (4.3) - (4.3)
comprehensive income items
Share of other comprehensive
income of investments - - - 0.5 - 0.5
accounted for using the
equity method
Total comprehensive (loss) - - (0.2) 97.7 0.9 98.4
income for the year
Share-based compensation - - - 2.5 - 2.5
Movement on tax arising on - - - 1.3 - 1.3
share-based compensation
Proceeds from exercise of - 0.2 - - - 0.2
employee options
Own shares purchased by the - - - (1.8) - (1.8)
Employee Share Trust
Balance as at 31 March 2022 99.5 473.8 (15.0) (227.1) 7.0 338.2
Balance at 1 April 2020 99.5 473.6 (11.6) (327.6) 1.4 235.3
Profit (loss) for the year – - - - 5.6 (0.1) 5.5
restated*
Other comprehensive (loss)
income:
Exchange (loss) gain on
translation of foreign - - (3.2) - 0.1 (3.1)
subsidiaries
Fair value movement on cash - - - 14.4 (0.1) 14.3
flow hedges
Actuarial loss on defined - - - (23.3) - (23.3)
benefit pension schemes
Tax in respect of other - - - 2.0 - 2.0
comprehensive income items
Share of other comprehensive
income of investments - - - 0.3 - 0.3
accounted for using the
equity method
Total comprehensive loss for - - (3.2) (1.0) (0.1) (4.3)
the year – restated*
Share-based compensation - - - 1.4 - 1.4
Movement on tax arising on - - - 0.3 - 0.3
share-based compensation
Disposal of non-controlling - - - 1.3 4.8 6.1
interest
Own shares purchased by the - - - (1.2) - (1.2)
Employee Share Trust
Balance as at 31 March 2021 – 99.5 473.6 (14.8) (326.8) 6.1 237.6
restated*
*The comparatives have been restated due to prior period adjustments as explained in note
2 Basis of preparation.
Consolidated Statement of Cash Flows
For the year ended 31 March 2022
Restated*
2022
2021
€m
€m
Profit before tax 95.7 10.9
Finance income (9.5) (11.3)
Finance charges 38.3 38.1
Share of results from associates and joint ventures (0.5) (1.6)
Operating profit 124.0 36.1
Amortisation and impairment of intangible assets 11.1 19.1
Depreciation and impairment of property, plant and equipment 74.7 80.4
Depreciation and impairment of right-of-use assets 45.5 42.5
Impairment of investment in associate 1.9 -
Net gain on disposal of property, plant and equipment and intangible (0.8) (0.1)
assets
Exceptional (credit) charge on long term provisions (1.6) 3.7
Net decrease in provisions (5.8) (11.0)
Payment related to committed funding of the defined benefit pension (3.6) (3.6)
schemes
Other non-cash items - 2.6
Share-based compensation 2.5 1.4
Operating cash flows before movement in working capital 247.9 171.1
(Increase) decrease in inventories (1.9) 0.2
(Increase) decrease in receivables (23.2) 25.1
(Decrease) increase in payables (34.8) 57.1
Cash flows from operating activities 188.0 253.5
Income tax paid (7.6) (14.8)
Net cash inflow from operating activities 180.4 238.7
Investing activities
Purchases of intangible assets (8.4) (4.1)
Purchases of property, plant and equipment (77.6) (58.0)
Proceeds from disposals of property, plant and equipment 4.7 4.5
Acquisition of business assets (0.5) -
Net cash outflow in relation to prior year sale of business (0.8) -
Capital contribution to associates and joint ventures - (1.1)
Dividends received from associates and joint ventures 1.3 1.6
Receipt of deferred consideration 0.3 0.6
Purchase of other short-term investments (2.2) (0.8)
Outflows in respect of PPP arrangements under the financial asset (0.4) (1.9)
model
Capital received in respect of PPP financial assets 6.2 5.1
Finance income 9.9 10.2
Net cash outflow from investing activities (67.5) (43.9)
Financing activities
Finance charges and loan fees paid (28.4) (30.8)
Investment in own shares by the Employee Share Trust (1.8) (1.2)
Proceeds from share issues 0.2 -
Loan from non-controlling interest - 0.5
Proceeds from retail bonds 125.0 -
Proceeds from bank borrowings 141.6 9.0
Repayment of bank borrowings (312.2) (269.0)
Settlement of cross-currency interest rate swaps 6.4 -
Repayment of PPP debt (5.7) (4.1)
Repayments of obligations under lease liabilities (44.2) (40.4)
Net cash outflow from financing activities (119.1) (336.0)
Net decrease in cash and cash equivalents (6.2) (141.2)
Effect of foreign exchange rate changes 1.0 0.2
Cash and cash equivalents at the beginning of the year 68.8 209.8
Cash and cash equivalents at the end of the year 63.6 68.8
*The comparatives have been restated due to prior period adjustments as explained in note
2 Basis of preparation.
Notes to the Consolidated Financial Statements
1. General information
Renewi plc is a public limited company listed on the London Stock Exchange with a
secondary listing on Euronext Amsterdam. Renewi plc is incorporated and domiciled in
Scotland under the Companies Act 2006, registered number SC077438. The address of the
registered office is 16 Charlotte Square, Edinburgh, EH2 4DF. The nature of the Group’s
operations and its principal activities are set out in note 3.
2. Basis of preparation
The figures and financial information for the year ended 31 March 2022 are extracted from
but do not constitute the statutory financial statements for that year. The figures and
financial information are audited. The Consolidated Income Statement, Consolidated
Statement of Comprehensive Income, Consolidated Statement of Changes in Equity and
Consolidated Statement of Cash Flows for the year ended 31 March 2021 and the Consolidated
Balance Sheet as at 31 March 2021 have been derived from the full Group accounts published
in the Annual Report and Accounts 2021 with restatements as explained below. These have
been delivered to the Registrar of Companies and on which the report of the independent
auditors was unqualified and did not contain a statement under section 498 of the
Companies Act 2006. The statutory accounts for the year ended 31 March 2022 will be filed
with the Registrar of Companies in due course.
The consolidated financial statements are prepared in accordance with UK adopted
international accounting standards in conformity with the requirements of the Companies
Act 2006. The Group has applied all accounting standards and interpretations issued
relevant to its operations and effective for accounting periods beginning on 1 April 2021.
The IFRS accounting policies have been applied consistently to all periods presented and
throughout the Group for the purpose of the consolidated financial statements.
Going concern
The Directors have adopted the going concern basis in preparing these consolidated
financial statements after assessing the Group's principal risks including an assessment
of the impact of continued recovery from the Covid-19 pandemic, the current high
inflationary environment and the uncertainty arising from the invasion of Ukraine.
The Directors have carried out a comprehensive assessment of the Group’s ability to
continue as a going concern. This assessment has involved the review of medium-term cash
flow modelling over an 18-month period to 30 September 2023. This includes expectations on
the future economic environment, available liquidity, which includes repayment of the
€100m Belgian retail bond in June 2022, as well as other principal risks associated with
the Group’s ongoing operations.
The assessment includes a base case scenario setting out the Directors’ current
expectations of future trading and a plausible but severe downside scenario and without
applying any mitigating actions to assess the potential impact on the Group’s future
financial performance. The key judgement in both scenarios is the level and speed of
economic recovery following the disruption caused by the Covid-19 pandemic and the impact
of recent geopolitical events.
The downside scenario includes significantly weaker macro-economic conditions leading to a
volume decline, well below the forecast economic growth in all our territories in FY23 and
FY24. Other downsides include a significant decline in recyclate prices from the current
levels, higher energy and diesel prices, operational downtime in some of our plants and a
settlement of the provision arising from the European Commission investigation into
alleged state aid in Belgium. These factors reduce FY23 EBIT by 31% compared to the base
case. No mitigating cost and cash actions, such as deferral of uncommitted capital
expenditure, working capital actions and reduced discretionary spend, have been applied to
our downside modelling as these are not necessary to preserve sufficient liquidity or to
avoid a breach of covenants.
In the base case and plausible downside scenarios the Group has sufficient liquidity and
headroom in its existing facilities and no covenants are breached at any of the forecast
testing dates.
In addition, a reverse stress test calculation has been undertaken to consider the points
at which the covenants may be breached. Underlying EBIT in FY23 would need to reduce by
59% compared to the base case without considering any mitigating actions. In the opinion
of the Directors there is no plausible scenario or combination of scenarios that we
consider to be remotely likely that would generate this result.
Having considered all the elements of the financial projections, sensitivities and
mitigating actions, the Directors confirm they have a reasonable expectation that the
Group has adequate resources to continue in operational existence for the foreseeable
future and to meet all banking covenants.
In accordance with Provision 31 of the UK Corporate Governance Code, the Directors have
also assessed the prospects and financial viability of the Company for a period longer
than the 12 months required in the going concern assessment.
2. Basis of preparation – continued
Prior year restatements
PPP non-recourse net debt presentation
Given that cash held in UK PPP entities is not freely available to the Group, historically
management determined that it was appropriate to present these cash balances together with
the gross non-recourse debt as PPP non-recourse net debt. In preparing these financial
statements, management identified this presentation of cash and cash equivalents and PPP
non-recourse debt in the balance sheet as an error and accordingly a prior year adjustment
has been made. Non-recourse debt in these UK PPP entities has always been excluded from
the calculation of the Group’s covenants which remains unchanged. It has been determined
that the appropriate presentation should be on a gross basis in line with the requirements
of IAS 32 Financial Instruments. The impact of this change has led to gross PPP
non-recourse debt and PPP cash held at bank being presented separately within borrowings
and current assets respectively which has resulted in the following changes to the 31
March 2021 Balance Sheet: an increase in non-current borrowings of €15.2m, an increase in
current borrowings of €2.1m with a corresponding increase in cash and cash equivalents of
€17.3m. There is no impact on the Income Statement, earnings per share, Statement of
Comprehensive Income, Group equity or the alternative performance measure of core net
debt. The Balance Sheet and Statements of Cash flows together with related disclosures
have been restated to reflect this adjustment. A 31 March 2020 balance sheet has not been
presented as considered not material, the impact is an increase in non-current borrowings
of €14.0m, an increase in current borrowings of €1.3m with a corresponding increase in
cash and cash equivalents of €15.3m.
Earnings per share due to share capital consolidation
At the Annual General Meeting of Renewi plc held on 15 July 2021, shareholders approved
the consolidation of the Company’s share capital on the basis of one new ordinary share
with a nominal value of £1.00 each for every ten existing ordinary shares of 10 pence each
held. As a result earnings per share disclosures have been restated in these consolidated
financial statements in accordance with the requirements of IAS 33 Earnings per share and
as set out in note 8.
Change in accounting policy – Configuration or customisation costs in cloud computing,
Software as a Service (SaaS) arrangements
In April 2021 the IFRS Interpretations Committee (IFRIC) published an agenda decision in
relation to the interpretation on accounting for configuration or customisation costs in
cloud computing or Software as a Service (SaaS). As a result the Group has reviewed its
accounting policy regarding the configuration and customisation costs incurred when
implementing SaaS arrangements.
The Group’s revised policy, applied retrospectively, aligns with the IFRIC agenda decision
whereby:
• In SaaS arrangements where the Group controls the underlying software, configuration
and customisation costs are capitalised as part of bringing the identified intangible
asset into use
• Where the Group does not control the underlying software, but the related
configuration and customisation costs are not distinct from access to the software,
these costs are expensed over the term of the SaaS contract
• In all other circumstances, configuration and customisation costs are recognised as an
expense as incurred, except in the limited instances where these costs result in a
separately identifiable intangible asset.
We have determined that €3.9m of costs incurred and capitalised during the current
financial year and the net book value of €7.3m of software intangible assets held at 31
March 2021 no longer meet the criteria for recognition under IAS 38 Intangible assets. The
impact on opening reserves for the year ended March 2020 of €3.7m was deemed immaterial
and has therefore been included in the year ended March 2021 adjustment. Accordingly,
€3.9m (2021: €7.3m) has been expensed and disclosed as a non-trading and exceptional
administrative expenses item because it arises from the one-off introduction of
interpretations to accounting policy guidance and is material in size. The prior year
balance sheet has been adjusted with a reduction of €7.3m of intangibles, an increase in
deferred tax assets of €1.8m and a reduction in retained earnings of €5.5m. The impact on
the Statement of Cash flows is a €4.7m increase in cashflows from operating activities and
a reduction in cash outflows due to investing activities of €4.7m.
The impact of the above restatements on the Consolidated Income Statement for the year
ended 31 March 2021 is as follows:
Restatement Restatement
31 March 2021 (previously 31 March 2021
Income statement reported) due to PPP due to SaaS (restated)
extract arrangements
€m cash and debt €m
€m
€m
Underlying operating 73.0 - - 73.0
profit
Non-trading and (29.6) - (7.3) (36.9)
exceptional items
Operating profit 43.4 - (7.3) 36.1
Profit before 18.2 - (7.3) 10.9
taxation
Taxation (7.2) - 1.8 (5.4)
Profit for the year 11.0 - (5.5) 5.5
2. Basis of preparation – continued
The impact of the above restatements on the Consolidated Balance Sheet as at 31 March 2021
is as follows:
Restatement Restatement
31 March 2021 31 March 2021
(previously due to PPP due to SaaS (restated)
Balance Sheet extract reported) arrangements
cash and debt €m
€m €m
€m
Goodwill and intangible assets 602.2 - (7.3) 594.9
Deferred tax assets 49.5 - 1.8 51.3
Non-current assets 1,617.8 - (5.5) 1,612.3
Cash and cash equivalents – 51.5 17.3 - 68.8
including restricted cash
Current assets 338.4 17.3 - 355.7
Total assets 1,956.2 17.3 (5.5) 1,968.0
Borrowings – non-current (673.9) (15.2) - (689.1)
Non-current liabilities (1,068.5) (15.2) - (1,083.7)
Borrowings – current (45.7) (2.1) - (47.8)
Current liabilities (644.6) (2.1) - (646.7)
Total liabilities (1,713.1) (17.3) - (1,730.4)
Net assets 243.1 - (5.5) 237.6
Issued capital and reserves
attributable to the owners of the
parent
Retained earnings (321.3) - (5.5) (326.8)
Other equity 558.3 - - 558.3
237.0 - (5.5) 231.5
Non-controlling interests 6.1 - - 6.1
Total equity 243.1 - (5.5) 237.6
The impact of the above restatements on the Consolidated Statement of Cash Flows for the
year ended 31 March 2021 is as follows:
Restatement Restatement
31 March 2021 31 March 2021
(previously due to PPP due to SaaS (restated)
Statement of Cash Flows extract reported) arrangements
cash and debt €m
€m €m
€m
Net cash flows from operating 243.4 - (4.7) 238.7
activities
Net cash flows from investing (48.6) - 4.7 (43.9)
activities
Net cash flows from financing (337.3) 1.3 - (336.0)
activities
Net decrease in cash and cash (142.5) 1.3 - (141.2)
equivalents
Effect of foreign exchange rate (0.5) 0.7 - 0.2
changes
Cash and cash equivalents at 31 194.5 15.3 - 209.8
March 2020
Cash and cash equivalents at 31 51.5 17.3 - 68.8
March 2021
The impact of the above restatements on basic and diluted earnings per share for the year
ended 31 March 2021 is as follows:
Restatement Restatement
31 March 2021 (previously Share capital 31 March 2021
reported) consolidation due to PPP due to SaaS (restated)
arrangement
cents cents cash and debt cents
cents
cents
Basic 1.4 12.6 - (7.0) 7.0
Diluted 1.4 12.6 - (7.0) 7.0
Underlying 4.5 40.5 - - 45.0
basic
Underlying 4.5 40.5 - - 45.0
diluted
2. Basis of preparation – continued
New standards and interpretations not yet adopted
Standards and interpretations issued by the International Accounting Standards Board
(IASB) are only applicable if endorsed by the UK Endorsement Board (UKEB). At the date of
approval of these financial statements there were no new IFRSs or IFRS Interpretation
Committee interpretations which were early adopted by the Group.
The following amendments are effective for the period beginning 1 April 2022:
• Onerous Contracts – Costs of Fulfilling a Contract (Amendments to IAS 37)
• Property, plant and equipment: Proceeds before Intended Use (Amendments to IAS 16)
• Annual improvements to IFRS Standards 2018-2020 (Amendments to IFRS 1, IFRS 9, IFRS 16
and IAS 41)
• References to Conceptual Framework (Amendments to IFRS 3)
The amendment to IAS 37 Onerous Contracts – Costs of Fulfilling Contract clarifies that
the costs of fulfilling a contract should include an allocation of other costs that relate
directly to fulfilling the contract. Costs that relate directly to a contract consist of
both the incremental costs of fulfilling that contract – for example, direct labour and
materials; and an allocation of other costs that relate directly to fulfilling contracts –
for example, an allocation of the depreciation charge for an item of property, plant and
equipment used in fulfilling that contract among others. Prior to this amendment there has
been a diversity in practice as to whether the costs of meeting contractual obligations
should comprise only incremental costs or also include an allocation of direct costs which
would have been incurred regardless of whether the contract was being performed or not.
The Group’s current accounting policy only includes incremental direct costs when
measuring the costs to fulfil a contract. The amendment is effective from 1 April 2022 and
requires any additional provisions to be recognised as an adjustment to retained earnings
at that date. The Group is in the process of finalising the impact of this amendment and
it is currently estimated that this will result in an increase in the existing onerous
contract provisions of approximately €53m.
The following amendments are effective for the period beginning 1 April 2023:
• Disclosure of Accounting Policies (Amendments to IAS 1 and IFRS Practice Statement 2)
• Definition of Accounting Estimates (Amendments to IAS 8)
• Deferred Tax Related to Assets and Liabilities arising from a Single Transaction
(Amendments to IAS 12)
The Group does not expect a significant impact from any of the other new accounting
standards and amendments.
Consideration of climate change
In preparing the financial statements, the Directors have considered the impact of climate
change, particularly in the context of the risks identified in the TCFD disclosures.
Physical climate change poses risk to our operations and supply chain however mitigation
measures are either already in place or are in the process of being further developed
therefore no medium-term impact is expected from climate change. The Directors are aware
of the changing risks attached to climate change and are in the process of developing a
TCFD Roadmap which will lead to quantifying the business impact of material climate
related risks and opportunities. There have been no material impacts identified on the
financial reporting judgements and estimates. In particular, the impact of climate change
has been considered in respect of the following areas:
• Going concern and viability of the Group over the next three years
• Cash flow forecasts in the impairment assessments of goodwill
• Carrying value and useful economic lives of property, plant and equipment
Exchange Rates
In addition to the Group’s presentational currency of Euros, the most significant currency
for the Group is Sterling with the closing rate on 31 March 2022 of €1:£0.845 (2021:
€1:£0.852) and an average rate for the year ended 31 March 2022 of €1:£0.849 (2021:
€1:£0.885).
Critical accounting judgements and estimates
The preparation of financial statements in accordance with IFRS requires management to
make judgements, estimates and assumptions that affect the application of policies and
reported amounts of assets and liabilities, income and expenditure. The areas involving a
higher degree of judgement or complexity are set out below. Critical estimates are defined
as those that have a significant risk of resulting in a material adjustment to the
carrying amounts of assets and liabilities within the next financial year. The estimates
and associated assumptions are based on factors including historical experience and
expectations of future events that are considered to be relevant and reasonable. These
estimates, assumptions and judgements are reviewed on an ongoing basis.
2. Basis of preparation – continued
Judgements in applying the Group’s accounting policies
Use of alternative performance measures
The Group uses alternative performance measures as we believe these measures provide
additional useful information on the underlying trends, performance and position of the
Group. These underlying measures are used by the Group for internal performance analysis
and incentive compensation arrangements for employees. The term ‘underlying’ refers to the
relevant measure being reported for continuing operations excluding non-trading and
exceptional items. These include underlying earnings before interest and tax (underlying
EBIT), underlying profit before tax, underlying profit after tax, underlying earnings per
share and underlying EBITDA (earnings before interest, tax, depreciation and
amortisation). The terms ‘EBIT’, ‘EBITDA’, ‘exceptional items’, ‘adjusted’ and
‘underlying’ are not defined terms under IFRS and may therefore not be comparable with
similarly titled profit measures reported by other companies. These measures are not
intended to be a substitute for, or superior to, GAAP measurements of profit. A full list
of alternative performance measures and non-IFRS measures together with reconciliations
are set out in note 16.
Non-trading and exceptional items
In establishing which items are disclosed separately as non-trading and exceptional to
enable a better understanding of the underlying financial performance of the Group,
management exercise judgement in assessing the size, nature or incidence of specific
items. A policy for non-trading and exceptional items is followed consistently and is
submitted to the Audit Committee for annual review. See note 5 for further details of the
costs included within this category.
Service concession arrangements
Management considered all relevant factors including the expectation by the relevant
client authority of who was the primary obligor, the ability of the Group to set the
selling price, who performed the service, who assumed the credit risk and who had
discretion in selecting suppliers. Following this assessment the Group determined that it
acted as agent during the construction phase of the UK Municipal contracts. Consequently
the consideration from local authorities for the operations of waste management service
concessions is treated as financial assets relating to PPP contracts in accordance with
IFRIC 12. Management determined that the cash flows relating to the outflows and capital
repayments in respect of PPP arrangements under the financial asset model are investing
activities in the statement of cash flows and not operating cash flows. At the balance
sheet date, the Group has financial assets relating to PPP contracts of €143.4m (2021:
€149.1m). Consideration relating to financial assets is split between a service element as
revenue and a repayment element, split between capital and interest receivable that is
deducted from the financial asset.
Defined benefit pension scheme surplus
Management have concluded that the UK defined benefit pension scheme rules determine that
upon winding up the scheme the Group has an unconditional right to a refund once all of
the liabilities have been discharged and that the trustees of the scheme do not have the
unilateral right to wind up the scheme, therefore the asset is not restricted and no
additional liability was recognised.
Taxation
The recognition of deferred tax assets, particularly in respect of tax losses, is based
upon management’s judgement that it is probable that there will be taxable profits in the
relevant legal entity or tax group which will utilise the assets in the future. In respect
of tax losses, the time expiry period, if any, is also taken into account in the analysis.
The Group assesses the availability of future taxable profits using the five year
projections as used for impairment reviews, together with other available forecasts. The
predictability of income streams is also taken into consideration and where profits are
highly predictable beyond the five year projections, profits from subsequent periods are
taken into account in the recognition of deferred tax assets. The longest period of
forecasts used to calculate deferred tax recovery is nine years. Where there is some
uncertainty around profits in five year projections and a period of five years or less to
the time expiry of the losses exists, the profits used to calculate a deferred tax asset
are amended to reflect management’s judgement of the higher probability profit streams
within those forecasts. The intention is to avoid the recognition of a deferred tax asset
that is not ultimately recovered. Provisions have been recognised where necessary in
respect of any uncertain tax positions in the Group, being an uncertainty over whether the
relevant tax authority will accept the tax treatment.
Expected credit loss allowance
Management have used judgement to determine how the expected credit loss allowance could
be impacted as a result of the Covid-19 pandemic and other macro-economic factors. For
trade receivables and accrued income, in addition to using a provision matrix based on the
payment profile of revenues, a detailed review has been undertaken at a customer level in
order to assess the likely potential of default considering the nature of the customers
business and any government support measures.
Alleged Belgium State Aid Claim
Management have used judgement in determining if a liability or contingent liability
exists by considering whether an outflow of economic benefit is probable or possible as a
result of past events. Legal advice has been obtained to determine that the most likely
outcome, the median case, results in a €15m provision. It is noted that the potential
maximum claim could be higher resulting in a potential further liability. Further details
are set out in notes 12 and 15.
Contingent liabilities
Management have used judgement in determining if a contingent liability exists and if a
provision needs to be recognised by considering whether an outflow of economic benefit is
possible as a result of past events including seeking legal advice where appropriate in
order to determine the most likely outcome. Where it is considered that there is a
possible obligation but it is not probable that there will be an outflow of economic
benefit or the amount cannot be reliably estimated then a contingent liability is
disclosed as set out in note 15.
2. Basis of preparation – continued
Estimates and assumptions
Impairment of goodwill
Impairment testing is carried out annually at a cash generating unit (CGU) level. The
Group estimates the recoverable amount of a CGU using a value in use model which involves
an estimation of future cash flows and applying appropriate discount and long-term growth
rates. The future cash flows are derived from approved forecasts which have taken into
account the ongoing impact of Covid-19 together with increasing energy prices and high
inflation as a result of the events in Ukraine, specifically with regard to recovery of
input volumes across different waste streams.
Impairment of tangible assets, intangible assets and investments
The Group assesses the impairment of tangible assets, intangible assets and investments
whenever there is reason to believe that the carrying value may exceed the fair value and
where a permanent impairment in value is anticipated. The determination of whether the
impairment of these assets is necessary involves the use of estimates that includes, but
is not limited to, the analysis of the cause of potential impairment in value, the timing
of such potential impairment and an estimate of the amount of the impairment.
Landfill related provisions
The Group has landfill related provisions of €156.9m (2021: €157.6m). These provisions are
long term in nature and are recognised at the net present value of the best estimate of
the likely future cash flows to settle the Group’s obligations. The period of aftercare
post-closure and the level of costs expected are uncertain and could be impacted by
changes in legislation and technology and can vary significantly from site to site. The
timings of cash outflows are uncertain and have been based on management’s latest
expectation. A discount rate is applied to recognise the time value of money and is
unwound over the life of the provision.
Onerous contract provisions
Onerous contract provisions arise when the unavoidable costs of meeting contractual
obligations exceed the cash flows expected. The Group has onerous contract provisions of
€79.9m (2021: €80.9m) which have been provided for at the lower of the net present value
of either exiting the contract or fulfilling our obligations under the contract. The most
significant component of these provisions relates to UK Municipal PPP contracts which
amount to €77.3m (2021: €78.9m). The provisions have been based on the best estimate of
likely future cash flows including assumptions on tonnage inputs, plant performance and
recyclates pricing. A discount rate is applied to recognise the time value of money and is
unwound over the life of the provision.
Right-of-use assets and lease liabilities
Estimates and assumptions are made in calculating the incremental borrowing rate used to
measure lease liabilities. For certain leases the determination of the lease liability is
based on assumptions of the term of the lease, whether purchase options are likely to be
exercised and the amount expected to be payable under any residual value guarantees.
Defined benefit pension schemes
The calculation of the present value of the defined benefit pension schemes is determined
by using actuarial valuations based on assumptions including discount rate, life
expectancy and inflation rates.
Taxation
The recognition of deferred tax assets, particularly in respect of tax losses, is based
upon management’s calculation of expected taxable profits in the relevant legal entity or
tax group against which to utilise the assets in the future. In respect of tax losses, the
time expiry period, if any is also taken into account in the calculation. The Group
assesses the availability of future taxable profits using the five year projections as
used for the value in use calculations for impairment reviews together with other
available long-term forecasts. The predictability of income streams is also taken into
consideration and where profits are highly predictable beyond the five year projections,
profit from subsequent periods are taken into account in the recognition of deferred tax
assets. The longest period of forecasts used to calculate deferred tax recovery is nine
years. Where there is some uncertainty around profits in five year projections and a
period of five years or less to the time expiry of the losses exists, the profits used to
calculate a deferred tax asset will be amended to reflect management’s estimate of the
higher probability profit streams within those forecasts. The intention is to avoid the
recognition of a deferred tax asset that is not ultimately recovered. Provisions have been
recognised where necessary in respect of any uncertain tax positions in the Group and are
based upon management’s evaluation of the potential outcomes of the relevant discussions
with the tax authorities.
Waste disposal cost accruals
Management have used judgement in determining the value of disposal cost accruals with a
carrying amount included in accruals and other payables of €48.9m (2021: €54.3m). Included
in this is €14.9m (2021: €24.7m) relating to processed soil accruals at ATM. The value is
determined by management’s best estimate after carrying out an assessment of the cost per
tonne to dispose of the waste based on historical transactions, discussions with potential
customers and knowledge of the market as in some cases, due to the nature of some of these
accruals there is no observable market data. It is anticipated that the majority of the
waste with the most judgemental values should be disposed of during the next 12 months and
as such is recorded as a current liability.
3. Segmental reporting
The Group’s chief operating decision maker is considered to be the Board of Directors. The
Group’s reportable segments are determined with reference to the information provided to
the Board of Directors, in order for it to allocate the Group’s resources and to monitor
the performance of the Group are unchanged from March 2021 and are set out below:
Commercial Waste Collection and treatment of commercial waste in the Netherlands and
Belgium.
Decontamination, stabilisation and re-use of highly contaminated
Mineralz & Waste materials to produce certified secondary products for the
construction industry in the Netherlands and Belgium.
Processing plants focusing on recycling and diverting specific
Specialities waste streams. The operations are in the UK, the Netherlands,
Belgium, France, Portugal and Hungary.
Group central services Head office corporate function.
The profit measure the Board of Directors uses to evaluate performance is underlying EBIT.
The Group accounts for inter-segment trading on an arm’s length basis.
The Commercial Waste reportable segment includes the Netherlands Commercial Waste and
Belgium Commercial Waste operating segments which have been aggregated and reported as one
reportable segment as they operate in similar markets in relation to the nature of the
products, services, processes and type of customer.
2022 2021
Revenue
€m €m
Netherlands Commercial Waste 896.2 828.4
Belgium Commercial Waste 466.9 412.9
Intra-segment (2.6) (0.7)
Commercial Waste 1,360.5 1,240.6
Mineralz & Water 193.9 182.8
Specialities 350.1 300.8
Inter-segment revenue (35.3) (30.6)
Revenue 1,869.2 1,693.6
During the course of the year, the Group identified certain revenue transactions in the
Specialities division which were presented net within the results for the year ended 31
March 2021 which, under IFRS 15, should be presented gross between revenue and cost of
sales. These items have been corrected prospectively however no adjustment has been
recorded in the year ended 31 March 2021 comparatives as the impact on revenue and cost of
sales, which if corrected would increase both by €12m, is not considered material. There
is no impact on gross profit or operating profit.
Restated*
2022
Results 2021
€m
€m
Netherlands Commercial Waste 93.1 53.7
Belgium Commercial Waste 42.6 23.1
Commercial Waste 135.7 76.8
Mineralz & Water 5.8 0.3
Specialities 4.1 2.4
Group central services (12.0) (6.5)
Underlying EBIT 133.6 73.0
Non-trading and exceptional items (note 5) (9.6) (36.9)
Operating profit 124.0 36.1
Finance income 9.3 10.9
Finance charges (38.2) (38.1)
Finance income – non trading and exceptional items 0.2 0.4
Finance charges – non trading and exceptional items (0.1) -
Share of results from associates and joint ventures 0.5 1.6
Profit before taxation 95.7 10.9
*The comparative for non-trading and exceptional items have been restated following the
change in accounting policy in relation to Software as a Service arrangements as explained
in note 2 Basis of preparation.
3. Segmental reporting - continued
Restated* Restated*
Commercial Mineralz Restated*
Waste Specialities Group Tax, net debt and
Net assets & Water central derivatives Total
€m €m services
€m €m €m
€m
31 March 2022
Gross non-current 1,010.8 257.5 219.3 36.3 42.0 1,565.9
assets
Gross current 192.0 37.9 67.7 17.2 71.1 385.9
assets
Gross liabilities (399.3) (206.4) (174.7) (79.7) (753.5) (1,613.6)
Net assets 803.5 89.0 112.3 (26.2) (640.4) 338.2
(liabilities)
31 March 2021
Gross non-current 1,042.6 258.2 225.7 26.6 59.2 1,612.3
assets
Gross current 174.1 31.6 64.3 15.2 70.5 355.7
assets
Gross liabilities (414.6) (224.3) (173.0) (91.4) (827.1) (1,730.4)
Net assets 802.1 65.5 117.0 (49.6) (697.4) 237.6
(liabilities)
*The comparatives have been restated due to prior period adjustments as explained in note
2 Basis of preparation.
4. Revenue
The following tables show the Group’s revenue by type of service delivered and by primary
geographical markets.
Mineralz &
Commercial Waste Specialities Inter-segment Total
By type of service Water
€m €m €m €m
€m
2022
Inbound 1,073.0 146.5 231.4 (31.6) 1,419.3
Outbound 212.2 47.4 116.5 (3.5) 372.6
On-Site 53.1 - - (0.2) 52.9
Other 22.2 - 2.2 - 24.4
Total revenue 1,360.5 193.9 350.1 (35.3) 1,869.2
2021
Inbound 1,032.2 136.3 210.1 (26.3) 1,352.3
Outbound 130.4 46.5 89.7 (2.6) 264.0
On-Site 41.3 - - (0.1) 41.2
Other 36.7 - 1.0 (1.6) 36.1
Total revenue 1,240.6 182.8 300.8 (30.6) 1,693.6
Mineralz &
Commercial Waste Specialities Inter-segment Total
By geographical market Water
€m €m €m €m
€m
2022
Netherlands 895.5 152.9 55.4 (32.9) 1,070.9
Belgium 465.0 41.0 39.8 (2.4) 543.4
UK - - 216.3 - 216.3
France - - 26.3 - 26.3
Other - - 12.3 - 12.3
Total revenue 1,360.5 193.9 350.1 (35.3) 1,869.2
2021
Netherlands 827.9 140.8 40.7 (29.0) 980.4
Belgium 412.7 42.0 28.1 (1.6) 481.2
UK - - 205.5 - 205.5
France - - 18.9 - 18.9
Other - - 7.6 - 7.6
Total revenue 1,240.6 182.8 300.8 (30.6) 1,693.6
Revenue recognised at a point in time amounted to €1,652.5m (2021: €1,580.3m) with the
remainder recognised over time. The majority of the Commercial Waste and Specialities
revenue is recognised at a point in time, whereas for Mineralz & Water 57% of revenue
(2021: 55%) is recognised over time.
5. Non-trading and exceptional items
To improve the understanding of the Group’s financial performance, items which are not
considered to reflect the underlying performance are presented in non-trading and
exceptional items.
Restated*
2022
2021
€m
€m
Renewi 2.0 improvement programme 6.6 7.3
Portfolio management activity:
Prior year disposals (0.7) (2.6)
Other changes in long-term provisions (3.1) 3.7
Other items:
Configuration or customisation costs in cloud computing, Software as a 3.9 7.3
Service arrangements
Restructuring (credit) charge – cash (0.5) 3.1
Restructuring charge – non-cash impairments - 5.3
Goodwill impairment - 9.5
3.4 25.2
Ineffectiveness and impact of termination of cash flow hedges (0.1) (0.4)
Amortisation of acquisition intangibles 3.4 3.3
Non-trading and exceptional items in profit before tax 9.5 36.5
Tax on non-trading and exceptional items (2.4) (7.2)
Exceptional tax (credit) charge (3.7) 1.0
Total non-trading and exceptional items in profit after tax 3.4 30.3
*The comparatives have been restated following the change in accounting policy in relation
to Software as a Service arrangements as explained in note 2 Basis of preparation.
Renewi 2.0 improvement programme
Renewi 2.0 improvement programme is a significant one-off business improvement project
with expected capital and one-off costs of €40m over a three-year period and as a result
is considered to be exceptional. Following the transformational merger five years ago, the
goal of the Renewi 2.0 programme is to make the Group more streamlined and more efficient
and improve customer experience and increase employee engagement. The programme also
includes around €4m of IT integration costs carried over from the original integration
programme and now merged with the Renewi 2.0 digitisation plans. This is the second year
of the programme with total costs of €6.6m (2021: €7.3m) of which €0.1m (2021: €0.3m) are
recorded in cost of sales and €6.5m (2021: €7.0m) are recorded in administrative expenses.
Portfolio management activity
The credit of €0.7m (2021: €2.6m) relates principally to releases of warranty provisions
in relation to prior year disposals and is all recorded in administrative expenses.
Other changes in long-term provisions
Other changes in long-term provisions of €3.1m credit (2021: €3.7m charge) relates to
future cash flow funding requirements in relation to Dutch landfills as a result of
changes in the discount rate as determined by the relevant Dutch Province in relation to
the long-term aftercare funds. These funds are managed and under the control of the
Province. This resulted in a reduction of €1.6m in landfill provisions and a €1.5m cash
refund from the Province. The credit (2021: charge) was all recorded in cost of sales.
Other items
Configuration or customisation costs in cloud computing, Software as a Service (SaaS)
arrangements, relate to the Group updating its accounting policy on when software can be
capitalised following the IFRIC interpretation. This guidance clarified the criteria under
IAS 38 Intangible assets in relation to SaaS arrangements as explained in note 2 Basis of
preparation. As a result €3.9m of costs incurred in the current year have been expensed.
In addition €7.3m of capitalised intangible assets in existence at 31 March 2021 have been
expensed as a prior year restatement as they no longer meet the criteria for recognition
as an asset. The costs have been expensed as a non-trading and exceptional item due to the
size, nature and incidence as they are not reflective of underlying performance.
The prior year goodwill impairment of €9.5m related to the Maltha business as a result of
a reduction in the expected future cash flows due to difficult market conditions.
The restructuring charges in the prior year related to a Covid-19 cost action programme to
address the challenges of the pandemic. These costs were considered to be exceptional due
to the total cost of the programme and the one-off nature. The costs of €8.4m were
reflected following the decision to close two processing lines in Belgium and some sites
and business activities in the Netherlands. Of the total costs €5.3m were non-cash asset
impairments. Following a reassessment in the current year €0.5m of these charges have been
released as no longer required.
The total charge of €3.4m (2021: €25.2m restated) was split €0.5m credit (2021: €8.4m
charge) in cost of sales and €3.9m charge (2021: €16.8m restated) in administrative
expenses.
5. Non-trading and exceptional items – continued
Items recorded in finance charges and finance income
The €0.1m credit (2021: €0.4m) relates to the termination and ineffectiveness on the
cancelled cross-currency interest cash flow hedges and ineffectiveness of the Cumbria PPP
project interest rate swaps as a result of a revised repayment programme for the PPP
non-recourse debt.
Amortisation of acquisition intangibles
Amortisation of intangible assets acquired in business combinations of €3.4m (2021: €3.3m)
is all recorded in cost of sales.
Exceptional tax (credit) charge
The €3.7m exceptional tax credit related to changes in UK tax rates as explained in note
7. The prior year exceptional tax charge of €1.0m related to changes in tax rates in the
Netherlands. Where one-off tax credits or charges are deemed significant they are
classified as exceptional and outside of normal tax charges.
6. Net finance charges
2022 2021
€m €m
Finance charges
Interest payable on borrowings 13.5 14.0
Interest payable on PPP non-recourse debt 7.4 7.4
Lease liabilities interest 7.2 7.2
Unwinding of discount on provisions (note 12) 6.4 6.3
Interest charge on the retirement benefit schemes 0.1 -
Amortisation of loan fees 1.9 1.5
Other finance costs 1.7 1.7
Total finance charges before non-trading and exceptional items 38.2 38.1
Non-trading and exceptional finance charges:
Charge as a result of the termination of cash flow hedges 0.1 -
Total non-trading and exceptional finance charges 0.1 -
Total finance charges 38.3 38.1
Finance income
Interest receivable on financial assets relating to PPP contracts (9.0) (9.0)
Unwinding of discount on deferred consideration receivable (0.1) (0.1)
Interest income on the retirement benefit schemes - (0.3)
Other finance income (0.2) (1.5)
Total finance income before non-trading and exceptional items (9.3) (10.9)
Non-trading and exceptional finance income:
Ineffectiveness income on cash flow hedges (0.2) (0.4)
Total non-trading and exceptional finance income (0.2) (0.4)
Total finance income (9.5) (11.3)
Net finance charges 28.8 26.8
7. Taxation
The tax charge based on the profit for the year is made up as follows:
Restated*
2022
2021
€m
€m
Current tax
UK corporation tax
- Current year 1.4 1.4
- Adjustment in respect of prior year (0.9) -
Overseas tax
- Current year 17.1 10.3
- Adjustment in respect of the prior year (0.2) 0.7
Total current tax charge 17.4 12.4
Deferred tax
- Origination and reversal of temporary differences in the current year (0.8) (6.5)
- Exceptional tax credit 3.7 -
- Adjustment in respect of the prior year - (0.5)
Total deferred tax charge (credit) 2.9 (7.0)
Total tax charge for the year 20.3 5.4
*The comparatives have been restated following the change in accounting policy in relation
to Software as a Service arrangements as explained in note 2 Basis of preparation.
Exceptional credit relating to change in UK tax rate
In the UK Chancellor’s Budget of 3 March 2021 it was announced that the UK corporation tax
rate will increase to 25% with effect from 1 April 2023. This measure was substantively
enacted on 24 May 2021. As a result, the UK deferred tax position has been calculated
based on the substantively enacted rates of 19% and 25% (2021: 19%). This resulted in an
exceptional tax credit of €3.7m in the current year.
Exceptional charge relating to changes in Netherlands tax rate
In September 2020 the Dutch government announced the cancellation of the reduction to
21.7% for the period ended 31 March 2022 and subsequent periods with the rate to remain at
25% going forward and this was enacted on 15 December 2020. This resulted in a prior year
exceptional tax charge of €1.0m.
Furthermore, in October 2021 the Dutch government announced an increase in the rate to
25.8% for the period ending 31 March 2023 and subsequent periods which was enacted in
December 2021. In addition, a tightening of the general interest deduction rule (also
referred to as the EBITDA rule) by lowering the 30% EBITDA threshold to 20% was also
enacted. As a result, Dutch deferred tax has been calculated at the substantively enacted
rates depending on when the timing differences are expected to reverse.
8. Earnings per share
Underlying basic and diluted earnings per share excludes non-trading and exceptional
items, amortisation of acquisition intangibles and the change in fair value of
derivatives, net of related tax. Non-trading and exceptional items are those items that
need to be disclosed separately on the face of the Income Statement, because of their size
or incidence, to enable a better understanding of performance. The Directors believe that
adjusting earnings per share in this way enables comparison with historical data
calculated on the same basis to reflect the business performance in a consistent manner
and reflect how the business is managed and measured on a day to day basis.
At the Annual General Meeting of Renewi plc held on 15 July 2021, shareholders approved
the consolidation of the Company’s share capital on the basis of one new ordinary share
with a nominal value of £1.00 each for every ten existing ordinary shares of 10 pence each
held. This was subsequently completed on 19 July 2021 when the issued share capital of
800,236,740 10 pence shares were replaced with 80,023,674 £1 shares. As a result earnings
per share have been restated in accordance with the requirements of IAS 33 Earnings per
share.
2022 2021 restated*
Basic Dilutions Diluted Basic Dilutions Diluted
Weighted average number of shares 79.7 0.4 80.1 79.5 0.1 79.6
(million)
Profit after tax (€m) 75.4 - 75.4 5.5 - 5.5
Non-controlling interests (€m) (0.9) - (0.9) 0.1 - 0.1
Profit after tax attributable to ordinary 74.5 - 74.5 5.6 - 5.6
shareholders (€m)
Basic earnings per share (cents) 93 - 93 7 - 7
*The comparatives have been restated due to prior period adjustments as explained in note
2 Basis of preparation.
The reconciliation between underlying earnings per share and basic earnings per share is
as follows:
2022 2021 restated*
Cents €m Cents €m
Underlying earnings per share/Underlying profit after tax 98 77.9 45 35.9
attributable to ordinary shareholders
Adjustments:
Non-trading and exceptional items (12) (9.5) (46) (36.5)
Tax on non-trading and exceptional items 3 2.4 9 7.2
Exceptional tax 4 3.7 (1) (1.0)
Basic earnings per share/Earnings after tax attributable to 93 74.5 7 5.6
ordinary shareholders
Diluted underlying earnings per share/Underlying profit after 98 77.9 45 35.9
tax attributable to ordinary shareholders
Diluted basic earnings per share/Earnings after tax 93 74.5 7 5.6
attributable to ordinary shareholders
*The comparatives have been restated due to prior period adjustments as explained in note
2 Basis of preparation.
9. Dividends
The Directors have not recommended a final dividend for the year ended March 2022 (2021:
nil).
10. Goodwill, intangible assets, property, plant and equipment, right-of-use assets and
assets held for sale
Restated* Property,
plant Right-of-use Restated*
Goodwill Intangible
and equipment Assets Total
€m assets
€m €m €m
€m
Net book value at 1 April 2020 561.1 49.0 584.0 215.9 1,410.0
Additions/modifications - 11.3 61.1 60.9 133.3
Reversal of previously
capitalised SaaS costs and - (7.3) - - (7.3)
related amortisation
Disposals - (0.2) (4.0) (0.1) (4.3)
Derecognition of a right-of-use - - - (0.4) (0.4)
assets into a finance sub-lease
Amortisation and depreciation - (9.6) (74.2) (40.7) (124.5)
charge
Impairment charge (9.5) - (6.2) (1.8) (17.5)
Exchange rate changes - 0.1 - - 0.1
Net book value at 31 March 2021 551.6 43.3 560.7 233.8 1,389.4
- restated
Additions/modifications - 9.3 73.3 27.1 109.7
Acquisitions through business - 0.3 0.2 - 0.5
combination
Disposals - (0.2) (3.7) (1.6) (5.5)
Transferred to Assets held for - - (2.6) - (2.6)
sale
Reclassifications - (0.4) 0.4 - -
Amortisation and depreciation - (8.8) (69.3) (44.8) (122.9)
charge
Impairment charge - (2.3) (5.4) (0.7) (8.4)
Net book value at 31 March 2022 551.6 41.2 553.6 213.8 1,360.2
*The comparatives have been restated following the change in accounting policy in relation
to Software as a Service arrangements as explained in note 2 Basis of preparation.
At 31 March 2022, the Group had property, plant and equipment commitments of €38.6m (2021:
€15.0m), right-of-use asset commitments of €38.8m (2021: €8.2m) and intangible asset
commitments of €2.7m (2021: €3.4m restated).
Assets held for sale
The Group had €3.3m (2021: €nil) assets classified as held for sale at 31 March 2022. The
assets include €2.0m land and buildings at a Netherlands Commercial Division site which
has now been closed and €1.3m in the Belgium Commercial Division in relation to an
associate of €0.7m and land and buildings of €0.6m. All these assets are expected to be
sold within the next 12 months.
11. Cash and borrowings
Cash and cash equivalents are analysed as follows:
Restated*
2022
2021
€m
€m
Cash at bank and in hand - core 42.5 51.5
Cash at bank - restricted relating to PPP contracts 21.1 17.3
Total cash and cash equivalents 63.6 68.8
*The comparatives have been restated to include cash at bank - restricted relating to PPP
contracts due to a prior year adjustment as explained in note 2 Basis of preparation.
11. Cash and borrowings continued
Borrowings are analysed as follows:
Restated*
2022
2021
€m
€m
Non-current borrowings
Retail bonds 199.2 174.5
European private placements 24.8 24.7
Term loans - 85.2
Revolving credit facility 12.8 97.1
Lease liabilities 187.3 205.7
Bank loans - 1.3
PPP non-recourse debt 94.6 100.6
518.7 689.1
Current borrowings
Retail bonds 100.0 -
Lease liabilities 42.0 42.1
Bank loans and overdrafts 1.3 1.2
PPP non-recourse debt 5.6 4.5
148.9 47.8
*The comparatives of current and non-current PPP non-recourse debt have been restated due
to a prior year adjustment as explained in note 2 Basis of preparation.
Revolving credit facility, term loans and European private placements
At 31 March 2022, the Group had a Euro denominated multicurrency green finance facility of
€425.0m (2021: €520.0m) including a €400.0m (2021: €412.5m) revolving credit facility
(RCF) and €25.0m (2021: €25.0m) European private placement (EUPP). In the prior year the
facility also included a €82.5m term loan which has been repaid during the year. Of the
RCF €30m matures on 18 May 2023, €65m matures on 18 May 2024 and €305m matures on 18 May
2025. The EUPP has a maturity of December 2023 for €15m and December 2025 for €10m.
At 31 March 2022 €15.0m (2021: €99.8m) of the RCF was drawn for borrowings in Euros. The
remaining €385.0m (2021: €312.7m) was available for drawing of which €48.5m (2021: €48.3m)
was allocated for ancillary overdraft and guarantee facilities. The EUPP and RCF are
unsecured and have cross guarantees from members of the Group.
Retail bonds
At 31 March 2022, the Group had three issues of green retail bonds. The bonds of €100m
(2021: €100m) maturing in June 2022 have an annual gross coupon of 3.65%, the bonds of
€75m (2021: €75m) maturing in July 2024 have an annual gross coupon of 3.00% and the bonds
of €125m issued on 23 July 2021 maturing in July 2027 have an annual gross coupon of
3.00%. The retail bonds are unsecured and have cross guarantees from members of the Group.
Movement in total net debt
Restated* Other
Exchange At 31 March
At 1 April Cash flows non-cash movements
changes 2022
2021 €m €m
€m €m
€m
Bank loans and overdrafts (184.8) 170.6 (0.5) 0.6 (14.1)
European private placements (24.7) - (0.1) - (24.8)
Retail bonds (174.5) (125.0) 0.3 - (299.2)
Lease liabilities (247.8) 44.2 (25.6) (0.1) (229.3)
Debt excluding PPP non-recourse debt (631.8) 89.8 (25.9) 0.5 (567.4)
PPP non-recourse debt (105.1) 5.7 - (0.8) (100.2)
Total debt (736.9) 95.5 (25.9) (0.3) (667.6)
Cash and cash equivalents – core 51.5 (9.8) - 0.8 42.5
Cash and cash equivalents – 17.3 3.6 - 0.2 21.1
restricted relating to PPP contracts
Total net debt (668.1) 89.3 (25.9) 0.7 (604.0)
Analysis of total net debt:
Net debt excluding PPP non-recourse (580.3) 80.0 (25.9) 1.3 (524.9)
net debt
PPP non-recourse net debt (87.8) 9.3 - (0.6) (79.1)
Total net debt (668.1) 89.3 (25.9) 0.7 (604.0)
*The comparatives for cash and cash equivalents relating to a PPP contracts and PPP
non-recourse debt have been restated due to prior year adjustment as explained in note 2
Basis of preparation.
11. Cash and borrowings continued
Analysis of movement in total net debt
Restated*
2022
2021
€m
€m
Net decrease in cash and cash equivalents (6.2) (141.2)
Net decrease in borrowings and lease liabilities 95.5 304.5
Total cash flows in net debt 89.3 163.3
Lease liabilities entered into during the year (27.1) (60.9)
Lease liabilities cancelled during the year 1.5 -
Capitalisation of loan fees 1.6 0.2
Amortisation of loan fees (1.9) (1.5)
Exchange gain (loss) 0.7 (10.3)
Movement in net debt 64.1 90.8
Total net debt at beginning of year (668.1) (758.9)
Total net debt at end of year (604.0) (668.1)
*The comparatives relating to net decrease in cash and cash equivalents, borrowings and
lease liabilities have been restated due to a prior year adjustment as explained in note 2
Basis of preparation. The total cash flows in net debt remain unchanged.
12. Provisions
Site restoration Onerous Legal and Restructuring Other Total
and aftercare contracts warranty
€m €m €m
€m €m €m
At 1 April 2020 152.8 89.7 25.2 4.3 18.1 290.1
Provided in the year 5.7 17.4 3.2 5.9 7.2 39.4
Released in the year (1.1) (15.8) (2.4) (1.0) (0.8) (21.1)
Finance charges – 3.7 2.4 - - 0.2 6.3
unwinding of discount
Utilised in the year (3.7) (15.6) (0.3) (5.4) (1.6) (26.6)
Exchange rate changes 0.2 2.8 - - 0.2 3.2
At 31 March 2021 157.6 80.9 25.7 3.8 23.3 291.3
Provided in the year 1.4 6.2 0.4 4.8 4.7 17.5
Released in the year (2.6) (4.8) (1.3) (0.7) (1.8) (11.2)
Finance charges – 3.9 2.3 0.1 - 0.1 6.4
unwinding of discount
Utilised in the year (3.4) (5.3) (1.8) (3.9) (1.0) (15.4)
Exchange rate changes - 0.6 - - - 0.6
At 31 March 2022 156.9 79.9 23.1 4.0 25.3 289.2
Within one year 5.7 9.2 4.7 4.0 7.5 31.1
Between one and five years 49.3 23.4 15.6 - 5.4 93.7
Between five and ten years 50.8 23.1 0.5 - 3.4 77.8
Over ten years 51.1 24.2 2.3 - 9.0 86.6
At 31 March 2022 156.9 79.9 23.1 4.0 25.3 289.2
Within one year 8.4 11.0 7.3 3.8 8.2 38.7
Between one and five years 45.7 28.2 15.1 - 4.6 93.6
Between five and ten years 55.1 20.2 0.7 - 3.3 79.3
Over ten years 48.4 21.5 2.6 - 7.2 79.7
At 31 March 2021 157.6 80.9 25.7 3.8 23.3 291.3
Site restoration and aftercare
The Group’s unavoidable costs have been reassessed at the year end and the NPV fully
provided for. The site restoration provisions at 31 March 2022 relate to the cost of final
capping and covering of the landfill and mineral extraction sites. These site restoration
costs are expected to be paid over a period of up to 30 years (2021: 31 years) from the
balance sheet date. Aftercare provisions cover post-closure costs of landfill sites which
include such items as monitoring, gas and leachate management and licensing. The dates of
payments of these aftercare costs are uncertain but are anticipated to be over a period of
at least 30 years from closure of the relevant landfill site. All site restoration and
aftercare costs have been estimated by management based on current best practice and
technology available and may be impacted by a number of factors including changes in
legislation and technology.
Onerous contracts
Onerous contract provisions arise when the unavoidable costs of meeting contractual
obligations exceed the cash flows expected. Onerous contracts are provided for at the
lower of the NPV of either exiting the contracts or fulfilling our obligations under the
contracts. The provisions have been calculated on the best estimate of likely future cash
flows over the contract term based on the latest budget and five year plan projections,
including assumptions on tonnage inputs, plant performance with efficiency improvements,
off-take availability and recyclates pricing. The provisions are to be utilised over the
period of the contracts to which they relate with the latest date being 2040.
12. Provisions - continued
Legal and warranty
Legal and warranty provisions relate to legal claims, warranties and indemnities. Under
the terms of the agreements for the disposal of certain businesses, the Group has given a
number of warranties and indemnities to the purchasers which may give rise to payments.
The Group has a liability until the end of the contractual terms in the agreements. The
Group considers each warranty provision based on the nature of the business disposed of
and the type of warranties provided with judgement used to determine the most likely
obligation.
On 6 February 2020 the European Commission announced its decision to initiate a formal
investigation in which it alleges that the Walloon Region of Belgium provided state aid to
the Group in relation to the Cetem landfill. An adverse judgement would require the
Walloon Region to seek repayment from the Group and a provision of €15.1m has been
recognised in both the current year and the prior year as non-current as timing of any
cash flow is expected to be after 12 months from the balance sheet date. The matter
remains ongoing and based on legal advice management consider this value to be their best
estimate of the potential exposure based on the most likely outcome.
Restructuring
The restructuring provision primarily relates to redundancy and related costs incurred as
a result of restructuring initiatives. As at 31 March 2022 the provision is expected to be
spent in the following twelve months as affected employees leave the business.
Other
Other provisions includes dilapidations €9.1m (2021: €8.7m), long-service employee awards
€7.0m (2021: €6.0m) and other environmental liabilities €9.2m (2021: €8.6m). The
dilapidations provisions are determined on a site by site basis using internal expertise
and experience and are calculated as the most likely cash outflow at the end of the
contracted obligation. The provisions will be utilised over the period up to 2071.
13. Retirement benefit schemes
The Group has the legacy Shanks UK defined benefit scheme which provides pension benefits
for pensioners, deferred members and eligible UK employees which is closed to new entrants
and to future benefit accrual. In addition there are a number of defined benefit schemes
eligible for certain employees in both the Netherlands and Belgium.
The amounts recognised in the Income Statement were as follows:
2022 2021
€m €m
Current service cost 2.3 1.1
Interest expense (income) on scheme net liabilities 0.1 (0.3)
Net retirement benefit charge before tax 2.4 0.8
The amounts recognised in the balance sheet were as follows:
2022 2021
€m €m
Present value of funded obligations (275.7) (296.6)
Fair value of plan assets 278.0 285.2
Pension schemes net asset (deficit) 2.3 (11.4)
Related deferred tax asset (0.5) 2.7
Net pension asset (liability) 1.8 (8.7)
Classified as:
Defined benefit scheme surplus - included in non-current assets 8.6 -
Defined benefit pension schemes deficit - included in non-current (6.3) (11.4)
liabilities
Pension schemes net asset (deficit) 2.3 (11.4)
The legacy Shanks UK defined benefit scheme moved by €12.6m from a deficit of €4.0m at 31
March 2021 to an asset of €8.6m at 31 March 2022. This was due to an increase in the
discount rate assumption on scheme liabilities from 2.1% at 31 March 2021 to 2.8% at 31
March 2022 which was partially offset by an increase in RPI inflation and asset returns
underperformed the discount rate. The overseas defined benefit schemes deficit reduced by
€1.1m to €6.3m.
14. Financial instruments at fair value
The Group uses the following hierarchy of valuation techniques to determine the fair value
of financial instruments:
• Level 1: quoted (unadjusted) prices in active markets for identical assets or
liabilities
• Level 2: other techniques for which all inputs which have a significant effect on the
recorded fair value are observable, either directly or indirectly
• Level 3: techniques which use inputs which have a significant effect on the recorded
fair value that are not based on observable market data
During the year ended 31 March 2022, there were no transfers between level 1 and level 2
fair value measurements and no transfers into or out of level 3.
Valuation techniques used to derive level 2 fair values:
• Unlisted non-current investments comprise unconsolidated companies where the fair
value approximates the book value
• Short-term investment valuations are provided by the fund manager
• Derivative financial instruments are determined by discounting the future cash flows
using the applicable period-end yield curve
• The fair value of the European private placements are determined by discounting the
future cash flows using the applicable period-end yield curve
• The fair value of retail bonds is based on indicative market pricing
The table below presents the Group’s assets and liabilities measured at fair values. The
Group considers that the fair value of all other financial assets and financial
liabilities are not materially different to their carrying value.
2022 2021
Level 2 Level 2
€m €m
Assets
Unlisted non-current investments 4.6 4.6
Short-term investments 11.1 9.3
Derivative financial instruments 7.0 9.1
22.7 23.0
Liabilities
Derivative financial instruments 14.7 25.5
European private placements 25.7 26.6
Retail bonds 300.2 179.1
340.6 231.2
15. Contingent liabilities
There is an ongoing investigation by the European Commission in which it alleges the
Walloon region of Belgium provided state aid to the Group in relation to the Cetem
landfill. An adverse judgement would require the Walloon region to seek repayment from the
Group. Both the Walloon Region and Renewi believe that no state aid was offered and will
defend their conduct vigorously. Renewi has provided €15m based on legal advice which
represents management’s best estimate of the most likely outcome. It is noted that the
potential maximum claim is €58m (excluding compound interest currently amounting to €5m),
and therefore there is a potential further liability should the Group be wholly
unsuccessful in its defence. A ruling from the European Commission has not been received
and is expected during FY23 but no monies would likely become payable until FY24 should
the European Commission conclude Renewi did receive state aid.
The criminal investigation into the production of thermally cleaned soil at ATM has been
closed without any prosecution. It is noted that there are discussions ongoing on the
application of thermally cleaned soil in certain areas in the Netherlands and it cannot be
ruled out that this could result in liability for damages resulting from third party
claims in the future.
Due to the nature of the industry in which the business operates, from time to time the
Group is made aware of claims or litigation arising in the ordinary course of the Group’s
business. Provision is made for the Directors’ best estimate of all known claims and all
such legal actions in progress. The Group takes legal advice as to the likelihood of
success of claims and actions and no provision is made where the Directors consider, based
on that advice, that the action is unlikely to succeed or a sufficiently reliable estimate
of the potential obligation cannot be made. None of these other matters are expected to
have a material impact.
Under the terms of sale agreements, the Group has given a number of indemnities and
warranties relating to businesses sold in prior periods. Different warranty periods are in
existence and it is assumed that these will expire within 15 years. Based on management’s
assessment of the most likely outcome appropriate warranty provisions are held.
In respect of contractual liabilities the Group and its subsidiaries have given guarantees
and entered into counter indemnities of bonds and guarantees given on their behalf by
sureties and banks totalling €226.0m (2021: €219.8m).
16. Explanation of non-IFRS measures and reconciliations
The Directors use alternative performance measures as they believe these measures provide
additional useful information on the underlying trends, performance and position of the
Group. These measures are used for internal performance analysis. These terms are not
defined terms under IFRS and may therefore not be comparable with similarly titled
measures used by other companies. These measures are not intended to be a substitute for,
or superior to, IFRS measurements. The alternative performance measures used are set out
below, there have been no changes in approach.
Financial Measure How we define it Why we use it
Operating profit excluding non-trading
and exceptional items, amortisation of
intangible assets arising on
acquisition and the change in fair
value remeasurements of derivatives.
Underlying EBIT Amortisation on acquisition intangibles Provides insight into ongoing
is excluded to avoid double counting of profit generation and trends
costs in underlying EBIT as the Group
incurs costs each year in maintaining
intangible assets which include
acquired customer relationships,
permits and licences
Underlying EBIT Underlying EBIT as a percentage of Provides insight into margin
margin revenue development and trends
Underlying EBIT before depreciation,
amortisation and impairment of plant, Measure of earnings and cash
Underlying EBITDA property and equipment, intangible generation to assess
assets and investments, profit or loss operational performance
on disposal of plant, property and
equipment and intangible assets
Underlying EBITDA Underlying EBITDA as a percentage of Provides insight into margin
margin revenue development and trends
Profit before tax excluding non-trading
Underlying profit and exceptional items, amortisation of Facilitates underlying
before tax intangible assets arising on performance evaluation
acquisition and the change in fair
value remeasurements of derivatives
Earnings per share excluding
non-trading and exceptional items,
Underlying EPS amortisation of intangible assets Facilitates underlying
arising on acquisition and the change performance evaluation
in fair value remeasurements of
derivatives
Underlying effective The effective tax rate on underlying Provides a more comparable
tax rate profit before tax basis to analyse our tax rate
Last 12 months underlying EBIT divided Provides a measure of the
by a 13-month average of net assets return on assets across the
Return on operating excluding core net debt, IFRS 16 lease Divisions and the Group
assets liabilities, derivatives, tax balances, excluding goodwill and
goodwill and acquisition intangibles acquisition intangible
balances
Last 12 months underlying EBIT as Provides a measure of the
adjusted by the Group effective tax Group return on assets taking
Post-tax return on rate divided by a 13-month average of into account the goodwill and
capital employed net assets excluding core net debt, acquisition intangible
IFRS 16 lease liabilities and balances
derivatives
Net cash generated from operating
activities including interest, tax and
replacement capital spend and excluding Measure of cash generation in
cash flows from non-trading and the underlying business,
exceptional items, Covid-19 tax including regular replacement
deferral payments or receipts, capital expenditure and
settlement of ATM soil liabilities and excluding items of a historic
cash flows relating to the UK PPP nature, to fund growth
contracts. Payment to fund defined capital projects and invest
Adjusted free cash benefit pension schemes are also in acquisitions. We classify
flow excluded as these schemes are now our capital spend into
closed to both new members and ongoing general replacement
accrual and as such relate to historic expenditure and growth
liabilities. The Municipal contract capital projects which
cash flows are excluded because they include the innovation
principally relate to onerous contracts portfolio and other large
as reported in exceptional charges in strategic investments
the past and caused by adverse market
conditions not identified at the
inception of the contract
Net cash generated from operating Measure of cash available
activities principally excluding after regular replacement
Free cash flow non-trading and exceptional items and capital expenditure to pay
including interest, tax and replacement dividends, fund growth
capital spend capital projects and invest
in acquisitions
Free cash flow The ratio of free cash flow to Provides an understanding of
conversion underlying EBIT how our profits convert into
cash
Renewi 2.0 and other exceptional cash
Non-trading and flows are presented in cash flows from Provides useful information
exceptional operating activities and are included on non-trading and
cash flow items in the categories in note 5, net of exceptional cash flow spend
opening and closing Balance Sheet
positions
16. Explanation of non-IFRS measures and reconciliations - continued
Financial Measure How we define it Why we use it
Total cash flow is net debt
excluding loan fee
capitalisation and
amortisation, exchange
Total cash flow movements, settlement of Provides an understanding of total
cross-currency interest rate cash flow of the Group
swaps, movement in PPP cash and
PPP non-recourse debt and
additions to IFRS 16 lease
liabilities
The cash relating to UK PPP
contracts is not freely available to
Core cash excludes cash and the Group and is excluded from
Core cash cash equivalents relating to UK financial covenant calculations of
PPP contracts the main multicurrency green finance
facility therefore excluding this
gives a suitable measure of cash for
the Group
The borrowings relating to the UK
PPP contracts are non-recourse to
Core net debt includes core the Group and excluding these gives
cash excludes debt relating to a suitable measure of indebtedness
Core net debt the UK PPP contracts and lease for the Group and IFRS 16 lease
liabilities as a result of IFRS liabilities are excluded as
16 financial covenants on the main
multicurrency green finance facility
remain on a frozen GAAP basis
Liquidity headroom includes
core cash, money market funds Provides an understanding of
Liquidity and undrawn committed amounts available headroom to the Group
on the multicurrency green
finance facility
Adjusted net debt to a
comparable adjusted annualised
underlying EBITDA in accordance Commonly used measure of financial
Net debt to with frozen GAAP, excluding leverage and consistent with
EBITDA/leverage ratio lease liabilities which are a covenant definition
result of IFRS 16, and
translated at an average rate
of exchange for the period
Reconciliation of operating profit (loss) to underlying EBITDA
Netherlands Belgium Mineralz & Group
Commercial Commercial Water Specialities central Total
2022 Waste Waste services
€m €m €m
€m €m €m
Operating profit (loss) 89.1 40.4 8.7 3.2 (17.4) 124.0
Non-trading and exceptional
items (excluding finance 4.0 2.2 (2.9) 0.9 5.4 9.6
items)
Underlying EBIT 93.1 42.6 5.8 4.1 (12.0) 133.6
Depreciation and impairment
of property, plant and 56.2 34.2 16.0 8.1 5.7 120.2
equipment and right-of-use
assets
Amortisation and impairment
of intangible assets 0.9 - 0.6 0.6 5.6 7.7
(excluding acquisition
intangibles)
Impairment of investment in - - - 1.9 - 1.9
associate
Non-exceptional (gain) loss
on disposal of property, (1.3) 0.7 - (0.2) - (0.8)
plant and equipment and
intangible assets
Underlying EBITDA 148.9 77.5 22.4 14.5 (0.7) 262.6
Restated*
Netherlands Belgium Restated*
Commercial Commercial Mineralz Specialities Group
2021 Waste Waste & Water Total
€m central
€m €m €m services €m
€m
Operating profit (loss) 46.3 14.4 (4.5) (7.9) (12.2) 36.1
Non-trading and
exceptional items 7.4 8.7 4.8 10.3 5.7 36.9
(excluding finance items)
Underlying EBIT 53.7 23.1 0.3 2.4 (6.5) 73.0
Depreciation and
impairment of property, 59.8 29.1 14.0 8.7 4.9 116.5
plant and equipment and
right-of-use assets
Amortisation of
intangible assets 1.2 0.1 0.6 0.6 3.8 6.3
(excluding acquisition
intangibles)
Non-exceptional (gain)
loss on disposal of (0.8) 0.2 0.1 0.3 0.1 (0.1)
property, plant and
equipment
Underlying EBITDA 113.9 52.5 15.0 12.0 2.3 195.7
*The comparatives for operating loss and non-trading and exceptional items in Group
central services have been restated following the change in accounting policy in relation
to Software as a Service arrangements as explained in note 2 Basis of preparation.
16. Explanation of non-IFRS measures and reconciliations – continued
Reconciliation of statutory profit before tax to underlying profit before tax
Restated*
2022
2021
€m
€m
Statutory profit before tax 95.7 10.9
Non-trading and exceptional items in operating profit 9.6 36.9
Non-trading and exceptional finance net income (0.1) (0.4)
Underlying profit before tax 105.2 47.4
*The comparatives for statutory profit before tax and non-trading and exceptional items in
operating profit have been restated following the change in accounting policy in relation
to Software as a Service arrangements as explained in note 2 Basis of preparation.
Reconciliation of adjusted free cash flow as presented in the Finance review
Restated*
2022
2021
€m
€m
Net cash generated from operating activities 180.4 238.7
Exclude non-trading and exceptional provisions and working capital 11.0 17.3
Exclude payments to fund defined benefit pension schemes 3.6 3.6
Exclude deferred Covid taxes 10.6 (54.1)
Exclude offtake of ATM soil 10.3 2.6
Exclude UK Municipal contracts 9.2 19.3
Include finance charges and loan fees paid (excluding exceptional finance (28.4) (30.8)
charges)
Include finance income received 9.9 10.2
Include repayment of obligations under lease liabilities (44.2) (40.4)
Include purchases of replacement items of intangible assets (8.4) (4.1)
Include purchases of replacement items of property, plant and equipment (64.5) (51.1)
Include proceeds from disposals of property, plant & equipment 4.7 4.5
Include repayment of UK Municipal contracts PPP debt (5.7) (4.1)
Include capital received in respect of PPP financial asset net of 5.7 3.2
outflows
Include movement in UK Municipal contracts PPP cash (3.6) (1.3)
Adjusted free cash flow 90.6 113.5
*The comparatives have been restated following the change in accounting policy in relation
to Software as a Service arrangements as explained in note 2 Basis of preparation.
Reconciliation of net capital spend in the Finance review to purchases and disposal
proceeds of property, plant and equipment and intangible assets within Investing
activities in the consolidated Statement of Cash Flows
Restated*
2022
2021
€m
€m
Purchases of intangible assets (8.4) (4.1)
Purchases of replacement property, plant and equipment (64.5) (51.1)
Proceed from disposals of property, plant and equipment 4.7 4.5
Net replacement capital expenditure (68.2) (50.7)
Growth capital expenditure (13.1) (6.9)
Total capital spend as shown in the cash flow in the Finance review (81.3) (57.6)
*The comparatives have been restated following the change in accounting policy in relation
to Software as a Service arrangements as explained in note 2 Basis of preparation.
Restated*
2022
2021
€m
€m
Purchases of intangible assets (8.4) (4.1)
Purchases of property, plant and equipment (replacement and growth) (77.6) (58.0)
Proceed from disposals of property, plant and equipment 4.7 4.5
Purchases and disposal proceeds of property, plant and equipment and
intangible assets within Investing activities in the consolidated (81.3) (57.6)
Statement of Cash Flows
*The comparatives have been restated following the change in accounting policy in relation
to Software as a Service arrangements as explained in note 2 Basis of preparation.
16. Explanation of non-IFRS measures and reconciliations – continued
Reconciliation of property, plant and equipment additions to replacement capital
expenditure as presented in the Finance review
Restated*
2022
2021
€m
€m
Property, plant and equipment additions (note 10) (73.3) (61.1)
Intangible asset additions (note 10) (9.3) (11.3)
Reversal of capitalised SaaS costs in the year ended 31 March 2021 - 4.7
Proceeds from disposals of property, plant and equipment 4.7 4.5
Movement in capital creditors (included in trade and other payables) (1.9) 5.6
Growth capital expenditure – as disclosed in the Finance review 13.1 6.9
Government grant received in a prior period transferred to property, (1.5) -
plant and equipment
Replacement capital expenditure per Finance review (68.2) (50.7)
*The comparatives have been restated following the change in accounting policy in relation
to Software as a Service arrangements as explained in note 2 Basis of preparation.
Reconciliation of total cash flow as presented in the Finance review
Restated*
2022
2021
€m
€m
Total cash flow 29.4 117.5
Additions to lease liabilities (25.6) (60.9)
Repayment of obligations under lease liabilities 44.2 40.4
Movement in PPP non-recourse debt 5.7 4.1
Movement in PPP cash and cash equivalents 3.6 1.3
Capitalisation of loan fees net of amortisation (0.3) (1.3)
Exchange movements 0.7 (10.3)
Settlement of cross-currency interest rate swaps 6.4 -
Movement in total net debt (note 11) 64.1 90.8
*The comparatives for movements in PPP non-recourse debt and PPP cash and cash equivalents
have been restated as explained in note 2 Basis of preparation.
Reconciliation of total net debt to net debt under covenant definition
Restated*
2022
2021
€m
€m
Total net debt (604.0) (668.1)
Less PPP non-recourse debt 100.2 105.1
Plus PPP cash and cash equivalents (21.1) (17.3)
Less IFRS 16 lease liabilities 221.9 236.7
Net debt under covenant definition (303.0) (343.6)
*The comparatives for PPP non-recourse debt and PPP cash and cash equivalents have been
restated as explained in note 2 Basis of preparation.
17. Events after the balance sheet date
On 24 May 2022 the Group announced that it had signed a conditional agreement to acquire
100% of the shares of GMP Exploitatie BV (“Paro”), an Amsterdam based commercial waste and
recycling business. The agreement is conditional upon competition approval and completion
of relevant employee representation procedures. The cash consideration will be €53.5m
including debt with the net assets to be determined on the date the acquisition completes
later in 2022.
APPENDIX
The following additional information, summarised from the Renewi plc Annual Report and
Accounts 2021, is disclosed in accordance with Disclosure and Transparency Rule 6.3.5.
1. Principal Risks and Uncertainties affecting the Group
Product pricing, demand and quality – That the value we receive for recycled product
falls, that markets contract, reducing demand for our product, or we become unable to
produce to the required quality.
Residue pricing, capacity and specification – Lack of capacity at outlets and/or inability
to produce in specification, resulting in increased price or limitations of disposal of
burnable waste and other residues.
Input volumes – That incoming waste volumes in the market may fall.
Changes in law and policy – Adverse impacts from changes in law and policy, including
environmental, tax and similar legal and policy regimes, including changes in regulatory
attitude and behaviours as a result of shifts in public opinion.
Disruptive event – That a disruptive event such as a pandemic or war has severe
consequences for our incoming waste streams, market prices, access to energy and
workforce, causing business interruption or loss.
Health and safety – Injury or loss of life. That we incur reputational loss, or civil and
criminal costs.
Digitisation – That a disruptive technology or business model deployed by a competitor or
new entrant impacts our ability to compete.
Labour availability and cost – That there are shortages of certain labour types, leading
to unavailability or severe wage inflation.
Major plant failure or fire – Operational failure and/or fire at a key facility leading to
business interruption and other costs.
Unsustainable debt – That funding is not available or that funding sources are available,
but that cash generation is insufficient to allow access to funding.
Regulatory compliance – That we fail to comply with environmental permits and/or
environmental laws and regulations.
Talent development, leadership and diversity – That we fail to develop the required
management capabilities for future needs.
Input pricing – That market pricing may put pressure on our margins.
ICT failure and cyber threat – That ICT failure and/or cyber crime causes business
interruption or loss.
2. Directors' Responsibility, financial information and posting of accounts
The 2022 Annual Report which will be published in June 2022 contains a responsibility
statement in compliance with DTR 4.1.12. This states that on 23 May 2022, the date of the
approval of the Annual Report, the Directors confirm that to the best of their knowledge:
• the Group financial statements, which have been prepared in accordance with UK adopted
international accounting standards, give a true and fair view of the assets,
liabilities, financial position and profit of the Group: and
• the Strategic Report in the Annual Report includes a fair review of the development
and performance of the business and the position of the Group, together with a
description of the principal risks and uncertainties that it faces.
The financial information set out above does not constitute the Company's full statutory
accounts for the year ended 31 March 2021 or 2022, but is derived from those accounts.
Statutory accounts for 2020/21 have been delivered to the Registrar of Companies and those
for 2021/22 will be delivered following the Company's Annual General Meeting on 14 July
2022. The auditors have reported on those accounts; their reports were unqualified and did
not contain statements under Section 498(2) or (3) of the Companies Act 2006.
The only change to the Board of Directors of Renewi plc since the 2021 Annual Report is
that Toby Woolrych left the Company on 31 March 2022.
A list of current directors is maintained on the Renewi plc website: www.renewi.com.
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ISIN: GB00BNR4T868
Category Code: FR
TIDM: RWI
LEI Code: 213800CNEIDZBL17KU22
OAM Categories: 1.1. Annual financial and audit reports
2.2. Inside information
Sequence No.: 163582
EQS News ID: 1359389
End of Announcement EQS News Service
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