REG-Renewi plc Renewi plc: Half-year report
09/11/2021 07:05
============
Renewi plc (RWI)
Renewi plc: Half-year report
09-Nov-2021 / 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.
══════════════════════════════════════════════════════════════════════════════════════
9 November 2021
STRONG FIRST HALF PERFORMANCE, WITH FURTHER INCREASE IN MANAGEMENT'S EXPECTATIONS FOR
YEAR ENDING 31 MARCH 2022
Renewi plc (LSE: RWI), the leading international waste-to-product business, announces
its results for the six months ended 30 September 2021.
Financial Highlights
• Revenue up 11% to €916m, driven by Covid recovery and ongoing stronger recyclate
prices
• Underlying EBITDA1 up by 43% to €126.6m; underlying EBIT1 up by 125% to €63.8m
driven by Commercial Waste; Commercial Waste EBIT margin increased by 470bp to
9.6%
• Statutory profit of €37.1m (2020: €3.5m)
• Core net debt* reduced to €336m (March 2021: €344m), representing net debt to
EBITDA of 1.82x, within our 2x leverage target two years ahead of expectations
• Management expectations for the full year ending 31 March 2022 further increased
Market and Strategic Highlights
• Regulation continues to support our business model, including increased
incineration taxes in Belgian regions and the Vlarema 8 legislation in Flanders
• Increased demand for recyclates, combined with shorter-term supply constraints,
has led to current higher recyclate prices; longer term outlook is for sustained
value from secondary materials
• As detailed in the Group's recent Capital Markets Event, our investments in
circular innovations are expected to deliver an additional €20m of EBIT by the end
of 2025. Further projects remain under development
• The Renewi 2.0 programme remains on track to deliver €20m of savings by FY24 and
is currently delivering run rate benefits of €4.0m
• ATM has shipped over 400k tonnes, representing 31% of legacy TGG stocks, and
outlets for secondary construction materials are developing. As previously
indicated, low intake of inbound contaminated soil will delay the full ATM profit
recovery
Sustainability
• Our business enables a circular economy: sustainability is core to our business
strategy and Renewi contributes to the net avoidance of over 3 million tonnes of
CO2 per annum
• Newly committed innovation projects expected to underpin our target to increase
the Group's recycling rate by 10 percentage points to 75% and avoidance of a
further 0.5 million tonnes of CO2 per annum
1The definition and rationale for the use of non-IFRS measures are included in note
17.
* 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 strong performance in the first half of FY22, with underlying EBIT
125% above prior year and 69% above the pre-Covid first half of FY20. We have
successfully retained some of the structural cost savings made in response to the
Covid-19 pandemic and these, combined with volume recovery and ongoing strong
recyclate prices, have contributed to the significant increase in margins and
profits. Following this strong first half, the Board is further increasing its full
year expectations, which assume a moderation of recyclate prices in the second half as
well as a reduced throughput at ATM.
"Our business model is essential to enable advanced circular economies to achieve
their carbon reduction targets. By recycling more we reduce incineration and assist
our customers in reducing their carbon footprint as they replace virgin materials with
our high-quality secondary materials. We therefore expect to see long-term accretive
growth opportunities across our markets as we add more value to the waste we collect
and process."
Results
Sep 21 Sep 20 % change Sep 192
UNDERLYING NON-STATUTORY
Revenue €915.6m €821.4m +11% €850.7m
Underlying EBITDA1 €126.6m €88.5m +43% €91.2m
Underlying EBIT1 €63.8m €28.3m +125% €37.8m
Underlying profit before tax1 €50.4m €15.3m +229% €20.2m
Underlying EPS1 (cents per share) 47c 15c +213%
Adjusted free cash flow1 €25.9m €33.7m
Free cash flow1 €14.2m €77.9m
Core net debt* €336m €381m
STATUTORY
Revenue €915.6m €821.4m
Operating profit €58.2m €17.0m
Profit before tax €44.7m €4.4m
Profit for the period €37.1m €3.5m
Basic EPS (cents per share) 46c 5c
Cash flow from operating activities €75.5m €133.9m
Total net debt* €648m €684m
1 The definition and rationale for the use of non-IFRS measures are included in note
17.
2 September 2019 values are for ongoing businesses only and exclude the results for
the Canada and Reym activities which were sold during FY20.
* Core net debt used for banking leverage calculations excludes the impact of IFRS 16
lease liabilities and UK PPP net debt.
The results for both this year and the prior years are reported applying IFRS 16.
Where appropriate, we also disclose certain metrics on an IAS 17 basis as this is of
particular relevance for the calculation of leverage for the Group's banking
covenants.
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 0241 +44 7773 813 180
Ben Honan Michelle James, Communications
Notes:
1. A copy of this announcement is available on the Company's website,
( 1 www.renewi.com)
2. Renewi will hold an online analyst presentation at 9.30 a.m. GMT / 10.30 a.m. CET
today
3. Webcast: 2 https://live.sommedia.nl/renewic-ir-2021
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 strong performance in the first half of FY22, with underlying EBIT
125% above prior year and 69% above the pre-Covid first half of FY20. We have
successfully retained some of the structural cost savings made in response to the
Covid-19 pandemic and these, combined with volume recovery and ongoing strong
recyclate prices, have contributed to the significant increase in margins and
profits. We are also particularly pleased to have achieved our target of reducing
leverage below 2x while at the same time increasing our investment in growth projects.
We remain confident our three strategic value drivers - our innovation pipeline,
recovery of earnings at ATM, and the Renewi 2.0 programme - will deliver significant
additional earnings over the next years as well as the longer term. Our business
model is essential to enable advanced circular economies to achieve their circularity
and consequent carbon reduction targets. We continue to see positive structural
growth drivers as the Dutch and Belgian regional governments progressively tax carbon
emitters, incentivise recycling over incineration, and promote the use of secondary
materials. We therefore expect to see long-term accretive growth opportunities across
our markets as we continue to assist our customers to recycle more and to use our
high-quality secondary materials.
Group financial performance
Group Summary Revenue Underlying EBIT
Sep 21 Sep 20 Variance Sep 21 Sep 20 Variance
€m €m % €m €m %
Commercial Waste 670.6 595.0 13% 64.7 29.4 120%
Mineralz & Water 93.6 90.4 4% 4.0 2.3 74%
Specialities 168.0 149.4 12% 1.7 - N/A
Group central services - - (6.6) (3.4) -94%
Inter-segment revenue (16.6) (13.4) - -
Total 915.6 821.4 11% 63.8 28.3 125%
The underlying figures above are reconciled to statutory measures in note 3 in the
consolidated financial statements.
Group revenue was up by 11% to €916m and underlying EBIT increased by 125% to €63.8m.
Underlying profit before tax increased by 229% to €50.4m. Underlying earnings per
share increased by 213% to 47 cents (2020: 15 cents).
The business delivered a positive adjusted free cash-flow of €25.9m (2020: €33.7m).
There was a net cash outflow of €1.9m (2020: inflow of €67.7m, which included the €55m
benefit of deferred payroll and other taxes in the Netherlands). Core net debt/EBITDA
reduced to 1.82x at 30 September 2021, achieving the Board's target of leverage below
2x two years ahead of expectations.
The Board is keeping the dividend under review, taking into account the Group's
ongoing investments in growth projects, current trading and longer-term outlook.
Commercial Waste Revenue Underlying EBITDA Underlying EBIT
Sep 21 Sep 20 Sep 21 Sep 20 Sep 21 Sep 20
Netherlands Commercial 442.3 396.8 71.1 50.3 43.2 21.1
Belgium Commercial 228.9 198.5 38.1 22.6 21.5 8.3
Intra-segment revenue (0.6) (0.3) - - - -
Total (€m) 670.6 595.0 109.2 72.9 64.7 29.4
Period on period variance %
Netherlands Commercial 11% 41% 105%
Belgium Commercial 15% 69% 159%
Total 13% 50% 120%
Return on Underlying Underlying
operating assets EBITDA margin EBIT margin
Sep 21 Sep 20 Sep 21 Sep 20 Sep 21 Sep 20
Netherlands Commercial 22.6% 12.0% 16.1% 12.7% 9.8% 5.3%
Belgium Commercial 38.5% 21.3% 16.6% 11.4% 9.4% 4.2%
Total 26.0% 14.1% 16.3% 12.3% 9.6% 4.9%
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 17 in
the consolidated financial statements.
The Commercial Division increased revenues by 13% to €671m and underlying EBIT by 120%
to €64.7m, representing an EBIT margin of 9.6%. Return on operating assets increased
to a strongly accretive 26%.
In the Netherlands, revenue increased by 11% to €442.3m and underlying EBIT increased
by 105% to €43.2m. Volumes were broadly flat on the prior year and were around 3%
below pre-Covid levels. Compared to prior year, there was a small recovery in
commercial volumes offset by the expected contraction in construction and bulky
waste. Inbound revenues increased by 3% and outbound revenues by 78%, reflecting the
strength of recyclate prices and a corresponding reduction in inbound revenue from our
customers with whom we have dynamically priced contracts. As reported at our last
results, paper/cardboard and ferrous metal prices have been particularly strong; the
outlook for recyclates is discussed later in this review. Around two thirds of the
uplift in earnings was attributable to extra margin on recyclates, supported by
continuing tight control of costs.
In Belgium, revenue increased by 15% to €228.9m and underlying EBIT by 159% to
€21.5m. Core volumes increased by 13% compared to the prior year and recyclates by
8%, although these volumes also remain around 7% below pre-Covid levels. This strong
volume recovery reflected the very challenging first quarter drop in the prior year.
Volume recovery contributed the majority of the increase in underlying EBIT, supported
also by the strong recyclate prices and ongoing operational cost savings.
Mineralz & Water Sep 21 Sep 20 Variance
€m €m %
Revenue 93.6 90.4 4%
Underlying EBITDA 11.0 10.0 10%
Underlying EBITDA margin 11.8% 11.1%
Underlying EBIT 4.0 2.3 74%
Underlying EBIT margin 4.3% 2.5%
Return on operating assets 4.6% 11.7%
The return on operating assets excludes all landfill related provisions. Earnings
recovery at ATM was more than offset by the integration of a former joint venture
which increased assets and included significant one-off charges in the second half
last year which read through into the return on operating asset calculation. The
underlying figures above are reconciled to statutory measures in notes 3 and 17 in the
consolidated financial statements.
The Mineralz & Water Division made underlying progress and saw revenues increase by 4%
to €93.6m and underlying EBIT increase by 74% to €4.0m. The contaminated soil
processing line successfully increased throughput to 55% of capacity with no impact on
product quality of the filler, sand and gravel. Over 0.4m tonnes out of 1.3m tonnes
of clean thermally treated soil ("TGG") stocks have now been shipped, clearing space
on the site and reducing external storage costs. We anticipate shipping a further
250k tonnes in the second half. Other activities in the Division remained in line
with expectations.
Specialities Sep 21 Sep 20 Variance
€m €m %
Revenue 168.0 149.4 12%
Underlying EBITDA 7.9 4.5 76%
Underlying EBITDA margin 4.7% 3.0%
Underlying EBIT 1.7 - N/A
Underlying EBIT margin 1.0% 0.0%
Return on operating assets 17.9% 1.8%
Underlying EBIT includes utilisation of €0.5m (2020: €6.1m) 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 17 in the
consolidated financial statements.
The Specialities Division grew revenues by 12% to €168m and delivered an underlying
EBIT of €1.7m. Coolrec continued to perform strongly, benefiting from operational
improvements and strong recyclate prices. Maltha recovered well from a Covid impacted
prior period. UK Municipal saw the benefits of high recyclate prices offset by higher
Council volumes, some of which are loss-making, and an accounting adjustment in one
contract.
Markets and strategy
Continuing positive developments in our end markets
COP26 is challenging the world to take 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 requirement for success in meeting 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 part in enabling a circular economy by converting waste back
into secondary materials and is therefore set to be supported by fiscal and regulatory
governmental policy. Recycling, like most markets, needs balanced supply and demand.
Supply is stimulated by banning or taxing landfill and incineration to create an
environment in which sorting and processing to produce recyclates is economically
competitive. This is already in place in the Benelux and has been further
strengthened in Flanders by the recent announcement to double the incineration tax to
€25 per tonne. Next generation stimulation of supply is fundamental to Vlarema 8
legislation in Flanders which comes into effect in January 2023. 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
build 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 very 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 the customer universe. These
targets have led us to predict that recyclates will over time become scarce materials
and that prices should consequently rise from the long-term lows that we saw in March
2020, and that these prices may ultimately decouple from trading at a discount to
virgin materials. The last twelve months have seen sustained increases in the selling
prices for most key recyclates, including paper, metals and plastics. In the shorter
term, we forecast some moderation of pricing towards the long-term average levels, as
temporary imbalances in supply and demand attributable to Covid are resolved.
Looking forward, legislators are considering further action, including carbon taxes,
minimum recycled content levels and producer responsibility for the management of
closed loops. All these measures will help to accelerate the transition to increased
recycling rates and, critically, increased demand for secondary materials. While
progress is being made, we believe that it will have to accelerate significantly if
governments wish to meet their own recycling and circularity targets.
Our unchanged strategy for long-term profitable growth
Our purpose is to protect the world by giving new life to used materials, and our
vision is to be the leading waste-to-product company in the world'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 among companies that collect our society's waste to find new
uses for it.
To expand our position as a secondary raw material producer, 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 by 10 percentage points within five
years to 75%.
2. Leader in secondary material production: enhance value of the products we
produce. To build a circular economy, the usage of secondary raw materials must
increase. We aim to significantly increase the value of our products by investing
in advanced processing of our materials.
3. Selectively gain market share. Our primary focus in the Benelux 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 smaller acquisitions in our core markets and
potentially to enter into new geographies with strong growth potential for our
waste-to-product model.
Positive progress with our three value drivers
We have three key value drivers, each expected to be worth €20m EBIT in the coming
years: our innovation pipeline, Renewi 2.0, and the return to full production at our
ATM facility.
Capital committed to underpin the €20m EBIT target from the innovation pipeline
Innovation is one of our core priorities and we are working on a growing number of
initiatives to deliver the first two pillars of our growth strategy. Given that a
number of these initiatives relate to new products or technologies, we do not expect
them all to proceed to commercialisation. During the past six months we have made
significant progress and we have now committed €110m in total to the programme to
underpin our targeted EBIT increase, of which €25m has been spent. Our programme was
outlined in detail in our recent virtual Capital Markets Event, which can be seen on
our website. The most significant of the investments is the €60m project to build
advanced sorting lines in Flanders to meet the needs of the Vlarema 8 legislation.
These sorting lines will provide up to 400kT of capacity, generating attractive
returns due to increased pricing, reduced incineration costs and some extra recyclate
income. The Walloon government has indicated that it will likely implement similar
legislation to come into effect in 2025 and we expect pre-sorting of residual waste
will become more common across other advanced circular economies with time. Our
investments at ATM and at our organics facility in Amsterdam are largely complete and
will commission by the end of FY22. These Board approved investments each meet the
required return on operating assets of 16%-20%.
Project Partner Opportunity Status
Advanced residual Stand-alone €€€€€ Three lines approved, with the
waste sorting Flanders first to commission during 2022
ATM Gravel sand & Filler capacity installed and
filler Stand-alone €€€ product certifications
progressing well
Organics: bio-gas to Opened by King Willem-Alexander
bio-LNG Shell & Nordsol €€ on October 14 2021 and now
commissioning
Organics: expanded Stand-alone € Construction complete and will
depackaging capacity commission in 2021
Expansion plastic Ghent and Waalwijk investments
recycling Stand-alone €€ complete. Acht to commission in
2023
New facilities: fourth facility
Mattress recycling IKEA group €€€ completed and fifth in planning.
Chemical recycling plant to be
commissioned in early 2022
Feedstock for chemical Discussions ongoing concerning
recycling of plastics Petro Chemical € - €€€ feedstock specification and
sourcing
Polyurethane recycling Chemical recycler € - €€€ Technical feasibility studies
underway
Wood flake for Arcelor-Mittal €€ - €€€€ Commercial discussions ongoing
low-carbon steel
€ = c€2m of additional EBIT at full run rate
Renewi 2.0 programme
We are now eighteen months into 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, orientated around two key themes:
digitisation of the business and the simplification and harmonisation of processes.
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
to 2023 for a total cash cost of €40m, which will be split into an exceptional cost of
€33m and capital investment of €7m. Our current run-rate of savings has increased to
€4.0m. We remain confident that we will achieve the targeted savings on schedule.
After the successful launch of the MyRenewi portal more than 140,000 customers have
been invited to access the platform. The current number of active customers is around
40,000 and adoption is increasing each month. Around 2,700 orders and questions per
week are being processed over the platform, which has driven phone call volumes down
5% year to date towards a target 20% reduction.
Our procure-to-pay process, PEAR, is now fully operational in Belgium and is being
extended to the Netherlands.
ATM profit recovery
ATM is our major site that cleans contaminated soil, water and chemical waste,
providing a unique range of services in the Netherlands. The market for the thermal
treatment of contaminated soil and its reuse as TGG was disrupted from mid-2018 due to
environmental concerns, reducing earnings by around €20m. ATM's TGG was cleared by
IL&T, the national regulator, for use in appropriate locations from late 2019.
We continue to make good progress with our recovery plan. Certification projects for
our filler, sand and gravel are continuing at pace. Inbound deliveries of
contaminated soil have been lower than expected, as previously announced, 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 have reduced our throughput back
to 35% from 55% until we see an upturn in inbound volumes. We remain confident in
ongoing progress and in delivery of the €20m EBIT target albeit with an expected delay
of up to two years.
Sustainability performance
In 2020 we launched Renewi's upgraded sustainability strategy and our new sustainable
development objectives for the next three and five years. Using the UN Sustainable
Development Goals, we are focusing on three key themes: Enabling the circular economy;
Reducing carbon emissions and waste; and Caring for people. In keeping with our
purpose, our business and sustainability strategies are inextricably linked and
mutually supportive. By delivering on one, we will help to deliver on the others.
During the last six months we have made good progress with our strategy, including the
following highlights:
• Recycling rate increased from 65.8% at March 2021 to 66.5% (+0.7% points), mainly
driven by Specialities and Mineralz & Water Divisions
• Significantly improved H1 safety results: significant incidents are down 77%, LTIs
(lost time injuries) are down 26% and major fires are down 47%
• Established a Diversity & Inclusion committee, aimed at making Renewi an even more
rewarding and inclusive place to work
Outlook
Following the strong performance in the first half and previous increased guidance
expectations, the Board is further increasing its FY22 expectations, which assume a
moderation of recyclate prices in the second half as well as a reduced throughput at
ATM.
We remain confident our three strategic growth initiatives - our innovation pipeline,
recovery of earnings at ATM, and the Renewi 2.0 programme - will deliver significant
additional earnings over the coming years as well as the longer term.
Our business model is essential to enable advanced circular economies to achieve their
carbon reduction targets. We continue to see positive structural growth drivers as
the Dutch and Belgian regional governments progressively tax carbon emitters,
incentivise recycling over incineration, and promote the use of secondary materials.
We therefore expect to see long-term accretive growth opportunities across our markets
as we continue to assist our customers to recycle more and to use our high-quality
secondary materials.
FINANCE REVIEW
Financial Performance Sep 21 Sep 20 Variance
€m €m %
Revenue 915.6 821.4 11%
Underlying EBITDA 126.6 88.5 43%
Underlying EBIT 63.8 28.3 125%
Operating profit 58.2 17.0 242%
Underlying profit before tax 50.4 15.3 229%
Non-trading & exceptional items (5.7) (10.9)
Profit before tax 44.7 4.4
Total tax charge for the period (7.6) (0.9)
Profit for the period 37.1 3.5
The underlying figures above are reconciled to statutory measures in notes 3 and 17 in
the consolidated financial statements.
Renewi delivered a strong performance in the first half of FY22, with revenues and
underlying EBIT 11% and 125% above prior year. We have retained some of the
structural cost savings made in response to Covid and these, combined with ongoing
strong recyclate prices, have contributed to a significant increase in margins and
profits. Underlying EBIT was €35.5m higher than prior year, of which €23.7m resulted
from all-time high recyclate prices and €9.3m from volume and mix changes, with the
balance coming from net price gains more than offsetting inflation, increased ATM
throughput, costs savings and others. Underlying EBITDA increased by 43% whereas
underlying EBIT increased by 125% as the level of depreciation and amortisation
remained fairly constant year on year. The level of exceptional and non-trading items
in the current year was again significantly reduced to €5.7m resulting in a statutory
operating profit of €58.2m compared to €17.0m last year. Interest charges and share
of results from associates and joint ventures were comparable to last year which has
resulted in an underlying profit before tax of €50.4m for this year compared to €15.3m
in the prior year.
Non-trading and exceptional items excluded from pre-tax 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 48%
to €5.7m (2020: €10.9m), of which €1.6m was non-cash. Of the total charge, €4.0m
relates to the Renewi 2.0 programme.
Operating profit from continuing operations, after taking account of all non-trading
and exceptional items, was €58.2m (2020: €17.0m).
Net finance costs
Net finance costs excluding exceptional items increased by €0.2m to €13.7m (2020:
€13.5m), with savings on main facility interest due to lower borrowing levels net of
increased costs for leases which reflect an increase in new leases entered into during
the previous years. Further details are provided in note 6 to the consolidated
interim financial statements.
Taxation
Total taxation for the period was a charge of €7.6m (2020: €0.9m). The effective tax
rate on underlying profits at 25% is based on the estimate of the full year effective
tax rate. An exceptional tax credit of €5.0m includes €1.3m attributable to the
non-trading and exceptional items of €5.7m and €3.7m as a result of tax rates changes
in the UK which were substantively enacted during the first half.
The Group statutory profit after tax, including all non-trading and exceptional items,
was €37.1m (2020: €3.5m).
Earnings per share (EPS)
Following the one for ten share consolidation, EPS comparatives have been restated to
reflect the change in the number of shares. Underlying EPS excluding non-trading and
exceptional items was 47 cents per share, an increase of 32 cents. Basic EPS was 46
cents per share compared to 5 cents per share in the prior year.
The Board has not declared an interim dividend.
CASH FLOW PERFORMANCE
The funds flow performance table is derived from the statutory cash flow statement and
reconciliations are included in note 17 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 last March 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 also includes lease repayments for IFRS 16 leases. The prior period comparatives
have been restated to reflect this new layout.
Funds flow performance Sep 21 Sep 20
€m €m
EBITDA 126.6 88.5
Working capital movement (36.0) 6.4
Movement in provisions and other (0.2) -
Net replacement capital expenditure (29.7) (23.7)
Repayment of obligations under lease liabilities (21.9) (19.9)
Interest, loan fees and tax (12.9) (17.6)
Adjusted free cash flow 25.9 33.7
Deferred Covid taxes (0.4) 55.0
Offtake of ATM soil (3.4) (2.6)
UK Municipal contracts (7.9) (8.2)
Free cash flow 14.2 77.9
Growth capital expenditure (7.5) (3.3)
Renewi 2.0 and other exceptional spend (6.0) (5.6)
Other (2.6) (1.3)
Total cash flow (1.9) 67.7
Free cash flow conversion 22% 275%
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 17 in the
consolidated financial statements.
Adjusted free cash flow was lower at €25.9m despite the strong EBITDA improvement.
There was an outflow on working capital in the period primarily driven by temporary
delays in billing during a process change and an underlying reduction in payables.
Core days sales outstanding (DSO) remain unimpacted by Covid-19.
Replacement capital spend at €29.7m was slightly ahead of last year. In addition,
€16.6m 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 further spend on the €10m facility to process
out-of-date food waste in Amsterdam.
Interest and tax payments were lower than the prior period due to phasing of annual
tax settlements which have fallen into the second half this year along with lower
interest payments given reduced bank borrowings.
Looking at the three components that are shown below adjusted free cash flow, there
has been minimal repayment on Covid-19 tax deferrals. The total tax deferrals were
€60m at the end of March and the Dutch elements will be settled in 36 monthly
instalments starting in October 2021. Initial cash spend for placement of TGG soil
stocks placed in the market in the first six months was €3.4m. The balance of the
liability of up to €20m is expected to be placed in the market over the next 24
months. Cash outflow on UK PPP contracts was €7.9m.
Spending on Renewi 2.0 and other exceptional costs was similar to last year at €6.0m.
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 generated from operating activities decreased from €129.4m in the prior
period to €74.1m in the current year. A reconciliation to the underlying cash flow
performance as referred to above is included in note 17 in the consolidated interim
financial statements.
We continue to pay significant attention to cash, taking into account the future
investment needs of the business alongside the ongoing replacement capital and the
medium term repayment of the Covid taxes.
INVESTMENT PROJECTS
Expenditure in FY22
The Group's long-term expectations for replacement capital expenditure remain around
80% of depreciation. FY22 replacement capital spend is expected to be up to €80m
which includes some catch-up from the prior two years and a second half investment in
a replacement LUVO emissions cleaning unit at the ATM TRI plant. In addition, up to
€40m of IFRS 16 lease investments are expected for the full year, primarily in
replacement trucks.
Growth capital expenditure will continue to increase as elements of the innovation
pipeline comes into the construction phase. Growth investments in FY22 are estimated
at €23m which includes the first half expenditure on the out-of-date food waste
facility in Amsterdam, with the second half influenced by the exact timing of
expenditure on the advanced sorting investments in Belgium for Vlarema 8 and other
initiatives. The following table shows the investments and returns expected for the
circular innovation projects shared at the recent Capital Markets Event.
FY21 &
Circular innovations Prior FY22 FY23 FY24 FY25 FY26 TOTAL
€m €m €m €m €m €m €m
Capital Investment 19.0 23.0 42.0 19.0 7.0 - 110.0
EBIT (4.0) (2.0) 2.0 9.0 19.0 >20.0 >20.0
Return on assets
The Group return on operating assets excluding debt, tax and goodwill increased to
36.0% at 30 September 2021 from 22.6% at 31 March 2021. The Group post-tax return on
capital employed at September 2021 was 9.5% up from 6.3% at 31 March 2021.
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
€336.0m (31 March 2021: €343.6m) which resulted in a net debt to EBITDA ratio of
1.82x, comfortably within our covenant limit of 3.50x. Liquidity headroom including
core cash and undrawn facilities was also strong at €492m up from €364m at March 2021.
Debt structure and strategy
Borrowings, excluding PPP non-recourse borrowings, are mainly long-term. All our core
borrowings of bonds and loans are green financed. During the period all term loans
and revolving credit facilities denominated in Sterling were repaid and the related
cross-currency interest rate swaps were cancelled. On 23 July 2021 new Green retail
bonds of €125m were issued at a gross coupon of 3.00% for a period of six years.
Debt Structure Sep 21 Sep 20 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)
€495m Green RCF and term loan (82.5) (306.1) 223.6
Green EUPP (25.0) (25.0) -
Gross borrowings before lease liabilities (407.5) (506.1) 98.6
Historical IAS 17 lease liabilities and other (11.0) (15.6) 4.6
Loan fees 3.3 4.3 (1.0)
Core cash and money market funds 79.2 136.3 (57.1)
Core net debt (as per covenant definitions) (336.0) (381.1) 45.1
IFRS 16 lease liabilities (232.8) (219.1) (13.7)
Net debt excluding UK PPP net debt (568.8) (600.2) 31.4
UK PPP restricted cash balances 21.1 16.6 4.5
UK PPP non-recourse debt (100.7) (100.8) 0.1
Total net debt (648.4) (684.4) 36.0
As set out in note 2 in the consolidated financial statements the comparatives for UK
PPP balances and lease liabilities have been restated.
The Group operates a committed invoice discounting programme. The cash received for
invoices sold at 30 September 2021 was €83.7m (March 2021: €80.3m).
The introduction of IFRS 16 on 1 April 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 lease liabilities.
Debt borrowed in the special purpose vehicles (SPVs) created 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 30 September
2021 this net debt amounted to €79.6m (31 March 2021: €87.8m). As set out in note 2
in the consolidated financial statements the presentation of cash held in the UK PPP
entities is now shown gross in cash and cash equivalents rather than netted off the
non-recourse debt balance.
PROVISIONS AND CONTINGENT LIABILITIES
Around 85% of the Group's provisions are long-term in nature, with the onerous
contract provisions against the PPP contracts being utilised over 20 years and
landfill provisions for many decades longer. The provisions balance classified as due
within one year amounts to €35m, including €3m for restructuring, €10m for onerous
contracts, €8m for landfill related spend and €14m for environmental, legal and
others.
The position on the alleged Belgian State Aid claim remains unchanged since March,
with a gross potential liability of €63m against which we have provided for €15m. We
expect a ruling from the European Commission during FY22 but no monies would likely
become payable until FY23. 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 defined benefit pension scheme for certain UK employees which has been
closed to new entrants since September 2002 and was closed to future benefit accrual
from 1 December 2019. At 30 September 2021, the scheme had moved back to a surplus of
€5.9m from a deficit of €4.0m at 31 March 2021. The move in the period was due to
strong asset returns. There are also several defined benefit pension schemes for
employees in the Netherlands and Belgium which had a retirement benefit deficit of
€7.4m at 30 September 2021, unchanged from March.
PRINCIPAL RISKS AND UNCERTAINTIES
Renewi operates a risk management framework to identify, assess and control the most
serious risks facing the Group. The 2021 Annual Report (pages 80 to 83) provides a
discussion of the Group's principal risks and uncertainties. The Board believes that
the key risks and associated mitigation strategies have not changed in the period.
Renewi continues to monitor for aftershocks from Covid-19, including customer
insolvencies, reduced volumes from ongoing homeworking and the risks of further
lockdowns. In common with the broader market we observe inflationary pressures
including energy costs, and a shortage of labour in specific locations or
specialisms. The global post Covid-19 demand recovery has also created positive
pricing pressure on recyclates, which heightens attention as to how to maximise the
opportunity caused by this volatility and to identify potentially heightened risks,
such as new entrants. Cyber crime is an increasing risk for all businesses and we
have been investing significantly to further strengthen our capabilities. The floods
in Europe this summer have highlighted the risks of physical loss arising from climate
change. While we experienced no material impact from these floods, we continue to
appraise potential risks to our assets as well as ensuring we can maintain continuity
of service to our customers. All of these potential risks are actively reviewed and
managed at the Board and in our executive management teams.
GOING CONCERN
The Directors have adopted the going concern basis in preparing these consolidated
interim financial statements after assessing the Group's principal risks. Further
details of the modelling and scenarios prepared are set out in note 2 of the financial
statements. Having considered all the elements of the financial projections and
applying appropriate sensitivities, 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 its covenants.
STATEMENT OF THE DIRECTORS' RESPONSIBILITIES
The Directors confirm that these condensed consolidated interim financial statements
have been prepared in accordance with International Accounting Standard 34 Interim
Financial Reporting as adopted for use in the UK, and that the interim management
report includes a fair review of the information required by DTR 4.2.7 R and DTR 4.2.8
R, namely:
• an indication of important events that have occurred during the first six months
and their impact on the condensed set of financial statements, and a description
of the principal risks and uncertainties for the remaining six months of the
financial year; and
• material related-party transactions in the first six months and any material
changes in the related-party transactions described in the last Annual Report.
A list of current Directors is maintained on the Renewi plc website: www.renewi.com.
By order of the Board
O de Bont T Woolrych
Chief Executive Officer Chief Financial Officer
8 November 2021 8 November 2021
Consolidated Interim Income Statement (unaudited)
First half ended 30 September 2021
First half 2021/22 First half 2020/21
Non-trading Non-trading
& &
Note Underlying exceptional Underlying exceptional
items Total items Total
€m €m
€m €m €m €m
Revenue 3,4 915.6 - 915.6 821.4 - 821.4
Cost of sales 5 (740.0) (1.8) (741.8) (687.1) (7.7) (694.8)
Gross profit 175.6 (1.8) 173.8 134.3 (7.7) 126.6
(loss)
Administrative 5 (111.8) (3.8) (115.6) (106.0) (3.6) (109.6)
expenses
Operating 3 63.8 (5.6) 58.2 28.3 (11.3) 17.0
profit (loss)
Finance income 5,6 4.7 - 4.7 5.6 0.4 6.0
Finance charges 5,6 (18.4) (0.1) (18.5) (19.1) - (19.1)
Share of
results from 0.3 - 0.3 0.5 - 0.5
associates and
joint ventures
Profit (loss) 3 50.4 (5.7) 44.7 15.3 (10.9) 4.4
before taxation
Taxation 5,7 (12.6) 5.0 (7.6) (3.7) 2.8 (0.9)
Profit (loss) 37.8 (0.7) 37.1 11.6 (8.1) 3.5
for the period
Attributable
to:
Owners of the 37.3 (0.7) 36.6 11.9 (8.1) 3.8
parent
Non-controlling 0.5 - 0.5 (0.3) - (0.3)
interests
37.8 (0.7) 37.1 11.6 (8.1) 3.5
Restated*
First half
First half
Earnings per share Note 2021/22
2020/21
cents
cents
Basic 9 46 5
Diluted 9 46 5
Underlying basic 9 47 15
Underlying diluted 9 47 15
*The comparatives have been restated in accordance with the requirements of IAS 33
Earnings per share following the share consolidation as explained in note 2.
Consolidated Interim Statement of Comprehensive Income (unaudited)
First half ended 30 September 2021
First half 2021/22 First half 2020/21
€m €m
Items that may be reclassified subsequently to
profit or loss:
Exchange differences on translation of foreign 0.5 1.8
subsidiaries
Fair value movement on cash flow hedges 5.3 2.0
Deferred tax on fair value movement on cash flow (0.3) (0.6)
hedges
Share of other comprehensive income of
investments accounted for using the equity 0.3 0.1
method
5.8 3.3
Items that will not be reclassified to profit or
loss:
Actuarial gain (loss) on defined benefit pension 8.0 (18.4)
schemes
Deferred tax on actuarial gain (loss) on defined (1.8) 3.5
benefit pension schemes
6.2 (14.9)
Other comprehensive income (loss) for the 12.0 (11.6)
period, net of tax
Profit for the period 37.1 3.5
Total comprehensive income (loss) for the period 49.1 (8.1)
Attributable to:
Owners of the parent 48.6 (7.8)
Non-controlling interests 0.5 (0.3)
Total comprehensive income (loss) for the period 49.1 (8.1)
Consolidated Interim Balance Sheet (unaudited)
As at 30 September 2021
Restated* Restated*
30 September
30 September 31 March
Note 2021
2020 2021
€m
€m €m
Assets
Non-current assets
Goodwill and intangible assets 10 603.2 609.6 602.2
Property, plant and equipment 10 546.9 562.1 560.7
Right-of-use assets* 10 227.0 220.8 233.8
Investments 14.7 14.8 17.2
Financial assets relating to PPP contracts 137.3 135.7 142.4
Derivative financial instruments 14 0.2 - 7.9
Defined benefit pension scheme surplus 13 5.9 - -
Trade and other receivables 4.0 2.5 4.1
Deferred tax assets 46.3 39.7 49.5
1,585.5 1,585.2 1,617.8
Current assets
Inventories 22.5 20.6 20.6
Investments 11.5 8.5 9.3
Loans to associates and joint ventures 0.9 0.9 0.9
Financial assets relating to PPP contracts 7.1 6.2 6.7
Trade and other receivables 253.4 250.4 247.7
Derivative financial instruments 14 3.4 - 1.2
Current tax receivable 1.6 - 0.5
Cash and cash equivalents* 11 100.3 152.9 68.8
400.7 439.5 355.7
Total assets 1,986.2 2,024.7 1,973.5
Liabilities
Non-current liabilities
Borrowings* 11 (600.9) (793.0) (689.1)
Derivative financial instruments 14 (22.3) (35.5) (25.3)
Other non-current liabilities (44.4) (60.9) (54.4)
Defined benefit pension schemes deficit 13 (7.4) (8.3) (11.4)
Provisions 12 (254.4) (238.9) (252.6)
Deferred tax liabilities (48.6) (44.4) (50.9)
(978.0) (1,181.0) (1,083.7)
Current liabilities
Borrowings* 11 (147.8) (44.3) (47.8)
Derivative financial instruments 14 - (3.2) (0.2)
Trade and other payables (509.8) (509.7) (546.2)
Current tax payable (22.3) (14.5) (13.8)
Provisions 12 (34.9) (45.3) (38.7)
(714.8) (617.0) (646.7)
Total liabilities (1,692.8) (1,798.0) (1,730.4)
Net assets 293.4 226.7 243.1
Issued capital and reserves attributable to
the owners of the parent
Share capital 99.5 99.5 99.5
Share premium 473.6 473.6 473.6
Exchange reserve (14.3) (9.9) (14.8)
Retained earnings (272.0) (337.6) (321.3)
286.8 225.6 237.0
Non-controlling interests 6.6 1.1 6.1
Total equity 293.4 226.7 243.1
*The comparatives for cash and cash equivalents and PPP non-recourse debt within both
current and non-current borrowings have been restated at September 2020 and March
2021, additionally the comparatives for right-of-use assets and lease liabilities
within both current and non-current borrowings at September 2020 have been restated.
These are due to prior year adjustments which are explained in note 2.
Consolidated Interim Statement of Changes in Equity (unaudited)
First half ended 30 September 2021
Share Share Exchange Retained Non-controlling Total
reserve
capital premium earnings interests equity
€m
€m €m €m €m €m
Balance at 1 April 2021 99.5 473.6 (14.8) (321.3) 6.1 243.1
Profit for the period - - - 36.6 0.5 37.1
Other comprehensive income:
Exchange gain on translation - - 0.5 - - 0.5
of foreign subsidiaries
Fair value movement on cash - - - 5.3 - 5.3
flow hedges
Actuarial gain on defined - - - 8.0 - 8.0
benefit pension schemes
Tax in respect of other - - - (2.1) - (2.1)
comprehensive income items
Share of other comprehensive
income of investments 0.3 - 0.3
accounted for using the - - -
equity method
Total comprehensive income - - 0.5 48.1 0.5 49.1
for the period
Share-based compensation - - - 0.8 - 0.8
Movement on tax arising on - - - 0.4 - 0.4
share-based compensation
Balance as at 30 September 99.5 473.6 (14.3) (272.0) 6.6 293.4
2021
Balance at 1 April 2020 99.5 473.6 (11.6) (327.6) 1.4 235.3
Profit (loss) for the year - - - 11.1 (0.1) 11.0
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) - - (3.2) 4.5 (0.1) 1.2
income for the year
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) (321.3) 6.1 243.1
Balance at 1 April 2020 99.5 473.6 (11.6) (327.6) 1.4 235.3
Profit (loss) for the period - - - 3.8 (0.3) 3.5
Other comprehensive income
(loss):
Exchange gain on translation - - 1.7 - 0.1 1.8
of foreign subsidiaries
Fair value movement on cash - - - 2.1 (0.1) 2.0
flow hedges
Actuarial loss on defined - - - (18.4) - (18.4)
benefit pension schemes
Tax in respect of other - - - 2.9 - 2.9
comprehensive income items
Share of other comprehensive
income of investments - - - 0.1 - 0.1
accounted for using the
equity method
Total comprehensive income - - 1.7 (9.5) (0.3) (8.1)
(loss) for the period
Share-based compensation - - - 0.7 - 0.7
Own shares purchased by the - - - (1.2) - (1.2)
Employee Share Trust
Balance as at 30 September 99.5 473.6 (9.9) (337.6) 1.1 226.7
2020
Consolidated Interim Statement of Cash Flows (unaudited)
First half ended 30 September 2021
Restated*
First half
First half
Note 2021/22
2020/21
€m
€m
Profit before tax 44.7 4.4
Finance income (4.7) (6.0)
Finance charges 18.5 19.1
Share of results from associates and joint ventures (0.3) (0.5)
Operating profit 58.2 17.0
Amortisation and impairment of intangible assets 10 4.8 5.0
Depreciation and impairment of property, plant and 10 35.5 40.8
equipment
Depreciation and impairment of right-of-use assets 10 22.8 19.5
Impairment of investment in associate 1.9 -
Gain on disposal of property, plant and equipment (0.6) (0.4)
Net decrease in provisions (4.4) (6.1)
Payment related to committed funding of the defined benefit (1.8) (1.7)
pension schemes
Share-based compensation 0.8 0.7
Operating cash flows before movement in working capital 117.2 74.8
Increase in inventories (1.9) -
(Increase) decrease in receivables (6.0) 21.3
(Decrease) increase in payables (33.8) 37.8
Cash flows from operating activities 75.5 133.9
Income tax paid (1.4) (4.5)
Net cash inflow from operating activities 74.1 129.4
Investing activities
Purchases of intangible assets (6.6) (4.5)
Purchases of property, plant and equipment (32.7) (24.6)
Proceeds from disposals of property, plant and equipment 2.1 2.1
Dividends received from associates and joint ventures 1.2 1.1
Receipt of deferred consideration 0.2 0.4
Purchase of other short-term investments (2.2) -
Outflows in respect of PPP arrangements under the financial (0.2) (0.7)
asset model
Capital received in respect of PPP financial assets 3.0 2.5
Finance income 5.0 4.8
Net cash outflow from investing activities (30.2) (18.9)
Financing activities
Finance charges and loan fees paid (16.5) (18.0)
Investment in own shares by the Employee Share Trust - (1.2)
Proceeds from retail bonds 11 125.0 -
Proceeds from bank borrowings 11 126.6 9.0
Repayment of bank borrowings 11 (228.9) (134.7)
Settlement of cross currency interest rate swaps 6.4 -
Repayment of PPP debt 11 (3.5) (1.9)
Repayment of obligations under lease liabilities 11 (21.9) (19.9)
Net cash outflow from financing activities (12.8) (166.7)
Net increase (decrease) in cash and cash equivalents 31.1 (56.2)
Effect of foreign exchange rate changes 11 0.4 (0.7)
Cash and cash equivalents at the beginning of the period* 11 68.8 209.8
Cash and cash equivalents at the end of the period 11 100.3 152.9
*Cash and cash equivalents at the beginning and end of the period for the first half
2020/21 and beginning of the period for the first half 2021/22 along with the
repayment of PPP debt and the effect of foreign exchange rate changes have been
restated due to a prior year adjustment as explained in note 2.
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
This condensed set of consolidated interim financial statements for the six months
ended 30 September 2021 has been prepared in accordance with the Disclosure and
Transparency Rules of the United Kingdom Financial Conduct Authority and with IAS 34
Interim Financial Reporting as adopted for use in the UK. They should be read in
conjunction with the 2021 Annual Report and Accounts, which have been prepared in
accordance with international financial reporting standards in conformity with the
requirements of the Companies Act 2006 and international financial reporting standards
adopted pursuant to Regulation (EC) No 1606/2002 as it applies in the European Union.
The 2021 Annual Report and Accounts are available from the Company's website
www.renewi.com.
These primary statements and selected notes comprise the unaudited consolidated
interim financial statements of the Group for the six months ended 30 September 2021
and 2020, together with the audited results for the year ended 31 March 2021. These
interim financial results do not comprise statutory accounts within the meaning of
Section 434 of the Companies Act 2006. The comparative figures as at 31 March 2021
have been extracted from the Group's statutory Annual Report and Accounts for that
financial year, but do not constitute those accounts. Those statutory accounts for the
year ended 31 March 2021 were approved by the Board of Directors on 27 May 2021 and
delivered to the Registrar of Companies. The report of the auditors on those accounts
was unqualified, did not contain an emphasis of matter paragraph and did not contain
any statement under Section 498 of the Companies Act 2006.
The Board of Directors approved, on 8 November 2021, these consolidated interim
financial statements which have been reviewed by BDO LLP but not been audited.
Going concern
The Directors have adopted the going concern basis in preparing these consolidated
interim financial statements after assessing the Group's principal risks including the
ongoing risks arising from the Covid-19 pandemic.
Given the economic uncertainty arising from the Covid-19 pandemic, 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 31 March 2023 which includes estimates of any further
impact of Covid-19 on the Group's operations together with other factors that may
affect its performance and financial position. These factors include actual trading
performance in the period, 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 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.
The downside scenario includes another, less severe, wave of Covid-19 measures in the
second half of the current financial year to 31 March 2022, weaker macro-economic
conditions leading to a volume recovery rate at least 50% lower than the forecast
economic recoveries in all of our territories in FY23 and as well as other downsides
which are not linked to Covid-19, including a further delay in the operational ramp up
at the ATM site and a settlement of the potential maximum claim in FY23 arising from
the European Commission investigation into alleged state aid in Belgium. These factors
reduce FY23 EBIT by 22% compared to the base case. No mitigating cost and cash
actions, such as deferral of uncommitted capital expenditure 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 57% compared to the base case without considering any mitigating actions. In
the opinion of the Directors there is no 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
potential 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 as described in note 11.
2. Basis of preparation - continued
Restatement due to prior year adjustments
Given that cash held in UK PPP entities is not 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 an increase in non-current borrowings of €14.9m at September 2020 and
€15.2m at March 2021, an increase in current borrowings of €1.7m at September 2020 and
€2.1m at March 2020 with a corresponding increase in cash and cash equivalents of
€16.6m at September 2020 and €17.3m at March 2021. 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 Sheets and Statements of
Cash flows together with related disclosures have been restated to reflect this
adjustment.
In preparing the financial statements for the year ended 31 March 2021, management
identified an error relating to the prior period and accordingly an adjustment was
made for the year ended 31 March 2020 which also impacted the balance sheet of 30
September 2020. The error arose as a result of a lease being recorded incorrectly in
an entity in which the Group acquired the remaining 50% and took full control in
November 2019. The term used on the implementation of IFRS 16 was shorter than the
term stated in the lease contract. The impact at 30 September 2020 was to increase
right-of-use assets by €9.0m and increase lease liabilities by €9.0m, with the latter
split as a reduction of €0.4m in current lease liabilities and an increase of €9.4m in
non-current lease liabilities. The impact to the Income Statement for the six months
ended 30 September 2020 was not material and therefore no adjustment was made. There
is no goodwill impact on the acquisition accounting of the entity.
Restatement of 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 interim financial statements in accordance with the
requirements of IAS 33 Earnings per share.
Seasonality or cyclicality of operations
The Group is not subject to any significant seasonality or cyclicality fluctuations.
Accounting policies
The results have been prepared applying the accounting policies that were used in the
preparation of the 2021 Annual Report and Accounts except taxes on income in the
interim periods are accrued using the estimated tax rate that is expected for the full
financial year.
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 IC
interpretations which were early adopted by the Group. The following amendments are
effective for the period beginning 1 April 2022 and the Group is currently assessing
any potential impact:
• 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)
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 30 September 2021 of
€1:£0.859 (30 September 2020: €1:£0.907, 31 March 2021: €1:£0.852) and an average rate
for the period ended 30 September 2021 of €1:£0.858 (30 September 2020: €1:£0.891).
Critical accounting judgements and estimates
The preparation of consolidated interim 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. 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. Actual results may differ from these estimates.
2. Basis of preparation - continued
In preparing these consolidated interim financial statements management have reviewed
the nature of the significant judgements in applying the Group's accounting policies
and the key sources of estimation uncertainty, as set out on pages 145 to 147 of the
2021 Annual Report and Accounts. It has been determined that there have been no
significant changes in methodology in relation to these key estimates with all key
inputs considered and refreshed as appropriate.
Defined benefit pension scheme surplus
As noted previously, management have concluded that the Group has an unconditional
right to a refund of any surplus in the UK defined benefit pension scheme once the
liabilities have been discharged and the trustees of the scheme do not have the
unilateral right to wind up the scheme. Consequently the asset at 30 September 2021
has not been restricted and no additional liability has been recognised.
Underlying business performance
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 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 17.
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. There has been no change to that adopted in the March 2021 consolidated
financial statements. The Group incurs costs each year in maintaining intangible
assets which include acquired customer relationships, permits and licences and
excludes amortisation of these assets from underlying EBIT to avoid double counting
such costs within underlying results. A policy for non-trading and exceptional items
is followed consistently and is submitted to the Audit Committee for annual review and
full details are set out on page 154 of the 2021 Annual Report and Accounts. See note
5 for further details of the costs included within this category.
Impact of Covid-19
For the year ended March 2021 management considered the impact of Covid-19 when
assessing the future cash flows of cash generating units in the impairment reviews and
similarly the impact of Covid-19 in the assessment of the recoverability of trade
receivables and deferred tax assets. Overall trading in the first half has been ahead
of our expectations and therefore no adverse indicators have been identified to
trigger an update to goodwill impairment modelling.
Management have continued to use judgement to determine the expected impact on
financial instruments, principally how expected credit loss could be impacted as a
result of the Covid-19 pandemic. There has not been a significant increase in losses
to date as government measures have provided support and financial aid packages but as
these come to end there is an expectation of increased defaults and bankruptcies.
3. Segmental reporting
The Group's chief operating decision maker is considered to be the Board of Directors.
The Group's reportable segments, 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
Mineralz & Waste contaminated 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.
First half
First half 2021/22
Revenue 2020/21
€m
€m
Netherlands Commercial Waste 442.3 396.8
Belgium Commercial Waste 228.9 198.5
Intra-segment (0.6) (0.3)
Commercial Waste 670.6 595.0
Mineralz & Water 93.6 90.4
Specialities 168.0 149.4
Inter-segment revenue (16.6) (13.4)
Revenue 915.6 821.4
First half
First half 2021/22
Results 2020/21
€m
€m
Netherlands Commercial Waste 43.2 21.1
Belgium Commercial Waste 21.5 8.3
Commercial Waste 64.7 29.4
Mineralz & Water 4.0 2.3
Specialities 1.7 -
Group central services (6.6) (3.4)
Underlying EBIT 63.8 28.3
Non-trading and exceptional items (note 5) (5.6) (11.3)
Operating profit 58.2 17.0
Finance income (note 6) 4.7 5.6
Finance charges (note 6) (18.4) (19.1)
Finance income - non trading and exceptional items - 0.4
(note 5)
Finance charges - non trading and exceptional items (0.1) -
(note 5)
Share of results from associates and joint ventures 0.3 0.5
Profit before taxation 44.7 4.4
3. Segmental reporting - continued
Restated*
Commercial Mineralz Group Restated*
Specialities central Tax, net debt
Net assets Waste & Water services Total
€m and
€m €m €m derivatives €m
€m
30 September 2021
Gross non-current 1,025.4 255.7 216.7 41.2 46.5 1,585.5
assets
Gross current assets 195.8 32.2 66.1 1.3 105.3 400.7
Gross liabilities (386.4) (212.1) (167.8) (84.6) (841.9) (1,692.8)
Net assets 834.8 75.8 115.0 (42.1) (690.1) 293.4
(liabilities)
31 March 2021
Gross non-current 1,042.6 258.2 225.7 33.9 57.4 1,617.8
assets
Gross current assets 174.1 31.6 64.3 15.2 70.5 355.7
Gross liabilities (414.6) (224.3) (173.0) (91.4) (827.1) (1,730.4)
Net assets 802.1 65.5 117.0 (42.3) (699.2) 243.1
(liabilities)
*The comparatives for cash and cash equivalents within gross current assets and PPP
non-recourse debt within gross liabilities have been restated at March 2021 due to a
prior year adjustment as explained in note 2.
For the reportable segments there has been no material change in net assets and
liabilities from the prior period. As explained in note 2, the gross current assets
and gross liabilities at 31 March 2021 have been restated.
4. Revenue
The following tables show the Group's revenue by type of service delivered and by
primary geographic markets.
Commercial Mineralz &
Specialities Inter-segment Total
By type of service Waste Water
€m €m €m
€m €m
30 September 2021
Inbound 535.6 70.0 111.8 (14.9) 702.5
Outbound 97.8 23.6 55.7 (1.6) 175.5
On-Site 25.7 - - (0.1) 25.6
Other 11.5 - 0.5 - 12.0
Total revenue 670.6 93.6 168.0 (16.6) 915.6
30 September 2020
Inbound 510.1 73.0 104.2 (11.3) 676.0
Outbound 53.9 17.4 43.1 (1.2) 113.2
On-Site 18.2 - - (0.1) 18.1
Other 12.8 - 2.1 (0.8) 14.1
Total revenue 595.0 90.4 149.4 (13.4) 821.4
Commercial Mineralz &
Specialities Inter-segment Total
By geographic market Waste Water
€m €m €m
€m €m
30 September 2021
Netherlands 442.0 73.1 22.6 (15.7) 522.0
Belgium 228.6 20.5 16.2 (0.9) 264.4
UK - - 113.2 - 113.2
France - - 10.9 - 10.9
Other - - 5.1 - 5.1
Total revenue 670.6 93.6 168.0 (16.6) 915.6
30 September 2020
Netherlands 396.6 69.7 20.5 (12.7) 474.1
Belgium 198.4 20.7 13.0 (0.7) 231.4
UK - - 102.5 - 102.5
France - - 9.2 - 9.2
Other - - 4.2 - 4.2
Total revenue 595.0 90.4 149.4 (13.4) 821.4
Revenue recognised at a point in time amounted to €861.7m (2020/21: €767.3m) 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 61% of revenue
(2020/21: 49%) 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.
First half First half
2021/22 2020/21
€m €m
Renewi 2.0 improvement programme 4.0 3.6
Other items:
Restructuring charges - non-cash impairments - 3.2
Restructuring charges - cash - 2.8
- 6.0
Ineffectiveness on cash flow hedges - (0.4)
Termination of cash flow hedges 0.1 -
Amortisation of acquisition intangibles 1.6 1.7
Non-trading and exceptional items in profit before tax 5.7 10.9
Tax on non-trading and exceptional items (1.3) (2.8)
Exceptional tax credit (3.7) -
Total non-trading and exceptional items in profit after tax 0.7 8.1
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 in
February 2017, 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 which is on track. Of
the total cost of €4.0m (2020/21: €3.6m), €0.2m (2020/21: €nil) was recorded in cost
of sales and €3.8m (2020/21: €3.6m) was recorded in administrative expenses.
Other items
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 of the
circumstances. The costs of €6.0m 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 €3.2m were non-cash asset impairments. The total charge of €6.0m
was recorded in cost of sales.
Items recorded in finance charges and finance income
The €0.1m charge in the current year related to the termination of cross-currency
interest rate cash flow hedges. The prior year credit of €0.4m related to the Cumbria
PPP project interest rate swap cash flow hedges 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 €1.6m (2020/21:
€1.7m) was all recorded in cost of sales.
Exceptional tax credit
The €3.7m exceptional tax credit related to changes in UK tax rates as explained in
note 7.
6. Net finance charges
First half First half
2021/22 2020/21
€m €m
Finance charges
Interest payable on borrowings 6.5 7.6
Interest payable on PPP non-recourse net debt 3.7 3.7
Lease liabilities interest 3.6 3.2
Unwinding of discount on provisions (note 12) 3.2 3.1
Interest charge on the retirement benefit schemes 0.1 -
Amortisation of loan fees 0.8 0.7
Other finance costs 0.5 0.8
Total finance charges before non-trading and exceptional items 18.4 19.1
Non-trading and exceptional finance charges:
Charge as a result of the termination of cash flow hedges 0.1 -
Total finance charges 18.5 19.1
Finance income
Interest receivable on financial assets relating to PPP (4.5) (4.5)
contracts
Unwinding of discount on deferred consideration receivable (0.1) (0.1)
Interest income on the retirement benefit schemes - (0.2)
Other finance income (0.1) (0.8)
Total finance income before non-trading and exceptional items (4.7) (5.6)
Non-trading and exceptional finance income:
Ineffectiveness income on cash flow hedges - (0.4)
Total finance income (4.7) (6.0)
Net finance charges 13.8 13.1
7. Taxation
First half First half
2021/22 2020/21
€m €m
Current tax
UK corporation tax
Current tax 0.7 0.7
Overseas tax
Current year 7.8 2.6
Adjustment in respect of the prior year 0.2 -
Total current tax 8.7 3.3
Deferred tax
Origination and reversal of temporary differences in the current 2.6 (2.4)
period
Exceptional tax credit (3.7) -
Total deferred tax (1.1) (2.4)
Total tax charge for the period 7.6 0.9
Tax expense is recognised based on management's best estimate of the full year
effective tax rate on expected full year profits to March 2022. The estimated average
underlying annual tax rate for the year to 31 March 2022 is 25.0% (2020/21: 24.5%).
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%)
based on the timing of the utilisation of the deferred tax. This resulted in an
exceptional tax credit of €3.7m in the current period.
7. Taxation - continued
Amendments to Dutch tax rules
In September 2020 the Dutch government announced some amendments to the loss
utilisation rules. Under the new rules, losses may be carried forward indefinitely,
instead of the previous time limit of between 6 and 9 years (depending on the date of
origin of the losses) with the offset of tax losses against taxable income in excess
of €1m limited to a maximum of 50%. On 4 June 2021 a Royal Decree was published
confirming that the new rules will enter into force for accounting periods beginning
on or after 1 January 2022. Consequently the deferred tax asset position at 30
September 2021 in respect of Dutch tax losses has been calculated based on these
enacted changes. Furthermore on 15 October 2021 the Dutch government published
proposals to increase the Dutch corporate income tax rate from 25.0% to 25.8% for
accounting periods beginning on or after 1 January 2022. At the same time, an
amendment to the general interest deduction rule was announced, which if enacted would
lower the EBITDA threshold from 30% to 20% for financial years starting on or after 1
January 2022.
8. Dividends
The Directors did not recommend an interim dividend for the current year (2020/21: nil
per share). The Directors did not recommend a final dividend for the year ended March
2021 (2020: nil per share).
9. 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 are disclosed separately on the face of the Income Statement, because of their
size or incidence, to enable a better understanding of performance as more fully
explained in the accounting policy in the 31 March 2021 Annual Report and Accounts.
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.
In May 2021 95,204 ordinary shares were allotted following the exercise of share
options under the Savings Related Share Options Schemes for an aggregate consideration
of €25,104.
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 comparatives have been restated below as
required by IAS 33 Earnings per share.
First half 2021/22 First half 2020/21 restated
Basic Dilutions Diluted Basic Dilutions Diluted
Weighted average number of shares 79.7 0.3 80.0 79.5 - 79.5
(million)
Profit after tax (€m) 37.1 - 37.1 3.5 - 3.5
Non-controlling interests (€m) (0.5) - (0.5) 0.3 - 0.3
Profit after tax attributable to 36.6 - 36.6 3.8 - 3.8
ordinary shareholders (€m)
Earnings per share (cents) 46 - 46 5 - 5
The reconciliation between underlying earnings per share and basic earnings per share
is as follows:
First half 2021/22 First half 2020/21 restated
Cents €m Cents €m
Underlying earnings per
share/Underlying profit after tax 47 37.3 15 11.9
attributable to ordinary shareholders
Adjustments:
Non-trading and exceptional items (7) (5.7) (14) (10.9)
Tax on non-trading and exceptional 1 1.3 4 2.8
items
Exceptional tax 5 3.7 - -
Basic earnings per share/Earnings after
tax attributable to ordinary 46 36.6 5 3.8
shareholders
Diluted underlying earnings per
share/Underlying profit after tax 47 37.3 15 11.9
attributable to ordinary shareholders
Diluted basic earnings per
share/Earnings after tax attributable 46 36.6 5 3.8
to ordinary shareholders
10. Goodwill, intangible assets, property, plant and equipment and right-of-use
assets
Intangible Property, Right-of-use
Goodwill plant Total
assets assets
€m and equipment €m
€m €m
€m
Net book value at 31 March 561.1 49.0 584.0 215.9 1,410.0
2020
Additions/modifications - 11.3 61.1 60.9 133.3
Disposals - (0.2) (4.0) (0.1) (4.3)
Derecognition of a
right-of-use assets into a - - - (0.4) (0.4)
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 551.6 50.6 560.7 233.8 1,396.7
2021
Additions/modifications - 5.8 23.2 16.6 45.6
Disposals - - (1.5) (0.6) (2.1)
Amortisation and depreciation - (4.8) (33.7) (22.5) (61.0)
charge
Impairment charge - - (1.8) (0.3) (2.1)
Net book value at 30 September 551.6 51.6 546.9 227.0 1,377.1
2021
At 30 September 2021, the Group had property, plant and equipment commitments of
€25.7m (2020/21: €16.6m), right-of-use asset commitments of €15.0m (2020/21: €23.3m)
and intangible asset commitments of €2.0m (2020/21: €2.4m).
The impairment charge of €1.8m in property plant and equipment and €0.3m in
right-of-use assets relates to specific assets in the Commercial Division in both
Belgium and Netherlands following a detailed review principally in relation to the
Vlarema-8 project in Belgium where assets will be replaced.
Goodwill impairment
Goodwill is tested for impairment annually or more frequently if there is any
indication of impairment with the last annual test being undertaken at 31 March 2021.
The Group has performed an assessment across all cash generating units to identify
whether any indicators of impairment existed and no indicators were identified in the
period. As a result no impairment testing was carried out in the period and a full
detailed review will be conducted at 31 March 2022.
11. Cash and borrowings
Cash and cash equivalents are analysed as follows:
Restated* Restated*
30 September
30 September 31 March
2021
2020 2021
€m
€m €m
Cash at bank and in hand 49.8 75.5 51.5
Money market funds 29.4 60.8 -
Total core cash 79.2 136.3 51.5
Cash at bank - restricted relating to PPP 21.1 16.6 17.3
contracts
Total cash and cash equivalents 100.3 152.9 68.8
*The comparatives for cash and cash equivalents have been restated to include cash at
bank relating to PPP contracts due to a prior year adjustment as explained in note 2.
Of the total cash and cash equivalents, €2.4m was held by joint operations which is
only available in consultation with all other partners in the joint operations.
11. Cash and borrowings continued
Borrowings are analysed as follows:
Restated* Restated*
30 September
30 September 31 March
2021
2020 2021
€m
€m €m
Non-current borrowings
Retail bonds 199.2 174.4 174.5
European private placements 24.8 24.6 24.7
Term loans and Revolving credit facility 80.4 302.8 182.3
Lease liabilities 200.1 192.7 205.7
Other loans 0.6 1.9 1.3
PPP non-recourse debt 95.8 96.6 100.6
600.9 793.0 689.1
Current borrowings
Retail bonds 99.9 - -
Bank overdrafts 0.3 0.7 -
Lease liabilities 41.5 38.2 42.1
Other loans 1.2 1.2 1.2
PPP non-recourse debt 4.9 4.2 4.5
147.8 44.3 47.8
*The comparatives for current and non-current PPP non-recourse debt have been restated
at September 2020 and March 2021, additionally the comparatives for current and
non-current lease liabilities at 30 September 2020 have been restated. Further
details for these prior year adjustments are explained in note 2.
On 23 July 2021 the Group successfully issued new Green retail bonds for €125m at a
gross coupon of 3.00% for a period of 6 years maturing on 23 July 2027.
During the six months to 30 September 2021 the Group repaid all term loans and
revolving credit facilities denominated in Sterling and the related cross-currency
interest rate swaps were cancelled. The Group's Euro denominated multicurrency green
finance facility agreement has covenants including adjusted net debt to comparable
adjusted EBITDA and interest cover in accordance with a frozen GAAP concept. The
Group has complied with its banking covenants during the period.
Movement in total net debt
Restated*
Other non-cash Exchange 30 September
1 April Cash flows changes
movements 2021
2021 €m €m
€m €m
€m
Bank loans and overdrafts (184.8) 102.3 (0.6) 0.6 (82.5)
European private (24.7) - (0.1) - (24.8)
placements
Retail bonds (174.5) (125.0) 0.4 - (299.1)
Lease liabilities (247.8) 21.9 (15.9) 0.2 (241.6)
Debt excluding PPP (631.8) (0.8) (16.2) 0.8 (648.0)
non-recourse debt
PPP non-recourse debt (105.1) 3.5 - 0.9 (100.7)
Total debt (736.9) 2.7 (16.2) 1.7 (748.7)
Cash and cash equivalents 51.5 27.2 - 0.5 79.2
- core
Cash and cash equivalents
- restricted relating to 17.3 3.9 - (0.1) 21.1
PPP contracts
Total net debt (668.1) 33.8 (16.2) 2.1 (648.4)
Analysis of total net
debt:
Net debt excluding PPP (580.3) 26.4 (16.2) 1.3 (568.8)
non-recourse net debt
PPP non-recourse net debt (87.8) 7.4 - 0.8 (79.6)
Total net debt (668.1) 33.8 (16.2) 2.1 (648.4)
*The comparatives for cash and cash equivalents relating to PPP contracts and PPP
non-recourse debt have been restated as explained in note 2.
11. Cash and borrowings continued
Analysis of movement in total net debt
Restated* Restated*
First half
First half Full year
2021/22
2020/21 2020/21
€m
€m €m
Net increase (decrease) in cash and cash equivalents 31.1 (56.2) (141.2)
Net decrease in borrowings and lease liabilities 2.7 147.5 304.5
Total cash flows in net debt 33.8 91.3 163.3
Lease liabilities entered into during the period (15.9) (24.7) (60.9)
Capitalisation of loan fees 0.5 0.2 0.2
Amortisation of loan fees (0.8) (0.7) (1.5)
Exchange gain (loss) 2.1 8.4 (10.3)
Movement in net debt 19.7 74.5 90.8
Total net debt at beginning of period (668.1) (758.9) (758.9)
Total net debt at end of period (648.4) (684.4) (668.1)
*The net debt at the beginning and end of the period of the first half 2020/2021 has
been restated. The total cash flows in net debt in both prior periods are unchanged,
however the split of movements between cash and cash equivalents and borrowings and
lease liabilities has been restated. Further details of these restatements are
explained in note 2.
12. Provisions
Site restoration Onerous Legal and
Restructuring Other Total
and aftercare contracts warranty
€m €m €m
€m €m €m
At 31 March 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 period - 0.5 - 1.8 0.8 3.1
Released in the period - (0.2) (0.1) - - (0.3)
Finance charges - 2.0 1.1 - - 0.1 3.2
unwinding of discount
Utilised in the period (1.6) (1.6) (0.7) (2.7) (0.6) (7.2)
Exchange rate changes - (0.7) (0.1) - - (0.8)
At 30 September 2021 158.0 80.0 24.8 2.9 23.6 289.3
Current 8.6 9.5 6.3 2.9 7.6 34.9
Non-current 149.4 70.5 18.5 - 16.0 254.4
At 30 September 2021 158.0 80.0 24.8 2.9 23.6 289.3
Current 8.4 11.0 7.3 3.8 8.2 38.7
Non-current 149.2 69.9 18.4 - 15.1 252.6
At 31 March 2021 157.6 80.9 25.7 3.8 23.3 291.3
Current 6.3 20.6 8.2 6.6 3.6 45.3
Non-current 146.7 60.9 16.9 - 14.4 238.9
At 30 September 2020 153.0 81.5 25.1 6.6 18.0 284.2
Site restoration and aftercare
The site restoration provisions at 30 September 2021 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 31 years from the
balance sheet date. However, the timing of the payments is not certain and has been
estimated based on management's latest expectations. 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.
12. Provisions - continued
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 net present value 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.
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 prior years 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. Further
contingent liability information is provided in note 16.
Restructuring
The restructuring provision primarily relates to redundancy and related costs incurred
as a result of restructuring initiatives and is expected to be spent in the following
twelve months as affected employees leave the business.
Other
Other provisions includes dilapidations €8.7m (March 2021: €8.7m, September 2020:
€7.3m), long-service employee awards €6.3m (March 2021: €6.0m, September 2020: €5.7m)
and other environmental liabilities €8.6m (March 2021: €8.6m, September 2021: €5.0m).
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
2070.
13. Retirement benefit schemes
The UK defined benefit scheme (called the Shanks Group Scheme) provides pension
benefits for pensioners, deferred members and eligible UK employees and is closed to
both new entrants and future benefit accrual. In addition there are a number of
defined benefit schemes in both the Netherlands and Belgium for certain eligible
employees.
The amounts recognised in the Income Statement were as follows:
First half First half
2021/22 2020/21
€m €m
Current service cost 0.7 0.7
Interest expense (income) on scheme net liabilities 0.1 (0.2)
Net retirement benefit charge before tax 0.8 0.5
The amounts recognised in the balance sheet were as follows:
30 September 31 March
30 September 2021
2020 2021
€m
€m €m
Present value of funded obligations (296.6) (292.2) (296.6)
Fair value of plan assets 295.1 283.9 285.2
Pension schemes net deficit (1.5) (8.3) (11.4)
Related deferred tax asset 0.4 1.8 2.7
Net pension liability (1.1) (6.5) (8.7)
Classified as:
Defined benefit scheme surplus - included in 5.9 - -
non-current assets
Defined benefit pension schemes deficit - (7.4) (8.3) (11.4)
included in non-current liabilities
Pension schemes net deficit (1.5) (8.3) (11.4)
Following updated actuarial assumptions at 30 September 2021, the legacy Shanks UK
defined benefit scheme moved by €9.9m from a deficit of €4.0m at 31 March 2021 to a
surplus of €5.9m at 30 September 2021. This was principally due to asset returns being
significantly better than the impact on scheme liabilities of a small increase in the
discount rate from 2.05% at 31 March 2021 to 2.10% at 30 September 2021. The deficit
for the overseas defined benefit schemes remained unchanged at €7.4m.
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 period or preceding periods 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 investments 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.
30 September 2021 30 September 2020 31 March 2021
Level 1 Level 2 Level 1 Level 2 Level 1 Level 2
€m €m €m €m €m €m
Assets
Money market funds 29.4 - 60.8 - - -
Unlisted non-current investments - 4.6 - 4.7 - 4.6
Short term investments - 11.5 - 8.5 - 9.3
Derivative financial instruments - 3.6 - - - 9.1
29.4 19.7 60.8 13.2 - 23.0
Liabilities
Derivative financial instruments - 22.3 - 38.7 - 25.5
European private placements - 26.4 - 26.9 - 26.6
Retail bonds - 307.9 - 176.2 - 179.1
- 356.6 - 241.8 - 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 is
expected during FY22 but no monies would likely become payable until FY23.
There is an ongoing criminal investigation into the production of thermally cleaned
soil at ATM. This may or may not result in a prosecution and if so, we expect such a
process will likely take many years, should it proceed. ATM will defend its conduct
strongly in such an event. Given that it is not even clear whether or what charges
might be brought in the criminal case and the charge is expected to be lower than €1m
we do not consider it appropriate at this stage to provide for this. Given these
uncertainties, it cannot be ruled out that the outcome of the criminal investigation
or the topic it concerns 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 10 years. Based on
management's assessment of the most likely outcome appropriate warranty provisions are
held.
16. Related party transactions
The Group's significant related parties remain as disclosed in note 8.2 of the 2021
Annual Report and Accounts. There were no material differences in related parties or
related party transactions in the period compared to the prior year.
17. 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.
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 fair value
remeasurements. Amortisation on Provides insight into
Underlying EBIT acquisition intangibles is excluded to profit generation and
avoid double counting of costs in trends
underlying EBIT as the Group incurs
costs each year in maintaining
intangible assets which include
acquired customer relationships,
permits and licences.
Underlying EBIT Provides insight into
margin Underlying EBIT as a percentage of margin development and
revenue trends
Underlying EBIT before depreciation, Measure of earnings and
Underlying EBITDA amortisation, impairment and profit or cash generation to assess
loss on disposal of plant, property and operational performance
equipment
Underlying EBITDA Underlying EBITDA as a percentage of Provides insight into
margin revenue margin 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 fair value
remeasurements
Earnings per share excluding
non-trading and exceptional items, Facilitates underlying
Underlying EPS amortisation of intangible assets performance evaluation
arising on acquisition and the change
in fair value of derivatives
Underlying The effective tax rate on underlying Provides a more comparable
effective 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
Return on operating excluding core net debt, IFRS 16 lease the Divisions and the
assets liabilities, derivatives, tax balances, Group excluding goodwill
goodwill and acquisition intangibles and acquisition intangible
balances
Last 12 months underlying EBIT as Provides a measure of the
adjusted by the Group effective tax Group return on assets
Post-tax return on rate divided by a 13-month average of taking into account the
capital employed net assets excluding core net debt, goodwill and acquisition
IFRS 16 lease liabilities intangible balances
and derivatives
Net cash generated from operating
activities including interest, tax and
replacement capital spend and excluding
cash flows from non-trading and
exceptional items, Covid-19 tax
deferral payments or receipts, Measure of cash generation
settlement of ATM soil liabilities and in the underlying
cash flows relating to the UK PPP business, including
contracts. Payments to fund defined regular replacement
Adjusted free cash benefit pension schemes are also capital expenditure and
flow excluded as these schemes are now excluding items of a
closed to both new members and ongoing historical nature,
accrual and as such relate to historic available to fund growth
liabilities. The Municipal contract capital projects and
cash flows are excluded because they invest in acquisitions
principally relate to onerous contracts
as reported in exceptional charges in
the past and caused by adverse market
conditions not identified at the
inception of the contracts.
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
conversion underlying EBIT of how our profits convert
into cash
Total cash flow is net debt excluding
loan fee capitalisation and
amortisation, exchange movements, Provides an understanding
Total cash flow settlement of cross currency interest of total cash flow of the
rate swaps, movement in PPP cash and Group
PPP non-recourse debt and additions to
IFRS 16 lease liabilities
17. Explanation of non-IFRS measures and reconciliations - continued
Financial Measure How we define it Why we use it
Renewi 2.0 and other
exceptional related cash
flows are presented in cash
Non-trading and flows from operating Provides useful information on
exceptional activities and are included non-trading and exceptional cash
cash flow items in the categories in note flow spend
5, net of opening and
closing Balance Sheet
positions
The borrowings relating to the UK
Core net debt includes core PPP contracts are non-recourse to
cash but excludes net debt the Group and excluding these gives
relating to the UK PPP a suitable measure of indebtedness
Core net debt contracts and lease for the Group and IFRS 16 lease
liabilities as a result of liabilities are excluded as
IFRS 16 financial covenants on the main
multicurrency green finance facility
remain on a frozen GAAP basis
The cash relating to UK PPP
contracts is not available to the
Core cash excludes cash and Group and is excluded from financial
Core cash cash equivalents relating covenant calculations of the main
to UK PPP contracts multicurrency green finance facility
therefore excluding this gives a
suitable measure of cash for the
Group
Liquidity headroom includes
core cash, money market
Liquidity funds and undrawn committed Provides an understanding of
amounts on the available headroom to the Group
multicurrency green finance
facility
Core net debt divided by an
annualised underlying
EBITDA with a net debt Commonly used measure of financial
Net debt to value based on the leverage and consistent with
EBITDA/leverage ratio terminology of financing covenant definition
arrangements and translated
at an average rate of
exchange for the period
Reconciliation of operating profit (loss) to underlying EBITDA
Group
Netherlands Belgium Mineralz
Commercial Commercial & Water Specialities Central Total
First half 2021/22 Waste Waste
€m €m services €m
€m €m
€m
Operating profit (loss) 40.2 20.2 4.0 1.2 (7.4) 58.2
Non-trading and
exceptional items 3.0 1.3 - 0.5 0.8 5.6
(excluding finance items)
Underlying EBIT 43.2 21.5 4.0 1.7 (6.6) 63.8
Depreciation and
impairment of property, 28.2 16.3 6.7 4.3 2.8 58.3
plant and equipment and
right-of-use assets
Amortisation of intangible
assets (excluding 0.4 - 0.3 0.2 2.3 3.2
acquisition intangibles)
Impairment of investment - - - 1.9 - 1.9
in associate
Non-exceptional (gain)
loss on disposal of (0.7) 0.3 - (0.2) - (0.6)
property, plant and
equipment
Underlying EBITDA 71.1 38.1 11.0 7.9 (1.5) 126.6
Group
Netherlands Belgium Mineralz
Commercial Commercial & Water Specialities Central Total
First half 2020/21 Waste Waste
€m €m services €m
€m €m
€m
Operating profit (loss) 18.3 1.4 1.7 (0.3) (4.1) 17.0
Non-trading and
exceptional items 2.8 6.9 0.6 0.3 0.7 11.3
(excluding finance items)
Underlying EBIT 21.1 8.3 2.3 - (3.4) 28.3
Depreciation and
impairment of property, 28.9 14.3 7.4 4.4 2.3 57.3
plant and equipment and
right-of-use assets
Amortisation of intangible
assets (excluding 0.6 0.1 0.3 0.1 2.2 3.3
acquisition intangibles)
Non-exceptional gain on
disposal of property, (0.3) (0.1) - - - (0.4)
plant and equipment
Underlying EBITDA 50.3 22.6 10.0 4.5 1.1 88.5
17. Explanation of non-IFRS measures and reconciliations - continued
Reconciliation of statutory profit before tax to underlying profit before tax
First half First half
2021/22 2020/21
€m €m
Statutory profit before tax 44.7 4.4
Non-trading and exceptional items in operating profit 5.6 11.3
Non-trading and exceptional finance charges (income) 0.1 (0.4)
Underlying profit before tax 50.4 15.3
Reconciliation of adjusted free cash flow as presented in the Finance Review
First half First half
2021/22 2020/21
€m €m
Net cash generated from operating activities 74.1 129.4
Exclude non-trading and exceptional provisions and working 6.0 5.5
capital
Exclude payments to fund defined benefit pension schemes 1.8 1.7
Exclude payments (receipts) relating to deferred Covid taxes 0.4 (55.0)
Exclude offtake payments for ATM soil 3.4 2.6
Exclude spend related to UK Municipal contracts 7.9 8.2
Include finance charges and loan fees paid (16.5) (18.0)
Include finance income received 5.0 4.8
Include repayment of obligations under lease liabilities (21.9) (19.9)
Include purchases of replacement items of intangible assets (6.6) (4.5)
Include purchases of replacement items of property, plant and (25.2) (21.3)
equipment
Include proceeds from disposals of property, plant & equipment 2.1 2.1
Include repayment of UK Municipal contracts PPP debt (3.5) (1.9)
Include capital received in respect of PPP financial asset net 2.8 1.8
of outflows
Include movement in UK Municipal contracts PPP cash (3.9) (1.8)
Adjusted free cash flow 25.9 33.7
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
First half First half
2021/22 2020/21
€m €m
Purchases of intangible assets (6.6) (4.5)
Purchases of replacement property, plant and equipment (25.2) (21.3)
Proceeds from disposals of property, plant & equipment 2.1 2.1
Net replacement capital expenditure (29.7) (23.7)
Growth capital expenditure (7.5) (3.3)
Total capital spend as shown in the cash flow in the Finance (37.2) (27.0)
Review
First half First half
2021/22 2020/21
€m €m
Purchases of intangible assets (6.6) (4.5)
Purchases of property, plant and equipment (replacement and (32.7) (24.6)
growth)
Proceeds from disposals of property, plant & equipment 2.1 2.1
Purchases and disposal proceeds of property, plant and equipment
and intangible assets within Investing activities in the (37.2) (27.0)
consolidated Statement of Cash Flows
Reconciliation of property, plant and equipment additions to replacement capital
expenditure as presented in the Finance Review
First half First half
2021/22 2020/21
€m €m
Property, plant and equipment additions (note 10) (23.2) (20.5)
Intangible asset additions (note 10) (5.8) (4.5)
Exclude growth capital expenditure - as disclosed in the Finance 7.5 3.3
Review
Movement in capital creditors (included in trade and other (9.0) (4.1)
payables)
Proceeds from disposals of property, plant and equipment 2.1 2.1
Government grant received in a prior period transferred to (1.3) -
property, plant and equipment
Replacement capital expenditure per the Finance Review (29.7) (23.7)
17. Explanation of non-IFRS measures and reconciliations - continued
Reconciliation of total cash flow as presented in the Finance Review
Restated*
First half
First half
2021/22
2020/21
€m
€m
Total cash flow (1.9) 67.7
Additions to lease liabilities (15.9) (24.7)
Repayment of obligations under lease liabilities 21.9 19.9
Movement in PPP non-recourse debt 3.5 4.5
Movement in PPP cash and cash equivalents 3.9 1.3
Capitalisation of loan fees net of amortisation (0.3) (0.5)
Exchange movements 2.1 6.3
Settlement of cross currency interest rate swaps 6.4 -
Movement in total net debt (note 11) 19.7 74.5
*The prior period comparatives for total cash flow, movement in PPP non-recourse debt,
movement in PPP cash and cash equivalents and repayments of obligations under lease
liabilities have been restated as explained in note 2.
Reconciliation of total net debt to net debt under covenant definition
Restated* Restated*
30 September
30 September 31 March
2021
2020 2021
€m
€m €m
Total net debt (648.4) (684.4) (668.1)
Less PPP non-recourse debt 100.7 100.8 105.1
Less PPP cash and cash equivalents (21.1) (16.6) (17.3)
Less IFRS 16 lease liabilities 232.8 219.1 236.7
Net debt under covenant definition (336.0) (381.1) (343.6)
*The comparatives for PPP non-recourse debt and PPP cash at September 2020 and March
2021 and total net debt and IFRS 16 lease liabilities at September 2020 have been
restated due to prior year adjustments as explained in note 2.
INDEPENDENT REVIEW REPORT TO RENEWI PLC
Introduction
We have been engaged by the Company to review the condensed set of financial
statements in the half-yearly financial report for the six months ended 30 September
2021 which comprises Consolidated Interim Income Statement, Consolidated Interim
Statement of Comprehensive Income, Consolidated Interim Balance Sheet, Consolidated
Statement of Changes in Equity and Consolidated Interim Statement of Cash Flows.
We have read the other information contained in the half-yearly financial report and
considered whether it contains any apparent misstatements or material inconsistencies
with the information in the condensed set of financial statements.
Directors' responsibilities
The half-yearly financial report is the responsibility of and has been approved by the
directors. The directors are responsible for preparing the half-yearly financial
report in accordance with the Disclosure Guidance and Transparency Rules of the United
Kingdom's Financial Conduct Authority.
As disclosed in note 2, the annual financial statements of the group will be prepared
in accordance with UK adopted international accounting standards. The condensed set of
financial statements included in this interim financial report has been prepared in
accordance with UK adopted International Accounting Standard 34, Interim Financial
Reporting.
Our responsibility
Our responsibility is to express to the Company a conclusion on the condensed set of
financial statements in the half-yearly financial report based on our review.
Scope of review
We conducted our review in accordance with International Standard on Review
Engagements (UK and Ireland) 2410, ''Review of Interim Financial Information Performed
by the Independent Auditor of the Entity'', issued by the Financial Reporting Council
for use in the United Kingdom. A review of interim financial information consists of
making enquiries, primarily of persons responsible for financial and accounting
matters, and applying analytical and other review procedures. A review is
substantially less in scope than an audit conducted in accordance with International
Standards on Auditing (UK) and consequently does not enable us to obtain assurance
that we would become aware of all significant matters that might be identified in an
audit. Accordingly, we do not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that causes us to believe that
the condensed set of financial statements in the half-yearly financial report for the
six months ended 30 September 2021 is not prepared, in all material respects, in
accordance with UK adopted International Accounting Standard 34 and the Disclosure
Guidance and Transparency Rules of the United Kingdom's Financial Conduct Authority.
Use of our report
Our report has been prepared in accordance with the terms of our engagement to assist
the Company in meeting its responsibilities in respect of half-yearly financial
reporting in accordance with the Disclosure Guidance and Transparency Rules of the
United Kingdom's Financial Conduct Authority and for no other purpose. No person is
entitled to rely on this report unless such a person is a person entitled to rely upon
this report by virtue of and for the purpose of our terms of engagement or has been
expressly authorised to do so by our prior written consent. Save as above, we do not
accept responsibility for this report to any other person or for any other purpose and
we hereby expressly disclaim any and all such liability.
BDO LLP
Chartered Accountants
London, UK
8 November 2021
BDO LLP is a limited liability partnership registered in England and Wales (with
registered number OC305127).
══════════════════════════════════════════════════════════════════════════════════════
ISIN: GB00BNR4T868
Category Code: IR
TIDM: RWI
LEI Code: 213800CNEIDZBL17KU22
OAM Categories: 1.2. Half yearly financial reports and audit
reports/limited reviews
Sequence No.: 126307
EQS News ID: 1247180
End of Announcement EQS News Service
══════════════════════════════════════════════════════════════════════════
4 fncls.ssp?fn=show_t_gif&application_id=1247180&application_name=news&site_id=refinitiv
References
Visible links
1. https://eqs-cockpit.com/cgi-bin/fncls.ssp?fn=redirect&url=37ecb75b31f5bfdefa8afbb7bd40c228&application_id=1247180&site_id=refinitiv&application_name=news
2. https://eqs-cockpit.com/cgi-bin/fncls.ssp?fn=redirect&url=7d3aae7f58a88621529fc7ec02ed4813&application_id=1247180&site_id=refinitiv&application_name=news
3. https://eqs-cockpit.com/cgi-bin/fncls.ssp?fn=redirect&url=5bcc0b570b974c950f6e4feb6c4ff45d&application_id=1247180&site_id=refinitiv&application_name=news
============Recent news on Renewi
See all newsREG-Renewi plc Renewi plc: Total Voting Rights
AnnouncementREG-Renewi plc Renewi plc: Pre-close trading update
AnnouncementREG-Renewi plc Renewi plc: Block Listing Interim Review
AnnouncementREG-Renewi plc Renewi plc: Total Voting Rights
AnnouncementRCS - Renewi PLC - Renewi’s organic growth commitments
Announcement