REG-Renewi plc Renewi plc: Pre-close trading statement

RenewiAnnouncement

23/03/2022 07:15

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   Renewi plc (RWI)
   Renewi plc: Pre-close trading statement

   23-March-2022 / 07:00 GMT/BST
   Dissemination of a Regulatory Announcement that contains inside
   information according to REGULATION (EU) No 596/2014 (MAR), transmitted by
   EQS Group.
   The issuer is solely responsible for the content of this announcement.

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   23 March 2022

                                        

                                   Renewi plc

                                        

   ("Renewi", the "Company" or, together with its subsidiaries, the "Group")

                                        

                          Pre-close trading statement

                                        

   Renewi plc  (LSE: RWI),  the leading  European waste-to-product  business,
   announces its pre-close trading update for the year ending 31 March 2022. 

    

   Overall trading for the Group in the period has remained strong, with  the
   Board expecting performance for the year ending 31 March 2022 ("FY22")  to
   be ahead of previous expectations.

    

   Continued positive trading performance

    

   We are, of course, appalled by events in Ukraine.  While the Group has  no
   business exposure in Russia or Ukraine, the Board recognises the increased
   geopolitical instability and potential  macroeconomic impact.  Although  a
   significant and  widespread  economic  slowdown  could  eventually  impact
   Renewi, the  Board is  confident that  the Group  remains well  placed  to
   continue to operate as normal in the current circumstances.

    

   Renewi has a resilient business model in that it:

     • provides an  essential  service  across all  sectors  of  the  Benelux
       economies, with no material exposure to any one sector;
     • has demonstrated  an ability  to pass  inflationary costs  through  to
       customers. Price increases implemented on 1 January 2022 are  expected
       to cover 2022 cost inflation;
     • has hedged the majority of its energy requirements for 2022; and
     • has existing  guidance  for  FY23  that  anticipates  a  reduction  in
       recyclate prices from their current highs. 

   Renewi has continued to trade strongly through January and February,  with
   ongoing high recyclate prices and  good cost control more than  offsetting
   volumes that continued  to be adversely  affected by Covid  restrictions. 
   Cash flow performance has been in  line with expectations and the  balance
   sheet remains strong, with leverage at year-end expected to be around 1.5x
   net debt to EBITDA. 

    

   We have extended the Group's main banking facility, with most  commitments
   now maturing in May 2025.   At the same time, the size of the facility has
   been reduced to €400m from €495m, removing excess liquidity following  the
   Green Bond issuance completed in 2021. 

    

   Outlook

    

   Following the continued strong performance, the Board expects  performance
   for FY22 to be ahead of previous expectations.

    

   We remain confident in both the  medium and the long-term outlook for  the
   business.  Our  strategic  growth  programme,  driven  by  our  Innovation
   pipeline, is on track to deliver significant additional earnings over  the
   next three years and  beyond, as is our  internal Renewi 2.0  digitisation
   and simplification programme.

    

   We continue to see positive structural growth drivers as Dutch and Belgian
   regional  governments  progressively  tax  carbon  emitters,   incentivise
   recycling over incineration, and promote the use of secondary  materials. 
   This translates to positive  growth opportunities across Renewi's  markets
   as we assist our customers in recycling more and in using our high-quality
   secondary materials.

    

   New accounting regulations

    

   Total onerous contract provisions  are in line  with expectations and  are
   expected to remain unchanged overall, prior  to the IAS 37 adjustment,  as
   referenced below.

    

   From 1  April 2022,  the company  will  apply the  Amendments to  IAS  37,
   "Onerous contracts - costs of  fulfilling a contract."  Consequently,  all
   costs required for the  fulfilment of a contract  should be included  when
   assessing the  onerous  contract  provision, including  an  allocation  of
   divisional central overheads.  The Group  is in the process of  finalising
   the impact which is estimated to increase reported annual underlying  EBIT
   from 1 April 2022 by c€5m.  An  increase of c€50m will be recorded in  the
   onerous contract provisions, which have up to 18 years still to run.  This
   increase is taken as an adjustment to retained earnings on 1 April.  There
   is no  impact  on cash  and  this adjustment  reflects  no change  in  the
   underlying performance of the contracts.

    

   Following on from  an IFRS  clarification on the  accounting treatment  of
   costs associated  with  configuring or  customising  application  software
   under cloud computing  arrangements, the  Group has  determined that  most
   costs relating  to its  cloud-based software  solutions can  no longer  be
   capitalised.   This  change  in  accounting  policy  will  result  in   an
   exceptional charge of c€4m in the  current year and c€7m in prior  periods
   relating to  the derecognition  of assets  previously capitalised.   Going
   forward, the  accounting  policy  will  be  to  expense  the  majority  of
   investments in cloud computing arrangements. These changes have no  impact
   on cash.

    

   For further information:
                                   
    
   Renewi plc
                                  Paternoster Communications
    
                                   
   Adam Richford, Head of IR
                                  Tom Buchanan
   +44 7976 321 540
                                  +44 20 3012 0241
    
   Michelle James, Communications Ben Honan

   +44 7773 813 180               +44 20 3012 0241

                                   
    1 www.renewi.com
                                   
    

    

    

   About Renewi

    

   Renewi is a pure-play recycling company  with a focus on extracting  value
   from waste and used materials rather than disposal through incineration or
   landfill. The company also plays a key role in limiting resource  scarcity
   through the creation  of secondary  materials, and by  so doing  addresses
   both social and regulatory trends  and contributes to creating a  cleaner,
   greener world.

    

   Renewi's vision  is to  be  the leading  waste-to-product company  in  the
   world's most  advanced  circular  economies. By  opting  to  recycle,  the
   company avoids emissions of  more than 3  million tonnes of  CO2 and as  a
   result  plays  a   part  in   contributing  to   a  sustainable   society,
   transitioning to a  circular economy  and driving the  progress needed  to
   halt climate change.

    

   Renewi, which draws on innovation and the latest technology to turn waste
   into useful materials - paper, metals, plastics, glass, wood, building
   materials, compost and energy - employs over 6 500 people who work on 165
   operating sites in 6 countries across Europe and the UK. Renewi is
   recognised as a market leader in Benelux and a regional European leader in
   recycling.

    

   Visit our website for more information:  2 www.renewi.com.

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   ISIN:          GB00BNR4T868
   Category Code: TST
   TIDM:          RWI
   LEI Code:      213800CNEIDZBL17KU22
   Sequence No.:  150796
   EQS News ID:   1308943


    
   End of Announcement EQS News Service

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