REG-Renewi plc Renewi plc: Preliminary Results
25/05/2023 07:15
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Renewi plc (RWI)
Renewi plc: Preliminary Results
25-May-2023 / 07:00 GMT/BST
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25 May 2023
A STRONG PERFORMANCE AND CONTINUED STRATEGIC PROGRESS
Renewi plc (LSE: RWI), the leading European waste-to-product business, announces its
unaudited results for the year ended 31 March 2023. ("Renewi", the "Company" or the
"Group")
Financial Highlights
• Revenue of €1,892m and underlying EBIT# of €132.9m similar to prior year (FY22:
€1,869m and €133.6m respectively)
• Effectively mitigated lower recyclate prices, lower volumes and high inflation through
ongoing cost control and customer price increases
• Basic EPS reduced from 93 cents to 79 cents
• Group underlying EBIT margin of 7.0% (FY22: 7.1%) with Commercial, Maltha and Coolrec
all operating close to 10% margin
• Statutory profit after tax of €66.6m (FY22: €75.4m)
• Core net debt* increased to €370.6m (FY22: €303.0m) due to the acquisition of Renewi
Westpoort (Paro) during the year. Net debt to EBITDA increased to 1.8x (FY22:1.4x)
Strategic and Operational Highlights
• Good progress made on our key strategic initiatives to deliver €60m of additional EBIT
by FY26, with €20m delivered so far, Renewi 2.0 largely completed, €60m of the
investment pipeline deployed and Mineralz & Water recovery ongoing
• Customer net promoter score increased from 3 to 18, supported by digitisation and
process improvements
• Volumes lower due to reduced activity in certain market segments in the Netherlands,
increased pressure from secondary disposers and focus on margin accretive volumes
• Recycling rate (rebased) increased to 63.6%, resulting in 7mT of secondary materials
being put back into reuse
• Scope 1, 2 and 3 emissions methodology externally validated and application for SBTi
underway
Outlook
• The Group continues to trade in line with market expectations for FY241
• Recycled metal, paper, and plastics prices expected be more stable around current
levels in FY24, except wood which remains strong
• Price increases and tailwinds generated by Renewi 2.0, Mineralz & Water recovery and
investments are expected to cover cost inflation including energy and wages
• Ambition to accelerate revenue growth targeting €3bn in five years at high single
digit margins as a minimum. Growth will be achieved through market share gains, by
extracting more value from waste by deploying advanced recycling and by targeted
acquisitions. EBIT improvement is expected to grow even faster, driven by growth and
cost reduction through digitisation
• Cash generation expected to improve consistently over time with Covid tax deferrals
and shipment of Mineralz & Water TGG coming to an end
• Recommencement of a dividend for FY24 alongside a continued programme to invest
capital in our core businesses and potential further acquisitions to drive growth
# The 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.
1 Consensus expectations are for underlying Group FY24 Revenue of €1.96bn, EBITDA of €258m
and EBIT of €128m. See Analysts & Coverage section of the Renewi investor relations
website for more details
Results
UNDERLYING NON-STATUTORY FY23 FY22# Change
Revenue €1,892.3m €1,869.2m +1%
Underlying EBITDA1 €255.6m €262.6m -3%
Underlying EBIT1 €132.9m €133.6m -1%
Underlying EBIT1 margin 7.0% 7.1% 0.1pps
Adjusted free cash flow €72.9m €91.3m
Free cash flow1 €39.8m €60.5m
Core net debt* €370.6m €303.0m
STATUTORY FY23 FY22#
Revenue €1,892.3m €1,869.2m +1%
Operating profit €121.4m €124.0m -2%
Profit before tax €93.1m €95.7m -3%
Profit for the year €66.6m €75.4m -12%
Basic EPS (cents per share) 79c 93c
Cash flow from operating activities €209.6m €187.3m
Total net debt (including IFRS16 leases) €685.7m €594.5m
1The definition and rationale for the use of non-IFRS measures are included in note 17.
#Certain March 2022 cash flow and debt values have been adjusted to reflect prior year
adjustments as referred to in note 2.
*Core net debt used for banking leverage calculations excludes the impact of IFRS 16 lease
liabilities and UK PPP net debt.
Commenting on these results, Otto de Bont, Chief Executive Officer, said:
“Renewi has had another successful year. Thanks to the great efforts of our employees and
the loyalty of our customers we have been able to cope with some extraordinary
circumstances, including high inflation. We have also achieved significant progress with
the execution of our strategy: increasing our recycling rate, our investments in advanced
sorting in Belgium, producing secondary materials to the highest standards for children’s
toy production and extending our leading position in the Netherlands by a key acquisition
in the construction and demolition market in Amsterdam.
“Our purpose has always been to give new life to used materials, and our vision is to be
the leading waste-to-product company in Europe’s most advanced circular economies. We are
proud to be the leading operator in the Netherlands and Belgium, where the adoption of the
circular economy is one of the highest within the European Union. We have made significant
progress during the year to build on our position as a leader in the circular economies in
which we operate.
“Although the macroeconomic environment remains unpredictable, Renewi has proven that it
is able to operate successfully in the recent years of high volatility, adapting our cost
structure to reduced volumes and protecting our margins by passing on cost increases to
customers. Our dynamic pricing policy, where we link the price for our waste collection to
the index price of the recyclates we produce from waste, has proven successful, especially
in times where some recyclate prices fluctuate. We expect recyclate prices to remain more
stable at normalised levels in the coming year. Volumes in the year are expected to
develop in line with economic activity.
“With the Renewi 2.0 programme benefitting the business, the recovery of Mineralz & Water
progressing and the investment in new lines coming on stream, we are confident in Renewi’s
ability to grow in the future. Our investment programme is ongoing, and the business
continues to identify investment opportunities that are expected to yield strong returns.
In addition, Renewi anticipates a consistently improving cash position going forward due
to efficiencies across the business and an end to deferred Covid tax payments. We now
expect to be in a position to pay a dividend for FY24.
“Renewi is now well positioned to focus on growing both the top line and profitability of
its core businesses for the longer-term. Over the next five years, our aim is to
accelerate revenue growth targeting €3bn at high single digit margins as a minimum. We
will achieve growth through market share gains, by extracting more value from waste by
deploying advanced recycling and by targeted acquisitions. EBIT improvement is expected to
grow even faster, driven by growth and cost reduction through digitisation.
For further information:
Paternoster Communications Renewi plc
+44 20 3012 0241 +44 7976 321 540
Tom Buchanan Adam Richford, Head of Investor Relations
Notes:
1. A copy of this announcement is available on the Company’s website,
( 1 www.renewi.com/investors)
2. Renewi will hold an analyst presentation at 9.30 a.m. BST / 10.30 a.m. CEST today
3. Webcast: To watch and listen to the live webcast please pre-register 2 via this
link.
4. Today’s results presentation will also be available on the website.
Forward-looking statements
Certain statements in this announcement constitute “forward-looking statements”.
Forward-looking statements may sometimes, but not always, be identified by words such as
“will”, “may”, “should”, “continue”, “believes”, “expects”, “intends” or similar
expressions. These forward-looking statements are subject to risks, uncertainties and
other factors which, as a result, could cause Renewi plc’s actual future financial
condition, performance and results to differ materially from the plans, goals and
expectations set out in the forward-looking statements. Such statements are made only as
at the date of this announcement and, except to the extent legally required, Renewi plc
undertakes no obligation to revise or update such forward-looking statements.
Chief Executive Officer’s Statement
Overview
Renewi delivered a strong performance in FY23, and our business coped well in a
macroeconomic environment that saw cost inflation across our operations as well as
volatility in recyclate prices. As anticipated, revenues were stable year on year, with an
underlying decline in input volumes. The normalisation in recyclate prices during the year
from all-time highs was balanced by a disciplined pricing strategy with our customers. In
this environment we were pleased to see strong loyalty from customers, and our ability to
pass our input costs on to them demonstrates both the quality and essential nature of our
services. Our activities are driven by an increasingly favourable legislative environment
in our core markets, and we expect governments will continue to legislate to mandate
higher levels of recycling in the future.
We delivered consistent EBIT margins, as we took action to eliminate loss-making volumes,
particularly in our Belgium commercial business and maintained tight cost controls across
the company. In a competitive marketplace we have been able to achieve low customer churn
and win a number of important new commercial contracts. Our customer Net Promoter Score
has further improved from 3 to 18, against a long-term target of 23 – confirming we are on
the right track to further improve our customer services. This is primarily as a result of
the significant investment in this key area including the digitisation aspects of Renewi
2.0.
Our key strategic initiatives aimed at delivering sustained growth for Renewi are
continuing to deliver according to plan. We will begin to see the benefits of significant
capital investment in our advanced sorting facilities in Belgium, and the building of the
new rigid plastics recycling facility in Acht remains on schedule.
We are strengthening our positions in certain sectors of our core markets, including
construction, healthcare and retail. During the year, we acquired Renewi Westpoort from
Paro to further strengthen our leading position in the construction and demolition market
in the Netherlands, and to give us nationwide coverage for the large building companies.
At the same time we continue to explore new uses for our secondary materials with a
landmark deal signed with Playmobil during the year to produce a range of toys containing
>80% recycled plastics provided by our Coolrec business. In addition, we recently received
an award for a fully closed loop solution with Electrolux where inner liners for new
fridges are to be made of >70% recycled fridge plastics from Coolrec.
In a year where the effects of climate change have continued to drive news headlines, with
significant adverse weather events and record temperatures, the imperative to achieve
carbon reduction goals as set by governments has become even more obvious. The actions of
legislators are encouraging corporates to pursue net zero strategies including the
procurement of low carbon secondary materials, as well as zero waste strategies. By giving
new life to used materials and delivering high quality recyclates that have a much lower
carbon footprint than similar materials derived from virgin materials, we can make a
significant contribution to reducing carbon emissions.
We are proud to be a major operator in the Netherlands and Belgium, where the adoption of
the circular economy is one of the highest within Europe. This position has been driven to
some extent by the positive legislation that has been put in place by national governments
that recognise the imperative to increase recycling rates and change customer and consumer
behaviours. Although we acknowledge that there is still much that needs to be done, we
recognise that we have significant embedded expertise that can be brought into other
territories that will inevitably legislate to bring circularity into their own economies.
Group financial performance
Group Summary Revenue Underlying EBIT
FY23 FY22 Variance FY23 FY22 Variance
€m €m % €m €m %
Commercial Waste 1,397.3 1,360.5 3% 129.3 135.7 -5%
Mineralz & Water 190.9 193.9 -2% 0.5 5.8 -91%
Specialities 348.6 350.1 0% 17.1 4.1 >100%
Group central services - - (14.0) (12.0) -17%
Inter-segment revenue (44.5) (35.3) - -
Total 1,892.3 1,869.2 1% 132.9 133.6 -1%
The underlying figures above are reconciled to statutory measures in note 17 in
consolidated financial statements.
Total revenues were up 1% to €1,892.3m and underlying EBIT was down 1% to €132.9m. Profit
before tax decreased by €2.6m to €93.1m. Earnings per share fell to 79 cents (FY22: 93
cents) driven by an increase in the effective tax rate.
Outbound revenue from the sale of recycled materials increased to €391.4m (FY22: €372.6m)
principally driven by a €23.5m increase in Specialities from Maltha and Coolrec and robust
recyclate revenue in Commercial.
The Commercial Division, representing over 73% of Group revenues, increased revenue by 3%.
Underlying EBIT fell by 5% driven by cost inflation, higher utility costs, wage inflation,
lower volumes and normalisation of recyclate prices with a more pronounced impact in the
Netherlands.
The Mineralz & Water Division saw revenues decline by 2%, and underlying earnings declined
by €5.3m to €0.5m due to increased TGG cost accruals and landfill provisions. Performance
at the waterside was strong, despite an operational issue that required unplanned
maintenance. These issues have now been resolved. On the soil side we made good progress
in the development of producing building products on specification, with sand and filler
quality working towards the requirements of the concrete industry. This will allow us to
start increasing our throughput of contaminated soil in the second half of FY24. We also
have increased visibility on legacy offtake and have several contracts signed and in
negotiation. To facilitate offtake we anticipate higher prices, which has impacted
underlying EBIT by an increase in disposal cost accruals.
The Specialities Division saw flat revenues year-on-year with a decline in Municipal
offset by strong revenue growth at Coolrec and Maltha. Underlying EBIT increased by €13.0m
to €17.1m principally driven by Maltha, along with the previously announced €5m benefit
from the IAS 37 accounting changes for Municipal.
Group central services costs have increased by €2.0m in the year as a result of increased
investments in digitisation.
Renewi delivered adjusted free cash flow of €72.9m (FY22: €91.3m as adjusted for the prior
year restatement as referred to in note 2) reflecting an increase in replacement capital
expenditure and tax payments. As shown in the funds flow performance, there was a total
cash outflow of €64.9m (FY22: inflow of €29.4m) driven by the initial net debt impact of
€66m to acquire the Renewi Westpoort business from Paro, taking core net debt to €371m
(FY22: €303m). Accordingly, core net debt to EBITDA increased to 1.8x at 31 March 2023,
FY22: 1.4x). Leverage is still comfortably within the Board’s long-term target of 2.0x.
Liquidity headroom including core cash and undrawn facilities was also strong at €323m.
We are continuing to prioritise the allocation of our capital towards the maintenance and
enhancement of our existing assets, investment in new growth projects, and participating
in the consolidation of our industry through selective acquisitions. As exceptional
expenditure on the Renewi 2.0 programme is coming to an end, and legacy items of
expenditure including repayment of Covid taxes and placement of TGG are expected to be
completed in the next 24 months, the Board intends to reinstate a progressive dividend at
the end of the coming financial year.
Sustainability means a need for circularity
Our purpose has always been to give new life to used materials, and our vision is to be
the leading waste-to-product company in Europe’s most advanced circular economies. We have
made significant progress during the year to build on our position as a leader in the
circular economies in which we operate.
Despite a period of economic uncertainty, the drive from Governments and industry towards
decarbonisation has continued to gain momentum, driven by tangible evidence of the effects
of global warming that have become increasingly evident during the year. This has
manifested itself in an increasing demand for secondary materials from manufacturers, and
more legislation aimed at increasing recycling rates both from domestic consumers and
corporate entities.
Sustainability remains at the heart of everything we do. Our purpose, our vision and our
business strategy have sustainability at their core. In keeping with our purpose, our
business and sustainability strategies are inextricably linked and mutually supportive. In
practical terms this means we focus on three key objectives: Enable the circular economy,
Reduce our carbon emissions and Care for people.
Restating our recycling rate to updated international reporting standards
During FY23 a comprehensive external review of our sustainability calculation
methodologies to ensure adherence to the latest EU guidance and Greenhouse Gas (GHG)
protocol has been completed. This resulted in an updated codification of the approach, and
we have updated our baseline and targets for Scope 1, 2 and 3 Carbon emissions and Scope 4
Carbon avoidance, as well as the recycling rate. Changes in methodology reduced the
reported waste volumes processed, waste volumes recycled, and scope 4 carbon avoidance,
and increased the scope 1 and 2 emissions. Scope 3 is reported for the first time. The
revised baseline FY22 values are shown in the table below.
Following the work in FY23 we have committed to set near-term targets to the Science Based
Targets Initiative (SBTi). Our application process has started and we are planning on
submitting our targets for validation by SBTi over the coming months. Our carbon reduction
ambition by FY31, from a FY22 baseline as well as our restated figures are laid out in the
table below.
FY22 FY23
Metric Target
(baseline) (actual)
Volume of waste handled / recycled (mT) 11.5 / 7.1 11.0 / 7.0 Not applicable
Recycling rate 61.8% 63.6% 75%
Scope 1 & 2 CO2 emissions 640 580 50% reduction by 2030 (FY31)
(mT CO2 equivalent)
Scope 3 CO2 emissions 1.2 N/A 25% reduction by 2030 (FY31)
(mT CO2 equivalent)
Scope 4 CO2 carbon avoidance 2.6 2.5 Increase with recycling rate
(mT CO2 equivalent)
Metrics using previous methodology, reported for historical comparability
Recycling rate 67.2% 69.4%
Scope 4 CO2 carbon avoidance 3.1 No longer calculated
(mT CO2 equivalent)
The recycling rate increased in FY23 relative to FY22 following the investments in new
sorting and processing installations, as well as the acquisition of Renewi Westpoort
(Paro), and notwithstanding portfolio changes in M&W where some high recycling rate low
margin activities were stopped or sold. Our ambition remains to achieve 75% recycling, our
Mission 75 programme, despite the fact that due to the tighter definition our baseline has
been reduced by 6 percentage points.
Sustainability performance during the year
During the last year we have made good progress with our strategy, including the following
highlights:
Enable the circular economy
• Recycling rate increased by 1.8% points to 63.6%
• Scope 4 carbon avoidance of 2.5mT generated by producing low carbon recyclates that
replace higher carbon virgin materials
• Our new state-of-the-art advanced sorting facility in Ghent was opened, achieving a
>50% recycling rate on a 125kT residual waste stream which was previously incinerated
• We decontaminated 1mT of wastewater, an achievement we are particularly proud of in
light of current droughts throughout Europe
Reduce our carbon emissions
• Scope 1 and 2 reduced footprint by 60Kt (-9%)
• Scope 3 carbon footprint is now mapped at 1.2mT for the FY22 baseline year and will
report on this going forward
• We have committed to set near-term science based targets to SBTi
• Belgium’s tallest wind turbine, located on our Ghent facility, has started generating
power
Care for people
• Our employee Net Promoter Score has further increased to 24 (FY22: 18) and our
diversity target based on women in management has further improved to 24% (FY22: 22%)
• The total number of complaints received by our sites has remained low for a second
year in a row, dropping further from 156 in FY22 to 133 in FY23, driven by continuous
investments in technology, staff awareness training and active communication with the
community
• Major environmental incidents and fires have decreased significantly from 19 in FY22
to 3 in FY23
Progress against each of our specific targets will be detailed in full in both our
forthcoming Annual Report and our Sustainability Review.
Our strategy for the long term
We have a clear and consistent business strategy to deliver long-term growth in both
margins and volumes. To date, our strategy has been focused on margin expansion through
increased recycling rates and the production of higher quality materials. In addition, we
are seeking to expand our market share both in our core territories and internationally.
Our strategy is based on three pillars:
1. Be a leader in recycling. Our ambitious goal, launched as “Mission75”, is to increase
our recycling rate to 75% from the current 64%, which we believe is already the
highest in Europe. We continue to focus on diverting waste away from incineration as a
key driver to achieving this mission.
2. Be a leader in secondary material production. For production companies currently using
primary materials, the easiest way to improve their circularity is by using high
quality, low carbon secondary materials that they can drop into their existing
production processes. To help them do this, we are continuing to invest in increased
valorisation through advanced processing facilities to deliver materials of the
required quality.
3. Grow market share. Our aim is to achieve this through delivering organic growth and by
taking advantage of the consolidation opportunities in our sector both within our core
markets and potentially in new territories that are suited to our waste-to-product
model. In this endeavour we have three areas of focus:
• Organic investment opportunities offering attractive returns profiles of greater than
16% pre-tax returns. These include more than €100m of investments already committed in
our innovation pipeline and further opportunities that are currently being assessed.
• M&A within the Netherlands and Belgium. These investment opportunities have the
potential to consolidate and enhance our market position in attractive sectors.
• M&A outside of the Netherlands and Belgium. We have the potential to take our
expertise and waste-to-product model into other European jurisdictions with more
advanced circular economies. In the immediate term there are opportunities to expand
in niche waste segments where collection is not a requirement of the business model:
glass, white goods and mattresses being good examples. Longer-term, we believe our
waste collection model can be replicated in other territories, where the development
of the circular economy will be driven by EU legislation.
Collectively across these three focus areas, we have committed over €175m over the last
two years, including more than €100m of investment in our innovation pipeline and €66m for
the acquisition of assets from Paro. These investments are being funded by the Group’s
cash flow and borrowing capacity.
Update on the Group’s value drivers
We have three specific areas of activity to grow underlying profitability in the period to
FY26. These are our ongoing investments in circular innovations, the recovery of our
Mineralz & Water business and the Renewi 2.0 efficiency programme. Together these drivers
will deliver €60m in total by FY26 and we are on track to achieve this, although the
Mineralz & Water recovery is taking longer than expected. Each of these three value
drivers is discussed in more detail below:
1. Our investments in circular innovations: Innovation Pipeline
We are investing in innovative solutions to increase recycling rates and the quality of
the recyclates we produce, the first two pillars of our strategy to deliver an additional
EBIT of €20m by FY26. Our programme to deploy over €100m of investments across multiple
areas is progressing well, with €60m currently deployed. Each project will exceed our
threshold for pre-tax return on operating assets of 16% once the facilities are fully up
and running. We also have a pipeline of potential innovation projects for future
investments. Full detail is shown below.
Project Status
Three lines approved. Two out of three progressing in line
with expectations:
Advanced residual waste sorting • Ghent: production started January 2023 and operating
Flanders as expected.
• Puurs: civil works started, on track, and new baling
area ready and in production.
• Limburg site: new site acquisition delayed due to
permitting process.
Organics: expanded depackaging Installation completed and operating as expected.
capacity
Organics: bio-gas to bio-LNG Installation completed and operating as expected.
Ghent and Waalwijk investments complete.
Plastic recycling Acht progress on track: civil works completed and
construction of technical equipment progressing well.
Commissioning beginning Q2 as planned.
Investment of chemical recycling of PUR foam facility in
Mattress recycling Lelystad. First international expansion completed with the
integration of TFR Group in the UK.
Polyurethane recycling Technical and commercial feasibility studies ongoing.
Wood flake for low-carbon steel Project stopped for commercial reasons.
2. The recovery of our Mineralz & Water business
We are witnessing an emerging demand from the construction sector who are keen to improve
the circularity of their operations by incorporating secondary materials into their
building products. The secondary products also provide a financially attractive
alternative to the scarce primary materials. At ATM we produce three building products
from contaminated soil: gravel, which is selling well, and sand and filler which we are
selling in restricted volumes while we work on getting the quality of sand and filler in
line with the requirements of the concrete industry.
To meet the necessary quality we have invested in further treatment equipment, which will
come on stream over the summer. This will allow us to increase our TGG throughput in the
second half of FY24. This is an important and final step in the recovery of M&W, as we
will increase both input and output volumes accordingly.
3. Renewi 2.0
Our three-year Renewi 2.0 programme is largely complete and the targeted €20m underlying
EBIT run rate will be achieved in FY24 and we are in the process of handing over the
remaining activities to the divisions. The programme has delivered MyRenewi, a portal used
by over 100,000 of our customers, to place and modify orders, to add services, to review
their carbon footprint related to waste produced and their invoices among other things.
Another part was the delivery of a new web shop for new customers and a portal for
suppliers. In addition to the gained efficiency, our customer NPS score improved from 3 to
18 and employee NPS improved from 18 to 24. The Renewi 2.0 programme will be delivered
with an expected programme expenditure €12m less than our original €40m expectations.
We will continue to work on our efficiency and digitisation to further improve customer
satisfaction and employee engagement and to reduce our cost base further.
Group Outlook and Dividend
Although the macroeconomic environment remains unpredictable, Renewi has proven that it is
able to operate successfully in the recent years of high volatility, adapting our cost
structure to reduced volumes and protecting our margins by passing on cost increases to
customers. Our dynamic pricing policy, where we link the price for our waste collection to
the index price of the recyclates we produce from waste, has proven successful, especially
in times where some recyclate prices fluctuate. We expect recyclate prices to remain more
stable at normalised levels in the coming year. Volumes in the year are expected to
develop in line with economic activity.
With the Renewi 2.0 programme benefiting the business, the recovery of Mineralz & Water
progressing and the investment in new lines coming on stream, we are confident in Renewi’s
ability to grow in the future.
Our investment programme is ongoing, and the business continues to identify investment
opportunities that are expected to yield strong returns. In addition, Renewi anticipates a
consistently improving cash position going forwards due to efficiencies across the
business and an end to deferred Covid tax payments. We now expect to be in a position to
pay a dividend for FY24.
Renewi is now well positioned to focus on growing both the top line and profitability of
its core businesses for the longer-term. Over the next five years, our aim is to
accelerate revenue growth targeting €3bn at high single digit margins as a minimum. We
will achieve growth through market share gains, by extracting more value from waste by
deploying advanced recycling and by targeted acquisitions. EBIT improvement is expected to
grow even faster, driven by growth and cost reduction through digitisation.
Operating Review for the year ended 31 March 2023
Commercial Waste
Commercial Waste Revenue Underlying EBIT Operating profit
FY23 FY22 FY23 FY22 FY23 FY22
Netherlands Commercial 932.0 896.2 76.9 93.1 69.4 89.1
Belgium Commercial 468.4 466.9 52.4 42.6 65.3 40.4
Intra-segment revenue (3.1) (2.6) - - - -
Total (€m) 1,397.3 1,360.5 129.3 135.7 134.7 129.5
Year on year variance %
Netherlands Commercial 4% -17% -22%
Belgium Commercial 0% 23% 62%
Total 3% -5% 4%
Underlying Return on
EBIT margin operating assets
FY23 FY22 FY23 FY22
Netherlands Commercial 8.3% 10.4% 19.3% 26.2%
Belgium Commercial 11.2% 9.1% 47.3% 46.2%
Total 9.3% 10.0% 25.4% 30.3%
The return on operating assets 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 3% to €1,397m. Underlying EBIT fell by 5% to
€129.3m, representing an EBIT margin of 9.3%.
Revenues in the Netherlands grew by 4% to €932.0m and underlying EBIT fell by 17% to
€76.9m. Underlying EBIT margins decreased by 210 bps to 8.3% and return on operating
assets fell to 19.3%. In Belgium, revenue increased marginally to €468.4m and underlying
EBIT increased by 23% to €52.4m. Underlying EBIT margins increased by 210 bps to 11.2%.
In the Netherlands we saw stable revenues, with EBIT margins reduced from last year due to
an increase in labour costs, exacerbated by the need to engage temporary staff to cover
shortages in permanent labour.
Volumes in the Netherlands were reduced as we saw the effects of lower organic waste as
greenhouse operations in the Netherlands temporarily cut back on production in response to
higher energy costs, and a hot dry summer led to a reduction in compostable waste. We also
saw a reduction in construction and demolition volumes as permissions for new building
work were slowed by environmental concerns including nitrogen and shortages in some
materials due to supply issues. In the longer term the need to reduce both carbon and
nitrogen in the construction sector will prove to be an advantage to us as we bring lower
footprint materials into the market through our recycling activities.
In this environment of volume declines we exercised strong pricing discipline, ensuring
that to the extent that it was possible costs were passed on to customers. Customer
loyalty remained strong, and we were delighted to win a major contract at Schiphol Airport
Group where we were selected for both the quality of our services and our demonstrable
commitment to the circular economy.
During the year we completed the acquisition of the operations of Renewi Westpoort – a
significant player in the Dutch market which will increase our leading position in our
core construction and demolition sector and will also give us better nationwide coverage.
Optimisation and integration of the facilities is ongoing with some initial issues
affecting performance which caused disruption to the normal operation of the plant. We are
confident in the underlying strength of this business and have already seen an improvement
in the final months of the year.
In Belgium we saw stable revenues and a strong EBIT margin performance, driven by pricing
leadership allowing us to pass on the majority of our production cost increases to our
customers, and customer gains in the energy and medical segments. The increase in
recycling rate and the cost reductions related to the Renewi 2.0 programme contributed as
well. As anticipated, volumes in Belgium declined as we chose not to compete at the lower
end of the market for business that brought little or no benefit to the bottom line, which
has increased the mix. Finally, the strong results were supported by some one-off,
non-recurring items.
Operational highlights in Belgium during the year included significant progress made on
the construction and commissioning of the Ghent facility that will allow our customers to
fulfil the requirements of the Vlarema 8 legislation. Construction has also started at our
second plant in Puurs.
Mineralz & Water
Mineralz & Water FY23 FY22 Variance
€m €m %
Revenue 190.9 193.9 -2%
Underlying EBIT 0.5 5.8 -91%
Underlying EBIT margin 0.3% 3.0%
Operating profit 1.0 8.7 -89%
Return on operating assets 0.8% 11.3%
The return on operating assets 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 Mineralz & Water Division saw revenues decrease by 2% to €190.9m and underlying EBIT
decreased by €5.3m to €0.5m. The EBIT drop is largely due to the increase in disposal cost
accruals for historic production of TGG.
Within the division we saw a strong performance on the waterside, albeit impacted by a
one-off incident which incurred additional operational costs and a reduced throughput in
the final quarter. We have adjusted our processes to reduce the likelihood of a
recurrence. We continue to see customer wins on the waterside as we benefit from our
unique capabilities and position in this segment.
We continue to work with off takers to place our 0.6mT residual TGG stocks albeit at a
higher cost than previously expected and anticipate clearing the remaining stock over the
next 2 years. Over 100kT is under contract for shipment in FY24 and an additional 300kT is
under negotiation.
We continue to develop and certify our aggregate products to provide high quality products
for the construction industry with a lower carbon footprint than virgin materials. We now
use the raw material which was previously used to produce TGG, to produce aggregates for
the building industry. Our first product in this range – gravel – has already received
certification and is proving to be popular with customers in the construction industry who
are attracted to its credentials as being part of the circular economy. We continue to
develop two more products – sand and filler and aim to bring these to a level where they
can be sold in large volume and replace their virgin alternatives during the current
financial year. This has involved some investment in machinery that can produce sand and
filler to the required particle size specifications. Once completed, we will start to ramp
up production in the second half of the year.
Specialities
Specialities FY23 FY22 Variance
€m €m %
Revenue 348.6 350.1 0%
Underlying EBIT 17.1 4.1 >100%
Underlying EBIT margin 4.9% 1.2%
Operating profit (3.0) 3.2 -194%
Return on operating assets 35.4% 28.9%
Underlying EBIT includes utilisation of €14.2m (2022: €7.0m) 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 saw flat revenue at €348.6m and underlying EBIT was up
significantly at €17.1m (FY22: €4.1m). Within the division Coolrec and Maltha achieved 20%
growth and both are delivering EBIT margins close to 10%.
From an operational perspective we were delighted to have signed the contract with
Playmobil which demonstrates that we have the capability to produce recyclates that are of
the highest standards – both in terms of their quality and consistency. We expect that an
increasing number of manufacturers in a variety of sectors will turn to recyclates to
reduce the carbon footprint of their production. We also recently won an award for a fully
closed loop solution with Electrolux where inner liners for new fridges are made with >70%
recycled fridge plastics from Coolrec.
Our UK Municipal performance was stable as we continue to manage contract costs closely
and have a team who are focused on using innovation and prudent cost management to ensure
that the risks are managed carefully. However, based on the inflationary outlook in the UK
our assumptions on both lifecycle spend and cost inflation, combined with lower volumes at
ELWA, have necessitated a €27.1m increase to the associated onerous contract provisions.
In addition, an amendment to an accounting standard resulted in an increase of €52m to the
opening onerous contract provisions which has no impact on cash and no change in the
underlying performance of the contracts.
FINANCE REVIEW
Financial Performance FY23 FY22 Variance
€m €m %
Revenue 1,892.3 1,869.2 1%
Underlying EBITDA 255.6 262.6 -3%
Underlying EBIT 132.9 133.6 -1%
Operating profit 121.4 124.0 -2%
Underlying profit before tax 103.7 105.2 -1%
Non-trading & exceptional items (10.6) (9.5)
Profit before tax 93.1 95.7
Total tax charge for the year (26.5) (20.3)
Profit for the year 66.6 75.4
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 FY23 despite the difficult macroeconomic
environment of high inflation and volatility. Revenues were stable year on year.
Underlying EBIT was slightly lower than the prior year despite the €24.8m impact of lower
volumes from a decline in input volumes and recyclate pricing. Cost inflation was largely
mitigated by pricing discipline and ongoing cost initiatives. Favourable one-off items in
the current year of €16.5m (FY22: €9.0m adverse impact from one-off items) resulted from
settlements with incinerators, property disposals, IAS 37 amendment implementation as
referred to below and other items.
Underlying EBITDA decreased by 3%, whereas underlying EBIT was 1% lower with a number of
impairments in the prior year not repeated in FY23 and a higher profit from disposal of
property, plant and equipment this year. Interest charges and share of results from
associates and joint ventures were marginally adverse to last year. The level of
exceptional and non-trading items in the current year was slightly higher than last year
at €10.6m as described below, resulting in a statutory profit for the year of €66.6m
compared to €75.4m last year.
As previously announced the amendment to IAS 37 Onerous Contracts – Costs of Fulfilling a
Contract, effective from 1 April 2022, clarifies that the costs of fulfilling a contract
should include an allocation of other costs that relate directly to fulfilling the
contract in addition to the incremental costs. The Group assessed the impact of this
amendment which resulted in an increase to the onerous contract provisions of €53.2m. The
cumulative effect of initially applying the amendment has been recognised as an adjustment
to the opening balance of retained earnings as at 1 April 2022. The impact has resulted in
annual costs of €5m now being utilised against the provision rather than recorded as part
of underlying EBIT with no impact on cash. As permitted by the amendment, the Group has
not restated the comparative information.
Further to a more in-depth analysis of the UK Municipal contract with East London Waste
Authority (ELWA) and receipt of legal advice, it has been determined that the original
lease accounting as recorded on the transition to IFRS 16 in April 2019 was treated
incorrectly. We have therefore presented this as a prior year adjustment, with the March
2022 balance sheet showing a reduction in lease liabilities of €9.5m, an increase in
onerous contract provisions of €5.8m, an impact of €3.6m on retained earnings and €0.1m on
the exchange reserve. The Income Statement impact for the year ended 31 March 2022 was not
material and therefore has not been restated. Further details are given in note 2.
As reported with the FY22 results, we revised our accounting policy with regard to the
treatment of costs associated with the configuration and customisation incurred in cloud
computing or Software as a Service arrangements. Any such costs in the current year are
recorded as part of regular underlying EBIT.
Non-trading and exceptional items excluded from underlying profits
To enable a better understanding of underlying performance, certain items are excluded
from underlying EBIT and underlying profit before tax due to their size, nature or
incidence. Total non-trading and exceptional items excluding tax were a charge of €10.6m
(FY22: €9.5m).
As previously reported, we have accounted for the cost of the Renewi 2.0 programme as
exceptional due to its size and nature. The programme of activity is largely complete and
will deliver €20m cost benefits in FY24. The cost of the programme is now expected to be
around €28m, significantly below original expectations of €40m due to lower settlement
costs, with a remaining €3m cash outflow expected in FY24. Annual net benefit of €12m for
the year with cash spend of €4m which was lower than expected.
Renewi 2.0: expected costs and benefits FY21 FY22 FY23 FY24
€m €m €m €m
Annual net benefit 2 5 12 20
Exceptional costs (7) (7) (4) (3)
Capital spend (5) (2) - -
Net cash flow (10) (4) 8 17
The UK Municipal provision for onerous contracts has been increased by a further €27.1m in
the year. This has arisen due to revised assumptions on both lifecycle spend and cost
inflation, combined with lower volumes at the ELWA contract partially offset by the
indexation of customer pricing. In line with our policy, this item is recorded as
non-trading and exceptional due to size and nature.
Following the conclusion of the European Commission’s formal investigation in the alleged
Belgium State Aid matter and the determination that the Belgian Walloon region did not
provide State Aid to the Group, the provision of €15.1m has been released. This has been
reported a non-trading and exceptional credit as the original set up of the provision was
classified as such.
Further details on all non-trading and exceptional items are provided in note 5 to the
consolidated financial statements.
Operating profit, after taking account of all non-trading and exceptional items, was
€121.4m (FY22: €124.0m).
Net finance costs
Net finance costs, excluding exceptional items, increased by €0.3m to €29.2m (FY22:
€28.9m) due to increased costs for lease liabilities and discount unwind net of savings in
other areas. Further details are provided in note 6 to the consolidated financial
statements.
Profit before tax
Profit before tax on a statutory basis, including the impact of non-trading and
exceptional items, was €93.1m (FY22: €95.7m).
Taxation
Total taxation for the year was a charge of €26.5m (FY22: €20.3m). The effective tax rate
on underlying profits was 27.1% at €28.1m, an increase from 25.0% in the prior year, as
anticipated given recent changes in rates in the Netherlands and the UK. A tax credit of
€1.6m is attributable to the non-trading and exceptional items of €10.6m as a number of
items are not subject to tax.
Looking forward, we anticipate the underlying tax rate to remain around 27%. Due to items
disallowed for tax in both the Netherlands and Belgium, our effective tax rate is higher
than the nominal rates in the countries where we operate.
The Group statutory profit after tax, including all non-trading and exceptional items, was
€66.6m (FY22: €75.4m).
Earnings per share (EPS)
Underlying EPS excluding non-trading and exceptional items was 90 cents per share, a
decrease of 8 cents impacted by the higher effective tax rate. Basic EPS was 79 cents per
share compared to 93 cents per share in the prior year.
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 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.
Funds flow performance FY23 FY22
€m €m
EBITDA 255.6 262.6
Working capital movement (5.8) (38.0)
Movement in provisions and other (0.2) 4.5
Net replacement capital expenditure (87.3) (68.2)
Repayments of obligations under lease liabilities (47.5) (43.5)
Interest and loan fees (20.7) (18.5)
Tax (21.2) (7.6)
Adjusted free cash flow 72.9 91.3
Deferred Covid taxes (19.7) (10.6)
Offtake of ATM soil (1.2) (10.3)
UK Municipal contracts (12.2) (9.9)
Free cash flow 39.8 60.5
Growth capital expenditure (30.8) (13.1)
Renewi 2.0 and other exceptional spend (4.1) (11.0)
Acquisitions net of disposals (59.4) -
Other (10.4) (7.0)
Total cash flow (64.9) 29.4
Free cash flow conversion 30% 45%
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. FY22 values for repayments of obligation under lease
liabilities and UK Municipal contracts have each been adjusted by €0.7m to reflect the
prior year adjustment as referred to in note 2.
Adjusted free cash flow was lower at €72.9m (FY22: €91.3m) impacted by increased
replacement capex and taxation payments principally, partially offset by a smaller
movement in working capital. Days sales outstanding have increased slightly since March
2022 and still remain largely unimpacted by the current high inflationary environment.
Replacement capital spend at €87.3m was ahead of last year reflecting some catch up from
the prior two years which were more constrained during Covid. In addition, €57.4m of new
leases or modifications 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 of €30.8m includes further spend on the Vlarema 8 advanced sorting
investments in Belgium, plastics sorting in the Netherlands and some projects in other
divisions.
Tax payments were €13.6m higher than last year as some payments moved from FY22 to FY23.
Looking at the three components that are shown below adjusted free cash flow, there has
been a further €19.7m repayment on Dutch Covid-19 tax deferrals as expected. The remaining
balance of €30m will be settled over the next 18 months. Cash cost of placement of TGG
soil stocks was limited in the year at €1.2m (FY22: €10.3m). The cost accrual for the
remaining disposals of historical TGG anticipated over the next 24 months has been
increased by €1m to €16m. As noted earlier, the application of the amendment to IAS 37,
Onerous Contracts – Costs of Fulfilling a Contract has resulted in annual costs of €5m now
being utilised against the provision rather than recorded as part of underlying EBIT.
Taking this into account, the cash outflow on UK PPP contracts at €12.2m was lower than
expected due to phasing.
The acquisitions net of disposals outflow is principally €60.5m for the Renewi Westpoort
acquisition from Paro representing the cash paid of €53.5m and the repayment of loans
acquired. Further details are provided in note 12 to the consolidated financial
statements.
Other cash flows include funding of €3.5m for the closed UK defined benefit scheme,
funding of €5.3m to the Renewi Employee Share trust and an additional injection of €1.5m
into the investment in RetourMatras in relation to their UK acquisition.
Net cash inflow from operating activities increased from €179.7m in the prior year, as
adjusted for the prior year restatement referenced in note 2, to €188.4m in the current
year. A reconciliation to the underlying cash flow performance as referred to above is
included in note 17 in the consolidated financial statements.
INVESTMENT PROJECTS
Expenditure in FY24
The Group’s long-term expectations for replacement capital expenditure remain around 80%
of depreciation. FY24 replacement capital spend is expected to be around €75m. In
addition, c.€20m of IFRS 16 lease investments are anticipated, as the final deliveries of
the latest replacement truck programme is completed.
Expenditure on the circular innovation pipeline of €25m is expected in FY24 as the Puurs
site in Belgium and the Acht rigid plastic processing plant in the Netherlands are
completed. Total growth capital spend in FY24 is expected to be around €50m including
projects in the other divisions.
Return on assets
The Group return on operating assets, excluding debt, tax and goodwill, fell slightly from
42.6% at 31 March 2022 to 36.9% at 31 March 2023 due to increased asset values as a result
of capital expenditure levels and the acquisition of Renewi Westpoort from Paro. The Group
post-tax return on capital employed was 10.6% (FY22: 11.6%).
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 in line with management expectations at €370.6m (FY22:
€303.0m), which resulted in a net debt to EBITDA ratio of 1.8x, an increase from last
March due to the Westpoort acquisition and growth capital spend. Liquidity headroom
including cash and undrawn facilities remained strong at €323m.
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. As at 31 March 2023, 85% of our net debt
excluding UK PPP non-recourse net debt was on a fixed rate.
Debt Structure FY23 FY22 Variance
€m €m €m
Belgian Green retail bonds (200.0) (300.0) 100.0
Green RCF (102.5) (15.0) (87.5)
Other Green loans (105.0) (25.0) (80.0)
Gross borrowings before lease liabilities (407.5) (340.0) (67.5)
Historical IAS 17 lease liabilities and other (9.1) (8.7) (0.4)
Loan fees 2.3 3.2 (0.9)
Core cash 43.7 42.5 1.2
Core net debt (as per covenant definitions) (370.6) (303.0) (67.6)
IFRS 16 lease liabilities (245.8) (212.4) (33.4)
Net debt excluding UK PPP net debt (616.4) (515.4) (101.0)
UK PPP restricted cash balances 19.0 21.1 (2.1)
UK PPP non-recourse debt (88.3) (100.2) 11.9
Total net debt (685.7) (594.5) (91.2)
The FY22 values for IFRS 16 leases liabilities, net debt excluding UK PPP net debt and
total net debt have been reduced by €9.5m as a result of the prior year adjustment
referred to in note 2.
In November and December 2022, the Group signed new fixed rate green facilities of €95m in
addition to the €200m of outstanding fixed rate bonds. The new borrowings include a €45m
7-year European Private Placement at 4.676%, a facility of €40m with the European
Investment Bank with the first tranche of €25m drawn at a fixed rate of 3.572% repayable
in seven equal annual instalments commencing on 15 December 2025 and a €10m 5-year
bilateral loan at 4.22%. The weighted average rate of our €305m fixed rate borrowings is
3.3%.
The Group’s €400m green revolving credit facility has most commitments maturing in May
2025. We anticipate extending the term of the RCF facility during FY24.
The introduction of IFRS 16 in 2019 brought additional lease liabilities onto the balance
sheet with an associated increase in assets. Covenants on our main bank facilities remain
on a frozen GAAP basis and exclude IFRS 16 leases. The Group has complied with its banking
covenants during the year. The Group operates a committed invoice discounting programme.
The cash received for invoices sold at 31 March 2023 was €84.7m (FY22: €80.5m).
Debt borrowed in the special purpose vehicles (SPVs) for the financing of UK PPP
programmes is separate from the Group core debt and is secured over the assets of the SPVs
with no recourse to the Group as a whole. Interest rates on PPP borrowings were fixed by
means of interest rate swaps at contract inception. As at 31 March 2023 this net debt
amounted to €69.3m (FY22: €79.1m).
PROVISIONS AND CONTINGENT LIABILITIES
Around 87% of the Group’s provisions are long-term in nature, with the onerous contract
provisions against the PPP contracts being utilised over the remaining term of up to 17
years and landfill provisions for many decades longer. As noted previously, the
application of the amendment to IAS 37, Onerous Contracts – Costs of Fulfilling a Contract
has resulted in an increase of €53m to the onerous contract provisions on 1 April 2022 and
there has been an additional €27.1m charge in the year as detailed above. In addition, as
referred to in note 2, a prior year restatement increased the opening balance of
provisions by c€6m.
The provisions balance classified as due within one year amounts to €44m, including €3m
for restructuring, €19m for onerous contracts, €11m for landfill related spend and €11m
for environmental, legal and others. The position on the alleged Belgian State Aid claim
has now been closed resulting in the release of the €15m provision booked in an earlier
period.
Retirement benefits
The Group has a closed UK defined benefit pension scheme and at 31 March 2023, the scheme
had an accounting deficit of €4.3m (FY22: €8.6m surplus). The change in the year was due
to lower returns on pension scheme assets which were only partly offset by an increase in
the discount rate assumption on scheme liabilities. The latest triennial actuarial
valuation of the scheme was completed at 5 April 2021 and the future funding plan has been
maintained at the current level of €3.5m per annum until December 2024.
There are also several defined benefit pension schemes for employees in the Netherlands
and Belgium which had a retirement benefit deficit of €5.0m at 31 March 2023, a €1.3m
decrease from 31 March 2022.
GOING CONCERN
The Directors have adopted the going concern basis in preparing these consolidated
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.
Consolidated Income Statement
For the year ended 31 March 2023
2023 2022
Non-trading Non-trading
Underlying & Total Underlying & Total
Note exceptional exceptional
€m items €m €m items €m
€m €m
Revenue 3,4 1,892.3 - 1,892.3 1,869.2 - 1,869.2
Cost of sales 5 (1,530.0) (28.6) (1,558.6) (1,512.5) 0.1 (1,512.4)
Gross profit 362.3 (28.6) 333.7 356.7 0.1 356.8
(loss)
Administrative 5 (229.4) 17.1 (212.3) (223.1) (9.7) (232.8)
expenses
Operating 3 132.9 (11.5) 121.4 133.6 (9.6) 124.0
profit (loss)
Finance income 5,6 9.8 0.9 10.7 9.3 0.2 9.5
Finance charges 5,6 (39.0) - (39.0) (38.2) (0.1) (38.3)
Share of
results from - - - 0.5 - 0.5
associates and
joint ventures
Profit (loss) 3 103.7 (10.6) 93.1 105.2 (9.5) 95.7
before taxation
Taxation 5,7 (28.1) 1.6 (26.5) (26.4) 6.1 (20.3)
Profit (loss) 75.6 (9.0) 66.6 78.8 (3.4) 75.4
for the year
Attributable
to:
Owners of the 71.9 (9.0) 62.9 77.9 (3.4) 74.5
parent
Non-controlling 3.7 - 3.7 0.9 - 0.9
interests
75.6 (9.0) 66.6 78.8 (3.4) 75.4
2023 2022
Earnings per share Note
cents cents
Basic 8 79 93
Diluted 8 79 93
Underlying basic 8 90 98
Underlying diluted 8 90 98
Consolidated Statement of Comprehensive Income
For the year ended 31 March 2023
2023 2022
€m €m
Items that may be reclassified subsequently to profit or loss:
Exchange differences on translation of foreign subsidiaries 2.5 (0.2)
Fair value movement on cash flow hedges 3.7 16.5
Deferred tax on fair value movement on cash flow hedges 0.7 (1.9)
Share of other comprehensive income of investments accounted for using the 0.3 0.5
equity method
7.2 14.9
Items that will not be reclassified to profit or loss:
Actuarial (loss) gain on defined benefit pension schemes (15.5) 10.5
Deferred tax on actuarial (loss) gain on defined benefit pension schemes 3.8 (2.4)
(11.7) 8.1
Other comprehensive (loss) income for the year, net of tax (4.5) 23.0
Profit for the year 66.6 75.4
Total comprehensive income for the year 62.1 98.4
Attributable to:
Owners of the parent 58.4 97.5
Non-controlling interests 3.7 0.9
Total comprehensive income for the year 62.1 98.4
Consolidated Balance Sheet
As at 31 March 2023
Restated*
31 March
31 March
Note 2023
2022
€m
€m
Assets
Non-current assets
Goodwill and intangible assets 10 636.3 592.8
Property, plant and equipment 10 617.9 553.6
Right-of-use assets 10 253.1 213.8
Investments 14.8 14.3
Loans to associates and joint ventures 0.2 -
Financial assets relating to PPP contracts 123.4 135.7
Derivative financial instruments 15 1.2 0.4
Defined benefit pension scheme surplus 14 - 8.6
Other receivables 3.7 5.1
Deferred tax assets 35.6 41.6
1,686.2 1,565.9
Current assets
Inventories 25.2 22.5
Investments 10.9 11.1
Loans to associates and joint ventures 0.8 0.9
Financial assets relating to PPP contracts 7.6 7.7
Trade and other receivables 289.6 269.3
Derivative financial instruments 15 0.4 6.6
Current tax receivable 1.5 0.9
Cash and cash equivalents – including restricted cash 11 62.7 63.6
398.7 382.6
Assets classified as held for sale 10 0.6 3.3
399.3 385.9
Total assets 2,085.5 1,951.8
Liabilities
Non-current liabilities
Borrowings 11 (681.6) (509.9)
Derivative financial instruments 15 (2.6) (14.6)
Other non-current liabilities (34.7) (36.2)
Defined benefit pension schemes deficit 14 (9.3) (6.3)
Provisions 13 (298.2) (262.9)
Deferred tax liabilities (46.4) (47.0)
(1,072.8) (876.9)
Current liabilities
Borrowings 11 (66.8) (148.2)
Derivative financial instruments 15 (1.9) (0.1)
Trade and other payables (521.8) (528.4)
Current tax payable (31.2) (24.2)
Provisions 13 (43.7) (32.1)
(665.4) (733.0)
Total liabilities (1,738.2) (1,609.9)
Net assets 347.3 341.9
Issued capital and reserves attributable to the owners of the
parent
Share capital 99.8 99.5
Share premium 474.1 473.8
Exchange reserve (12.2) (14.9)
Retained earnings (224.5) (223.5)
337.2 334.9
Non-controlling interests 10.1 7.0
Total equity 347.3 341.9
* The comparatives have been restated due to a prior period adjustment as explained in
note 2 Basis of preparation.
Consolidated Statement of Changes in Equity
For the year ended 31 March 2023
Restated* Restated* Restated*
Share Share Non-controlling
Exchange Retained Total
capital premium reserve interests
earnings equity
€m €m €m €m
€m €m
Balance at 31 March 2022 – 99.5 473.8 (15.0) (227.1) 7.0 338.2
as reported
Impact of prior year - - 0.1 3.6 - 3.7
adjustment (note 2)
Balance at 31 March 2022 – 99.5 473.8 (14.9) (223.5) 7.0 341.9
restated
Impact of adopting
amendments to IAS 37 (note - - 0.2 (53.4) - (53.2)
2)
Balance at 1 April 2022 99.5 473.8 (14.7) (276.9) 7.0 288.7
Profit for the year - - - 62.9 3.7 66.6
Other comprehensive income
(loss):
Exchange gain on translation - - 2.5 - - 2.5
of foreign subsidiaries
Fair value movement on cash - - - 3.7 - 3.7
flow hedges
Actuarial loss on defined - - - (15.5) - (15.5)
benefit pension schemes
Tax in respect of other - - - 4.5 - 4.5
comprehensive income items
Share of other comprehensive
income of investments - - - 0.3 - 0.3
accounted for using the
equity method
Total comprehensive income - - 2.5 55.9 3.7 62.1
for the year
Dividend paid to - - - - (0.6) (0.6)
non-controlling interests
Share-based compensation - - - 2.7 - 2.7
Movement on tax arising on - - - (0.9) - (0.9)
share-based compensation
Proceeds from exercise of 0.3 0.3 - - - 0.6
employee options
Own shares purchased by the - - - (5.3) - (5.3)
Employee Share Trust
Balance as at 31 March 2023 99.8 474.1 (12.2) (224.5) 10.1 347.3
Balance at 1 April 2021 – as 99.5 473.6 (14.8) (326.8) 6.1 237.6
reported
Impact of prior year - - 0.1 3.6 - 3.7
adjustment (note 2)
Balance at 1 April 2021 - 99.5 473.6 (14.7) (323.2) 6.1 241.3
restated
Profit for the year - - - 74.5 0.9 75.4
Other comprehensive (loss)
income:
Exchange loss on translation - - (0.2) - - (0.2)
of foreign subsidiaries
Fair value movement on cash - - - 16.5 - 16.5
flow hedges
Actuarial gain on defined - - - 10.5 - 10.5
benefit pension schemes
Tax in respect of other - - - (4.3) - (4.3)
comprehensive income items
Share of other comprehensive
income of investments - - - 0.5 - 0.5
accounted for using the
equity method
Total comprehensive (loss) - - (0.2) 97.7 0.9 98.4
income for the year
Share-based compensation - - - 2.5 - 2.5
Movement on tax arising on - - - 1.3 - 1.3
share-based compensation
Proceeds from exercise of - 0.2 - - - 0.2
employee options
Own shares purchased by the - - - (1.8) - (1.8)
Employee Share Trust
Balance as at 31 March 2022 99.5 473.8 (14.9) (223.5) 7.0 341.9
* The comparatives have been restated due to a prior period adjustment as explained in
note 2 Basis of preparation.
Consolidated Statement of Cash Flows
For the year ended 31 March 2023
Restated*
2023
2022
€m
€m
Profit before tax 93.1 95.7
Finance income (10.7) (9.5)
Finance charges 39.0 38.3
Share of results from associates and joint ventures - (0.5)
Operating profit 121.4 124.0
Amortisation and impairment of intangible assets 10.5 11.1
Depreciation and impairment of property, plant and equipment 69.5 74.7
Depreciation and impairment of right-of-use assets 49.1 45.5
Impairment of investment in associate 0.9 1.9
Net gain on disposal of property, plant and equipment and intangible (3.0) (0.8)
assets
Portfolio management and provision movements in non-trading and 19.9 (1.6)
exceptional items
Net decrease in provisions (34.1) (6.5)
Payment related to committed funding of the defined benefit pension (3.5) (3.6)
schemes
Share-based compensation 2.7 2.5
Operating cash flows before movement in working capital 233.4 247.2
Increase in inventories (2.1) (1.9)
Increase in receivables (12.2) (23.2)
Decrease in payables (9.5) (34.8)
Cash flows from operating activities 209.6 187.3
Income tax paid (21.2) (7.6)
Net cash inflow from operating activities 188.4 179.7
Investing activities
Purchases of intangible assets (9.9) (8.4)
Purchases of property, plant and equipment (115.0) (77.6)
Proceeds from disposals of property, plant and equipment 6.8 4.7
Acquisition of subsidiary, net of cash acquired (53.5) -
Disposal of subsidiary and business assets net of acquisition of 1.1 (1.3)
business assets
Net movements in associates, joint ventures and other short-term (1.3) (0.9)
investments
Receipt of deferred consideration - 0.3
Outflows in respect of PPP arrangements under the financial asset 6.0 5.8
model net of capital received
Finance income 10.6 9.9
Net cash outflow from investing activities (155.2) (67.5)
Financing activities
Finance charges and loan fees paid (31.3) (28.4)
Investment in own shares by the Employee Share Trust (5.3) (1.8)
Proceeds from share issues 0.6 0.2
Dividend paid to non-controlling interest (0.6) -
Proceeds from retail bonds - 125.0
Repayment of retail bonds (100.0) -
Proceeds from bank borrowings 565.0 141.6
Repayment of bank borrowings (405.6) (312.2)
Repayment of PPP debt (8.1) (5.7)
Repayment of obligations under lease liabilities (47.5) (43.5)
Settlement of cross-currency interest rate swaps - 6.4
Net cash outflow from financing activities (32.8) (118.4)
Net increase (decrease) in cash and cash equivalents 0.4 (6.2)
Effect of foreign exchange rate changes (1.3) 1.0
Cash and cash equivalents at the beginning of the year 63.6 68.8
Cash and cash equivalents at the end of the year 62.7 63.6
* The comparatives have been restated due to a prior period adjustment as explained in
note 2 Basis of preparation.
Notes to the Consolidated Financial Statements
1. General information
Renewi plc is a public limited company listed on the London Stock Exchange with a
secondary listing on Euronext Amsterdam. Renewi plc is incorporated and domiciled in
Scotland under the Companies Act 2006, registered number SC077438. The address of the
registered office is 16 Charlotte Square, Edinburgh, EH2 4DF. The nature of the Group’s
operations and its principal activities are set out in note 3.
2. Basis of preparation
The financial information for the year ended 31 March 2023 as set out in this preliminary
announcement does not constitute the statutory accounts of the Group for the relevant year
within the meaning of section 435 of the Companies Act 2006. The financial statements for
the year ended 31 March 2023 are unaudited. These accounts will be finalised on the basis
of the financial information presented by the Directors in the preliminary announcement
and will be delivered to the Registrar of Companies following the Company’s annual general
meeting. The Consolidated Income Statement, Consolidated Statement of Comprehensive
Income, Consolidated Statement of Changes in Equity and Consolidated Statement of Cash
Flows for the year ended 31 March 2022 and the Consolidated Balance Sheet as at 31 March
2022 have been derived from the full Group accounts published in the Annual Report and
Accounts 2022 with restatements as explained below. These have been delivered to the
Registrar of Companies and on which the report of the independent auditors was unqualified
and did not contain a statement under section 498(2) or section 498(3) of the Companies
Act 2006.
The financial information in this preliminary announcement has been prepared with regards
to UK adopted international accounting standards. The Group has applied all accounting
standards and interpretations issued relevant to its operations and effective for
accounting periods beginning on 1 April 2022. The IFRS accounting policies have been
applied consistently to all periods with the exception of the amendment to IAS 37 Onerous
Contracts-Costs of Fulfilling Contract as explained later in this note.
Going concern
The Directors have adopted the going concern basis in preparing these consolidated
financial statements after assessing the Group’s principal risks including an assessment
of the impact of the ongoing high inflationary environment and the economic uncertainty
arising from the invasion of Ukraine and the recent banking crisis.
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 and covenant modelling over an 18-month period to 30 September 2024. This includes
expectations on the future economic environment as well as other principal risks
associated with the Group’s ongoing operations.
The assessment includes a base case scenario setting out the Directors’ current
expectations of future trading and a plausible but severe downside scenario after applying
mitigating actions to assess the potential impact on the Group’s future financial
performance. The key judgement in both scenarios is the level of economic disruption
caused by ongoing geopolitical events.
The downside scenario includes significantly weaker macroeconomic conditions leading to a
volume decline below the forecast economic outlook in all our territories in FY24 and
FY25. Other downsides include a significant decline in recyclate prices from the current
levels to below long-term averages and operational downtime in some of our plants. These
factors reduce FY24 EBIT by 31% compared to the base case. Appropriate cash mitigating
actions such as deferral of uncommitted capital expenditure and other working capital
actions have been applied to our downside modelling to arrive at a plausible and mitigated
downside position.
In the base case and plausible mitigated 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 FY24 would need to reduce by
44% compared to the base case including mitigating cost actions. In the opinion of the
Directors there is no plausible scenario or combination of scenarios that we consider to
be remotely likely that would generate this result.
Having considered all the elements of the financial projections, sensitivities and
mitigating actions, the Directors confirm they have a reasonable expectation that the
Group has adequate resources to continue in operational existence for the foreseeable
future and to meet all banking covenants.
In accordance with Provision 31 of the UK Corporate Governance Code, the Directors have
also assessed the prospects and financial viability of the Company for a period longer
than the 12 months required in the going concern assessment.
Prior year restatement
During the year, the Group has undertaken a more in depth analysis of the UK Municipal
contract with East London Waste Authority (ELWA) as the contract is due to expire in
December 2027. The contract is loss-making and therefore an onerous contract provision
(OCP) has been recorded. At inception of this contract on 28 November 2003, a subsidiary
of the Group entered a headlease arrangement for one location under the contract and then
subleased it to ELWA Limited, an associate, on terms which mirrored the terms of the
headlease. Prior to the disposal of the subsidiary in 2004 the headlease and sublease were
novated to Renewi UK Services Limited (RUKS), a subsidiary of the Group. Upon adoption of
IFRS 16 Leases from 1 April 2019, the Group accounted for the headlease as a right-of-use
asset with the rental expense recorded as a repayment of the lease liability. The rental
income from ELWA Limited was included within the cash flows used to measure the OCP.
During March 2023, external legal advice received clarified further the legal position in
relation to the commercial substance of the lease arrangements. The legal advice stated
that it is more likely than not that the sublease to ELWA Limited has taken effect as an
assignment of the headlease by operation of law. The practical effect of this is the
former subsidiary and ELWA Limited are directly liable for the headlease and that the
novation in 2004 to RUKS was invalid. Accordingly, the Group has determined that it was
not appropriate to recognise the headlease as a right-of-use asset and the lease income
should not have been included in the cash flows used to measure the OCP. The Group has
therefore concluded that the prior treatment was an error and that it is now appropriate
to restate the 1 April 2021 opening balance sheet.
The impact is a reduction in lease liabilities of €10.1m (of which €9.4m is non-current
and €0.7m is current) with a corresponding increase in OCP of €6.4m (of which €5.4m is
non-current and €1.0m is current) resulting in an impact of €3.6m on retained earnings and
€0.1m on the exchange reserve. The impact on the 31 March 2022 balance sheet is a
reduction in lease liabilities of €9.5m (of which €8.8m is non-current and €0.7m is
current) with an increase in OCP of €5.8m (of which €4.8m is non-current and €1.0m is
current) resulting in an impact of €3.6m on retained earnings and €0.1m on the exchange
reserve. The related right-of-use asset was fully impaired therefore there is no impact on
the net book value. However, as a result of the derecognition, cost and accumulated
depreciation and impairment have both been reduced by €8.9m as at 1 April 2021. The Income
Statement impact for the year ended 31 March 2022 is not material and therefore has not
been restated. The impact on the Cash Flow Statement for the year ended 31 March 2022 is
to reduce the cash inflow from operating activities by €0.7m and reduce the cash outflow
in financing activities by €0.7m. Earnings per share and alternative performance measures
for the year ended 31 March 2022 are not affected as a result of this correction.
The impact on the Consolidated Balance Sheet at 31 March 2021 is not material and
therefore as permitted in IAS 1 Presentation of Financial Statements a third balance sheet
is not presented. The impact of the above restatements on the relevant line items in the
Consolidated Balance Sheet and Statement of Changes in Equity is presented below:
1 April 2021 1 April 31 March 31 March
2021 2022 2022
Balance sheet (previously Restatement Restatement
extract reported) (restated) (previously (restated)
€m reported) €m
€m €m €m
€m
Total assets 1,968.0 - 1,968.0 1,951.8 - 1,951.8
Liabilities
Non-current
liabilities
Borrowings (689.1) 9.4 (679.7) (518.7) 8.8 (509.9)
Provisions (252.6) (5.4) (258.0) (258.1) (4.8) (262.9
Other (142.0) - (142.0) (104.1) - (104.1)
(1,083.7) 4.0 (1,079.7) (880.9) 4.0 (876.9)
Current
liabilities
Borrowings (47.8) 0.7 (47.1) (148.9) 0.7 (148.2)
Provisions (38.7) (1.0) (39.7) (31.1) (1.0) (32.1)
Other (560.2) - (560.2) (552.7) - (552.7)
(646.7) (0.3) (647.0) (732.7) (0.3) (733.0)
Total liabilities (1,730.4) 3.7 (1,726.7) (1,613.6) 3.7 (1,609.9)
Net assets 237.6 3.7 241.3 338.2 3.7 341.9
Issued capital
and reserves
attributable to
the owner of the
parent
Retained earnings (326.8) 3.6 (323.2) (227.1) 3.6 (223.5)
Exchange reserve (14.8) 0.1 (14.7) (15.0) 0.1 (14.9)
Other equity 573.1 - 573.1 573.3 - 573.3
231.5 3.7 235.2 331.2 3.7 334.9
Non-controlling 6.1 - 6.1 7.0 - 7.0
interests
Total equity 237.6 3.7 241.3 338.2 3.7 341.9
Adoption of new and revised accounting standards
The amendment to IAS 37 Onerous Contracts – Costs of Fulfilling a Contract, effective from
1 April 2022, clarifies that the costs of fulfilling a contract should include an
allocation of other costs that relate directly to fulfilling the contract in addition to
the incremental costs. As required by the pre-amended IAS 37, the Group’s accounting
policy previously only included incremental direct costs when measuring the costs to
fulfil a contract. The Group assessed the impact of this amendment which resulted in an
increase to the onerous contract provisions of €53.2m. A deferred tax asset has not been
recognised on the increase in the provision due to the uncertainty of future profit
streams in the UK Municipal business. The cumulative effect of initially applying the
amendment has been recognised as an adjustment to the opening balance of retained earnings
as at 1 April 2022 as shown in the Statement of Changes in Equity. As permitted by the
amendment, the Group has not restated the comparative information.
No other accounting standards, amendments or revisions to existing standards or
interpretations have been effective which had a significant impact on the Group’s
consolidated financial statements.
New standards and interpretations not yet adopted
Standards and interpretations issued by the International Accounting Standards Board
(IASB) are only applicable if endorsed by the UK Endorsement Board (UKEB). At the date of
approval of these financial statements there were no new IFRSs or IFRS Interpretation
Committee interpretations which were early adopted by the Group.
The following amendments are effective for the period beginning 1 April 2023:
• Disclosure of Accounting Policies (Amendments to IAS 1 and IFRS Practice Statement 2)
• Definition of Accounting Estimates (Amendments to IAS 8)
• IFRS 17 Insurance Contracts
• Deferred Tax Related to Assets and Liabilities arising from a Single Transaction
(Amendments to IAS 12).
The following amendments are effective for the period beginning 1 April 2024:
• IFRS 16 (Amendment – Liability in a Sale and Leaseback)
• IAS 1 Presentation of Financial Statements (Amendment – Classification of Liabilities
as Current or Non-current)
• IAS 1 Presentation of Financial Statements (Amendment – Non-current Liabilities with
Covenants)
The Group does not expect a significant impact from any of the new accounting standards
and amendments.
Exchange Rates
In addition to the Group’s presentational currency of Euros, the most significant currency
for the Group is Sterling with the closing rate on 31 March 2023 of €1:£0.879 (2022:
€1:£0.845) and an average rate for the year ended 31 March 2023 of €1:£0.870 (2022:
€1:£0.849).
Critical accounting judgements and estimates
The preparation of financial statements in accordance with IFRS requires management to
make judgements, estimates and assumptions that affect the application of policies and
reported amounts of assets and liabilities, income and expenditure. The areas involving a
higher degree of judgement or complexity are set out below and in more detail in the
related notes. 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.
Judgements in applying the Group’s accounting policies
Use of alternative performance measures
The Group uses alternative performance measures as we believe these measures provide
additional useful information on the underlying trends, performance and position of the
Group. These underlying measures are used by the Group for internal performance analysis
and incentive compensation arrangements for employees. The term ‘underlying’ refers to the
relevant measure being reported for continuing operations excluding non-trading and
exceptional items. These include underlying earnings before interest and tax (underlying
EBIT), underlying profit before tax, underlying profit after tax, underlying earnings per
share and underlying EBITDA (earnings before interest, tax, depreciation and
amortisation). The terms ‘EBIT’, ‘EBITDA’, ‘exceptional items’, ‘adjusted’ and
‘underlying’ are not defined terms under IFRS and may therefore not be comparable with
similarly titled profit measures reported by other companies. These measures are not
intended to be a substitute for, or superior to, GAAP measurements of profit. A full list
of alternative performance measures 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. A policy for non-trading and exceptional items is followed consistently and is
submitted to the Audit Committee for annual review. See note 5 for further details of the
costs included within this category.
Service concession arrangements
Management considered all relevant factors including the expectation by the relevant local
authority who was the primary obligor, the ability of the Group to set the selling price,
who performed the service, who assumed the credit risk and who had discretion in selecting
suppliers. Following this assessment the Group determined that it acted as agent during
the construction phase of the UK Municipal contracts. Consequently the consideration from
local authorities for the operations of waste management service concessions is treated as
financial assets relating to PPP contracts in accordance with IFRIC 12. Management
determined that the cash flows relating to the outflows in respect of PPP arrangements
under the financial asset model net of capital received are investing activities in the
statement of cash flows and not operating cash flows. At the balance sheet date, the Group
has financial assets relating to PPP contracts of €131.0m (2022: €143.4m). Consideration
relating to financial assets is split between a service element as revenue and a repayment
element, split between capital and interest receivable that is deducted from the financial
asset.
Defined benefit pension scheme surplus
In relation to the prior year surplus, based on actuarial professional advice management
concluded that the UK defined benefit pension scheme rules determine that upon winding up
the scheme the Group has an unconditional right to a refund once all of the liabilities
have been discharged and that the trustees of the scheme do not have the unilateral right
to wind up the scheme, therefore any asset is not restricted and no additional liability
is recognised.
ELWA headlease
Management have used judgement based on external legal advice in determining that the
headlease in relation to the ELWA contract has been assigned to ELWA Limited by operation
of law and therefore a novation of the headlease and sublease to RUKS in 2004 is invalid.
It is therefore not appropriate for the Group to recognise the lease under IFRS 16.
Consequently, the rental expense and the rental income are presented net within the
onerous contract provision. Additional details are provided earlier in the prior year
restatement section.
Wakefield Waste Holdings Limited joint venture
The Group has a 50.001% interest in the joint venture Wakefield Waste Holdings Limited.
Upon the sale of 49.99% of this entity in 2016 the Group assessed the criteria of control
considering power over the investee, exposure or rights to a variable return and the
ability to use power over the investee to affect the amount of the investors returns. The
Group determined that it does not meet the criteria for having control as each party
jointly controls the entity and as a result it is appropriate to equity account.
There are no other critical judgements other than those involving estimates, as set out
below, that have a significant effect on the amounts recognised in the Group’s
consolidated financial statements.
Key sources of estimation uncertainty
Landfill related provisions
The Group has landfill related provisions of €164.5m (2022: €156.9m). These provisions are
long term in nature and are recognised at the net present value of the best estimate of
the likely future cash flows to settle the Group’s obligations. The period of aftercare
post-closure and the level of costs expected are uncertain and could be impacted by
changes in inflation, legislation and technology and can vary significantly from site to
site. The timings of cash outflows are uncertain and have been based on management’s
latest expectations. A discount rate is applied to recognise the time value of money and
is unwound over the life of the provision.
Onerous contract provisions
Onerous contract provisions arise when the unavoidable costs of meeting contractual
obligations exceed the cash flows expected. The Group has onerous contract provisions of
€141.9m (31 March 2022 as restated: €85.7m, 1 April 2022: €138.9m adjusted for the impact
of IAS 37 amendment) which have been provided for at the lower of the net present value of
either exiting the contract or fulfilling our obligations under the contract. The most
significant component of these provisions relates to UK Municipal PPP contracts which
amount to €139.3m (31 March 2022 as restated: €83.5m, 1 April 2022: €135.3m adjusted for
the impact of IAS 37 amendment). The provisions have been based on the best estimate of
likely future cash flows including assumptions on inflationary increases, tonnage inputs,
off-take availability and recyclates pricing. The contracts include revenue inflationary
clauses which together with cost inflation are sources of estimation uncertainty. A
discount rate is applied to recognise the time value of money and is unwound over the life
of the provision.
Taxation
The recognition of deferred tax assets, particularly in respect of tax losses, is based
upon management’s judgement in the calculation of the probable expected taxable profits in
the relevant legal entity or tax group against which to utilise the assets in the future.
In respect of tax losses, the time expiry period, if any, is also taken into account in
the calculation. The Group assesses the availability of future taxable profits using
available long-term forecasts. The predictability of income streams is taken into
consideration in the recognition of deferred tax assets. The longest period of forecasts
used to calculate deferred tax recovery is eight years. This period reflects management’s
estimate of the higher probability profit streams due to income streams from internal
receivables which are highly predictable and likely to continue for the foreseeable
future. The intention is to avoid the recognition of a deferred tax asset that is not
ultimately recovered. Provisions have been recognised where necessary in respect of any
uncertain tax positions in the Group, including uncertainty over whether the relevant tax
authority will accept the tax treatment and are based upon management’s evaluation of the
potential outcomes of the relevant discussions with the tax authorities.
Other areas of focus
Whilst not considered to be critical accounting judgements or key sources of estimation
uncertainty, the following are areas of focus for management:
Assumptions used to determine the recoverable amount of goodwill and other assets
Impairment testing of goodwill is carried out annually at a cash generating unit (CGU)
level. The Group estimates the recoverable amount of a CGU using a value in use model
which involves an estimation of future cash flows and applying appropriate discount and
long-term growth rates. The future cash flows are derived from approved forecasts which
have taken into account increasing energy prices and high inflation as a result of the
events in Ukraine, specifically with regard to recovery of input volumes across different
waste streams. The Group assesses the impairment of tangible assets, intangible assets and
investments whenever there is reason to believe that the carrying value may exceed the
fair value and where a permanent impairment in value is anticipated.
The determination of whether the impairment of these assets is necessary involves the use
of estimates that include, but is not limited to, the analysis of the cause, the timing
and expected future cash flows.
Right-of-use assets and lease liabilities
Estimates and assumptions are made in calculating the incremental borrowing rate used to
measure lease liabilities where the lease contract does not contain an implicit rate. For
certain leases the determination of the lease liability is based on assumptions of the
term of the lease as to whether purchase options are likely to be exercised.
Assumptions used to determine the carrying amount of the Group’s defined benefit pension
schemes
The calculation of the present value of the defined benefit pension schemes is determined
by using actuarial valuations based on assumptions including discount rate, life
expectancy and inflation rates.
Waste disposal cost accruals
Management have used judgement in determining the value of disposal cost accruals with a
carrying amount included in accruals and other payables of €51.8m (2022: €48.9m). Included
in this is €21.1m (2022: €21.1m) relating to previously processed soil and other materials
at ATM. The value is determined by management’s best estimate after carrying out an
assessment of the cost per tonne to dispose of the waste based on historical transactions,
signed contracts, discussions with potential customers and knowledge of the market as in
some cases, due to the nature that in some cases there is no observable market data.
Management carry out sensitivity analysis on a range of potential outcomes and an increase
or reduction of the cost per tonne by 10% would impact the ATM accrual by €2.1m. It is now
expected that the disposal of certain components will take longer than 12 months and
consequently €17.6m has been recorded as a non-current liability.
Valuation of acquisition related intangible assets
When acting as the acquirer in a business combination, the Group is required to recognise
separate from goodwill all intangibles that are either separable or arise from contractual
or other legal obligations. In the acquisition of GMP Exploitatie B.V. on 1 August 2022
the Group acquired permits and customer relationships with a total value of €27.6m which
are explained in note 12. Determination of the fair value required a variety of
judgemental assumptions including, but not limited to, estimates of expected cash flows
and discount rates for which external specialists were engaged to provide expert
assistance. If the fair value of these acquisition related intangibles was 15% different
to the recorded value, the impact of the variance of €4m would be recorded in goodwill
with an adjustment of c€0.5m to the annual amortisation charge of acquisition related
intangibles over the next eight years.
Expected credit loss allowance
Management have used judgement to estimate how the expected credit loss allowance could be
impacted by current conditions as well as forecasts of future economic conditions as a
result of ongoing macroeconomic factors. For trade receivables and accrued income, in
addition to using a provision matrix based on the payment profile of revenues a detailed
review has been undertaken at a customer level in order to assess the likely potential of
default considering the nature of the customers business and any government support
measures.
Consideration of climate change
In preparing the financial statements, the Directors have considered the impact of climate
change, particularly in the context of the risks identified as part of the work on the
Taskforce for Climate-related Financial Disclosures (TCFD). Sustainability is recognised
as a growth driver for Renewi, directly aligned to its purpose to protect the world by
giving life to used materials, and is considered in all key decisions across all
management levels. The Directors have commenced a pilot quantitative exercise based on
certain risks identified in the TCFD disclosures and now have models that greatly enhance
our understanding of the potential impact of these risks on revenue and operating costs,
where relevant.
Physical climate change poses risks to our operations and supply chain. However,
mitigation measures are either already in place, or are in the process of being further
developed. In response to increased impacts from extreme heat, we continually invest to
avoid and mitigate the impact of fires as one of the greatest operational risks in the
waste industry. These investments are in processes and systems of fire prevention,
detection, and suppression.
Climate change is not considered to have a material adverse impact on the financial
reporting judgements and estimates. In particular, the impact of climate change has been
considered in respect of the following areas in both the medium and long term:
• Going concern and viability of the Group over the next three years
• Cash flow forecasts used in the impairment assessments of non-current assets including
goodwill, customer contracts and deferred tax assets
• Carrying value and useful economic lives of property, plant and equipment.
The Directors are aware of the ever-changing risk of climate change and will regularly
assess these risks against judgements and estimates made in preparation of the Group’s
financial statements.
3. Segmental reporting
The Group’s chief operating decision maker is considered to be the Board of Directors. The
Group’s reportable segments are determined with reference to the information provided to
the Board of Directors, in order for it to allocate the Group’s resources and to monitor
the performance of the Group. These segments are unchanged from March 2022 and are set out
below:
Commercial Waste Collection and treatment of commercial waste in the Netherlands and
Belgium.
Decontamination, stabilisation and re-use of highly contaminated
Mineralz & Water 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 and Portugal.
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. As detailed in note 12, the Group
acquired GMP Exploitatie B.V during the year and it is included in the Netherlands
Commercial operating segment.
2023 2022
Revenue
€m €m
Netherlands Commercial Waste 932.0 896.2
Belgium Commercial Waste 468.4 466.9
Intra-segment (3.1) (2.6)
Commercial Waste 1,397.3 1,360.5
Mineralz & Water 190.9 193.9
Specialities 348.6 350.1
Inter-segment revenue (44.5) (35.3)
Revenue 1,892.3 1,869.2
2023 2022
Results
€m €m
Netherlands Commercial Waste 76.9 93.1
Belgium Commercial Waste 52.4 42.6
Commercial Waste 129.3 135.7
Mineralz & Water 0.5 5.8
Specialities 17.1 4.1
Group central services (14.0) (12.0)
Underlying EBIT 132.9 133.6
Non-trading and exceptional items (note 5) (11.5) (9.6)
Operating profit 121.4 124.0
Finance income 9.8 9.3
Finance charges (39.0) (38.2)
Finance income – non-trading and exceptional items 0.9 0.2
Finance charges – non-trading and exceptional items - (0.1)
Share of results from associates and joint ventures - 0.5
Profit before taxation 93.1 95.7
Mineralz & Restated* Group Restated* Restated*
Commercial central
Net assets Waste Water Specialities services Tax, net debt and Total
derivatives
€m €m €m €m €m
€m
31 March 2023
Gross
non-current 1,143.8 262.6 211.1 31.9 36.8 1,686.2
assets
Gross current 206.6 35.2 75.0 17.9 64.6 399.3
assets
Gross (379.3) (216.5) (239.0) (72.9) (830.5) (1,738.2)
liabilities
Net assets 971.1 81.3 47.1 (23.1) (729.1) 347.3
(liabilities)
31 March 2022
Gross
non-current 1,010.8 257.5 219.3 36.3 42.0 1,565.9
assets
Gross current 192.0 37.9 67.7 17.2 71.1 385.9
assets
Gross (399.3) (206.4) (180.5) (79.7) (744.0) (1,609.9)
liabilities
Net assets 803.5 89.0 106.5 (26.2) (630.9) 341.9
(liabilities)
* The comparatives have been restated due to a prior period adjustment as explained in
note 2 Basis of preparation.
4. Revenue
The following tables show the Group’s revenue by type of service delivered and by primary
geographical markets:
Mineralz &
Commercial Waste Specialities Inter-segment Total
By type of service Water
€m €m €m €m
€m
2023
Inbound 1,089.6 153.2 202.4 (40.0) 1,405.2
Outbound 218.0 37.7 140.0 (4.3) 391.4
On-site 63.6 - - (0.2) 63.4
Other 26.1 - 6.2 - 32.3
Total revenue 1,397.3 190.9 348.6 (44.5) 1,892.3
2022
Inbound 1,073.0 146.5 231.4 (31.6) 1,419.3
Outbound 212.2 47.4 116.5 (3.5) 372.6
On-site 53.1 - - (0.2) 52.9
Other 22.2 - 2.2 - 24.4
Total revenue 1,360.5 193.9 350.1 (35.3) 1,869.2
Mineralz &
Commercial Waste Specialities Inter-segment Total
By geographical market Water
€m €m €m €m
€m
2023
Netherlands 931.2 159.2 69.3 (42.2) 1,117.5
Belgium 466.1 31.7 46.6 (2.3) 542.1
UK - - 188.4 - 188.4
France - - 27.1 - 27.1
Other - - 17.2 - 17.2
Total revenue 1,397.3 190.9 348.6 (44.5) 1,892.3
2022
Netherlands 895.5 152.9 55.4 (32.9) 1,070.9
Belgium 465.0 41.0 39.8 (2.4) 543.4
UK - - 216.3 - 216.3
France - - 26.3 - 26.3
Other - - 12.3 - 12.3
Total revenue 1,360.5 193.9 350.1 (35.3) 1,869.2
Revenue recognised at a point in time amounted to €1,670.4m (2022: €1,652.5m) 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 62% of revenue
(2022: 57%) 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. These include, but are not limited to, significant impairments,
significant restructuring of the activities of an entity including employee associated
severance costs, acquisition and disposal related transaction costs, significant fires,
onerous contracts arising from restructuring activities or if significant in size, profit
or loss on disposal of properties or subsidiaries as these are irregular, the impact of
terminating hedge derivatives, ineffectiveness of derivative financial instruments, the
impact of changing the discount rate on provisions, amortisation of acquisition related
intangibles and one-off tax credits or charges. The amortisation charge on acquisition
related intangible assets is excluded from underlying results due to its non-trading
nature in the same way as other significant items from M&A activity are excluded. The
performance of the acquired business is assessed as part of the Group’s underlying revenue
and EBIT. By excluding this amortisation charge there is comparability across divisions
and reporting periods.
2023 2022
€m €m
Renewi 2.0 improvement programme 3.7 6.6
Portfolio management activity:
Prior year disposals (1.7) (0.7)
Disposal of business assets in the Mineralz & Water division (3.8) -
(5.5) (0.7)
Changes in long-term provisions:
UK Municipal reassessment of onerous contract provisions 27.1 -
Changes in discount rate (1.7) (3.1)
Release of legal provision relating to the alleged State Aid claim in Belgium (15.1) -
10.3 (3.1)
Other items:
Reversal of prior year property, plant and equipment impairment (2.0) -
Configuration or customisation costs in cloud computing, Software as a - 3.9
Service arrangements
Restructuring credit – cash - (0.5)
(2.0) 3.4
Ineffectiveness and impact of termination of cash flow hedges (0.9) (0.1)
Amortisation of acquisition intangibles 5.0 3.4
Non-trading and exceptional items in profit before tax 10.6 9.5
Tax on non-trading and exceptional items (1.6) (2.4)
Exceptional tax credit - (3.7)
Total non-trading and exceptional items in profit after tax 9.0 3.4
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 now of €28m, previously €40m, 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. This is the third year
of the programme which is largely complete and will achieve the targeted €20m run rate of
savings in the new financial year, with the final costs of €3m to be incurred and paid in
the year to March 2024. The costs of €3.7m (2022: €6.6m) of which €nil (2022: €0.1m) are
recorded in cost of sales and €3.7m (2022: €6.5m) are recorded in administrative expenses.
Portfolio management activity
During the current year certain business assets in the Mineralz & Water division were sold
generating a profit of €3.8m (2022: €nil). The prior year disposals credit of €1.7m (2022:
€0.7m) relates to an insurance claim recovery in relation to a prior disposal. The credit
recognised in the prior year also includes releases of warranty provisions in relation to
prior year disposals. These are all recorded in administrative expenses. The line item
portfolio management and provision movements in non-trading and exceptional items in the
Statement of Cash Flows includes an add back of the €5.5m credit (2022: €nil) and the line
item disposal of subsidiary and business assets net of acquisition of business assets
includes the cash inflow of €1.7m (2022: €nil) from portfolio management activity.
Changes in long-term provisions
The charge of €27.1m (2022: €nil) in relation to the reassessment of UK Municipal onerous
contract provisions is due to revised assumptions on both lifecycle spend and cost
inflation, combined with lower volumes at the ELWA contract partially offset by the
indexation of customer pricing.
The credit for changes in discount rate of €1.7m is a result of the annual reassessment of
risk free rates which have impacted all long-term provisions. The prior year credit of
€3.1m related to future cash flow funding requirements in relation to Dutch landfills as a
result of changes in the discount rate as determined by the relevant Dutch Province in
relation to the long-term aftercare funds. These funds are managed and under the control
of the Province.
On 3 March 2023 the European Commission concluded its formal investigation and determined
that the Belgian Walloon Region did not provide State Aid to the Group and therefore the
provision of €15.1m has been released.
The total charge of €10.3m (2022: €3.1m credit) was split €25.6m charge (2022: €3.1m
credit) to cost of sales and a credit of €15.3m (2022: €nil) to administrative expenses.
The line item portfolio management and provision movements in non-trading and exceptional
items in the Statement of Cash Flows reflects an add back of the charge of €25.4m (2022:
€1.6m) from changes in provisions.
Other items
A reversal of a prior year property, plant and equipment impairment of €2.0m relates to
the Maltha CGU within Specialities as a result of improvement in performance.
Prior year configuration or customisation costs in cloud computing, Software as a Service
(SaaS) arrangements of €3.9m, related to the Group updating its accounting policy on when
software can be capitalised following the IFRIC interpretation. This guidance clarified
the criteria for when assets could be capitalised under IAS 38 Intangible assets in
relation to SaaS arrangements and it was determined that items had been capitalised which
no longer met the criteria for recognition as an asset. The costs were expensed as a
one-off non-trading and exceptional item due to the size, nature and incidence as they
were not considered to be reflective of underlying performance in the prior years. Since 1
April 2022 all costs relating to SaaS arrangements have been recorded in underlying EBIT.
The €0.5m restructuring credit in the prior year was a release of surplus provisions
following a reassessment of the costs of the Covid-19 cost action programme in the year
ended March 2021.
The total credit of €2.0m (2022: €3.4m charge) was split €2.0m credit (2022: €0.5m) in
cost of sales and €nil (2022: €3.9m charge) in administrative expenses.
Items recorded in finance charges and finance income
The €0.9m credit (2022: €0.1m) relates to the ineffectiveness of the Cumbria PPP project
interest rate swaps as a result of a revised repayment programme for the PPP non-recourse
debt.
Amortisation of acquisition intangibles
Amortisation of intangible assets acquired in business combinations of €5.0m (2022: €3.4m)
is all recorded in cost of sales.
Exceptional tax credit
Where one-off tax credits or charges are deemed significant they are classified as
exceptional and outside of normal tax charges. The prior year €3.7m exceptional tax credit
related to changes in UK tax rates.
6. Net finance charges
2023 2022
€m €m
Finance charges
Interest borrowings* 14.0 15.4
Interest payable on PPP non-recourse debt 6.9 7.4
Lease liabilities interest 7.8 7.2
Unwinding of discount on provisions (note 13) 8.3 6.4
Interest charge on retirement benefit schemes - 0.1
Other finance costs 2.0 1.7
Total finance charges before non-trading and exceptional items 39.0 38.2
Non-trading and exceptional finance charges:
Charge as a result of the termination of cash flow hedges - 0.1
Total non-trading and exceptional finance charges - 0.1
Total finance charges 39.0 38.3
Finance income
Interest receivable on financial assets relating to PPP contracts (8.6) (9.0)
Unwinding of discount on deferred consideration receivable - (0.1)
Interest income on retirement benefit schemes (0.2) -
Other finance income (1.0) (0.2)
Total finance income before non-trading and exceptional items (9.8) (9.3)
Non-trading and exceptional finance income:
Ineffectiveness income on cash flow hedges (0.9) (0.2)
Total non-trading and exceptional finance income (0.9) (0.2)
Total finance income (10.7) (9.5)
Net finance charges 28.3 28.8
*Interest on borrowings has been amended to include amortisation of loan fees which was
previously shown separately.
7. Taxation
The tax charge based on the profit for the year is made up as follows:
2023 2022
€m €m
Current tax
UK corporation tax
- Current year 1.0 1.4
- Adjustment in respect of prior years - (0.9)
Overseas tax
- Current year 26.4 17.1
- Adjustment in respect of prior years 0.2 (0.2)
Total current tax charge 27.6 17.4
Deferred tax
- Origination and reversal of temporary differences in the current year (2.5) (0.8)
- Adjustment in respect of prior years 1.4 -
- Exceptional tax credit - 3.7
Total deferred tax (credit) charge (1.1) 2.9
Total tax charge for the year 26.5 20.3
In October 2021 the Dutch government announced an increase in the rate to 25.8% for the
period ending 31 March 2023 and subsequent periods which was enacted in December 2021. In
addition, a tightening of the general interest deduction rule (also referred to as the
EBITDA rule) by lowering the 30% EBITDA threshold to 20% was also enacted. As a result,
Dutch deferred tax has been calculated at the substantively enacted rates depending on
when the timing differences are expected to reverse.
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 rate of 25% (2022: 19% and 25%). This resulted in an
exceptional tax credit of €3.7m in the prior year.
8. Earnings per share
Underlying basic and diluted earnings per share excludes non-trading and exceptional items
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. 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.
2023 2022
Basic Dilutions Diluted Basic Dilutions Diluted
Weighted average number of shares 79.4 0.2 79.6 79.7 0.4 80.1
(million)
Profit after tax (€m) 66.6 - 66.6 75.4 - 75.4
Non-controlling interests (€m) (3.7) - (3.7) (0.9) - (0.9)
Profit after tax attributable to ordinary 62.9 - 62.9 74.5 - 74.5
shareholders (€m)
Basic earnings per share (cents) 79 - 79 93 - 93
The reconciliation between underlying earnings per share and basic earnings per share is
as follows:
2023 2022
Cents €m Cents €m
Underlying earnings per share/Underlying profit after tax 90 71.9 98 77.9
attributable to ordinary shareholders
Adjustments:
Non-trading and exceptional items (13) (10.6) (12) (9.5)
Tax on non-trading and exceptional items 2 1.6 3 2.4
Exceptional tax - - 4 3.7
Basic earnings per share/Earnings after tax attributable to 79 62.9 93 74.5
ordinary shareholders
Diluted underlying earnings per share/Underlying profit after tax 90 71.9 98 77.9
attributable to ordinary shareholders
Diluted basic earnings per share/Earnings after tax attributable 79 62.9 93 74.5
to ordinary shareholders
The weighted average number of shares takes into account the movements in the Renewi
Employee Share Trust, The Trust owns 853,223 £1 shares (1.1%) (2022: 552,851 £1 shares
(0.7%)) of the issued share capital of the Company in trust for the benefit of employees
of the Group. During the year 400,597 (2022: 34,580) £1 shares were transferred to
individuals under the LTIP and DAB schemes and in the prior year 798,433 10 pence shares
were transferred to individuals under the LTIP and DAB schemes prior to the share
consolidation. During the year 700,969 £1 shares (2022: 237,000 £1 shares) were purchased
by the Trust at a cost of €5.3m (2022: €1.8m).
9. Dividends
The Directors have not recommended a final dividend for the year ended March 2023 (2022:
nil).
10. Goodwill, intangible assets, property, plant and equipment, right-of-use assets and
assets held for sale
Intangible Property, Right-of-use
Goodwill plant Total
Assets assets
€m and equipment €m
€m €m
€m
Net book value at 1 April 2021 551.6 43.3 560.7 233.8 1,389.4
Additions/modifications - 9.3 73.3 27.1 109.7
Acquisitions through business - 0.3 0.2 - 0.5
combinations
Disposals - (0.2) (3.7) (1.6) (5.5)
Transferred to Assets held for - - (2.6) - (2.6)
sale
Reclassifications - (0.4) 0.4 - -
Amortisation and depreciation - (8.8) (69.3) (44.8) (122.9)
charge
Impairment charge - (2.3) (5.4) (0.7) (8.4)
Net book value at 31 March 2022 551.6 41.2 553.6 213.8 1,360.2
Additions/modifications - 8.7 117.9 57.4 184.0
Acquisitions through business 17.4 27.9 19.0 38.4 102.7
combinations
Disposals - - (4.9) (5.4) (10.3)
Transferred to Assets held for - - (0.1) - (0.1)
sale
Transfer from right-of-use assets - - 2.0 (2.0) -
to property, plant and equipment
Amortisation and depreciation - (10.5) (69.8) (47.3) (127.6)
charge
Impairment charge - - (1.7) (2.3) (4.0)
Reversal of a prior year’s - - 2.0 0.5 2.5
impairment charge
Exchange rate changes - - (0.1) - (0.1)
Net book value at 31 March 2023 569.0 67.3 617.9 253.1 1,507.3
At 31 March 2023, the Group had property, plant and equipment commitments of €53.1m (2022:
€38.6m), right-of-use asset commitments of €17.7m (2022: €38.8m) and intangible asset
commitments of €7.6m (2022: €2.7m).
Assets held for sale
The Group had €0.6m (2022: €3.3m) assets classified as held for sale at 31 March 2023,
these relate to land and buildings in the Belgium Commercial Division which are expected
to be sold within the next 12 months. The prior year value also included €2.0m land and
buildings at a Netherlands Commercial Division site and €1.3m in the Belgium Commercial
Division in relation to an associate of €0.7m and land and buildings of €0.6m.
11. Cash and borrowings
Cash and cash equivalents are analysed as follows:
2023 2022
€m €m
Cash at bank and in hand - core 43.7 42.5
Cash at bank - restricted relating to PPP contracts 19.0 21.1
Total cash and cash equivalents 62.7 63.6
Borrowings are analysed as follows:
Restated*
2023
2022
€m
€m
Non-current borrowings
Retail bonds 199.5 199.2
Bank loans and private placements – fixed interest rates 89.6 24.8
Bank loans – floating interest rates# 101.1 12.8
Lease liabilities 208.3 178.5
PPP non-recourse debt 83.1 94.6
681.6 509.9
Current borrowings
Retail bonds - 100.0
Bank loans and private placements – fixed interest rates 15.0 -
Bank loans and overdrafts – floating interest rates 0.1 1.3
Lease liabilities 46.5 41.3
PPP non-recourse debt 5.2 5.6
66.8 148.2
#The revolving credit facility is now included in Bank loans – floating interest rates.
*The comparatives for lease liabilities have been restated due to a prior year adjustment
as explained in note 2 Basis of preparation.
Retail bonds
At 31 March 2023, the Group had two issues of green retail bonds. The green retail bonds
of €75m (2022: €75m) maturing in July 2024 have an annual gross coupon of 3.00% and the
green retail bonds of €125m (2022: €125m) maturing in July 2027 have an annual gross
coupon of 3.00%. On 16 June 2022 the €100m green retails bonds with an annual gross coupon
of 3.65% were repaid on maturity. The green retail bonds are unsecured and have cross
guarantees from members of the Group.
Bank loans - fixed interest rates and floating interest rates
At 31 March 2023, the Group had a Euro denominated multicurrency green finance facility of
€470m (2022: €425m) including a €400m (2022: €400.0m) revolving credit facility (RCF) and
€70m (2022: €25.0m) European private placements (EUPP).
Of the RCF €30m matures on 18 May 2023, €65m matures on 18 May 2024 and €305m matures on
18 May 2025. At 31 March 2023 €102.5m (2022: €15.0m) of the RCF was drawn for borrowings
in Euros with floating interest rates. The remaining €297.5m (2022: €385.0m) was available
for drawing of which €48.5m (2022: €48.5m) was allocated for ancillary overdraft and
guarantee facilities. The RCF qualifies as green financing as per the Green Finance
Framework and is aligned to the International Capital Market Association Green Bond
Principles and the Loan Market Association Green Loan Principles. There are four green
KPIs which result in an interest rate margin adjustment dependent upon performance against
pre-determined targets that were agreed with the Lenders. The green KPIs are non-financial
and specific to the performance of the Group in the following areas: recycling and
recovery rate, carbon avoidance, percentage of trucks Euro VI compliant and >3 day
accident rate. The impact of the margin adjustment is insignificant and therefore the IFRS
9 Financial instruments solely principal payments and interest criteria are met and it is
appropriate to account for the RCF on an amortised cost basis.
The EUPP has a maturity of December 2023 for €15m at a fixed interest rate of 2.344%,
December 2025 for €10m with a fixed interest rate of 2.916% and November 2029 for the
additional €45m drawn in November 2022 at a fixed interest rate of 4.676%.
In November 2022 the Group drew down a new €10m loan repayable in one lump sum on 10
November 2027 at a fixed interest rate of 4.22%. On 17 November 2022 the Group signed a
finance contract with the European Investment Bank for a facility of €40m, the first
tranche of €25m was drawn on 15 December 2022 at a fixed interest rate of 3.572% repayable
in seven equal annual instalments commencing on 15 December 2025.
Movement in total net debt
Restated*
Other At 31
At 1 Acquired Exchange
Cash flows (Note 12) non-cash movements March
April changes
€m €m €m 2023
2022 €m
€m
€m
Bank loans and overdrafts – (14.1) (79.4) (7.0) (0.6) (0.1) (101.2)
floating interest rates
Bank loans and private
placements – fixed interest (24.8) (80.0) - 0.2 - (104.6)
rates
Retail bonds (299.2) 100.0 - (0.3) - (199.5)
Lease liabilities (219.8) 47.5 (30.7) (52.0) 0.2 (254.8)
Debt excluding PPP non-recourse (557.9) (11.9) (37.7) (52.7) 0.1 (660.1)
debt
PPP non-recourse debt (100.2) 8.1 - - 3.8 (88.3)
Total gross debt (658.1) (3.8) (37.7) (52.7) 3.9 (748.4)
Cash and cash equivalents – core 42.5 1.5 - - (0.3) 43.7
Cash and cash equivalents –
restricted relating to PPP 21.1 (1.1) - - (1.0) 19.0
contracts
Total net debt (594.5) (3.4) (37.7) (52.7) 2.6 (685.7)
Analysis of total net debt:
Net debt excluding PPP (515.4) (10.4) (37.7) (52.7) (0.2) (616.4)
non-recourse net debt
PPP non-recourse net debt (79.1) 7.0 - - 2.8 (69.3)
Total net debt (594.5) (3.4) (37.7) (52.7) 2.6 (685.7)
*The comparatives for lease liabilities have been restated due to a prior year adjustment
as explained in note 2 Basis of preparation.
At 31 March 2023 the balance of interest accrued relating to total borrowings was €5.9m
(2022: €7.9m) and was included within the accruals and other payables balance. This
balance was after finance charges of €29.1m (2022: €29.3m) (including the finance charges
impact of the interest rate swaps) net of a cash outflow of €31.3m (2022: €28.4m)
(excluding €0.4m (2022: €1.6m of loan fees) and €0.2m (2022: €nil) relating to exchange
rate changes.
Analysis of movement in total net debt
Restated*
2023
2022
€m
€m
Net increase (decrease) in cash and cash equivalents 0.4 (6.2)
Net (increase) decrease in borrowings and lease liabilities (3.8) 94.8
Cash flows in total net debt (3.4) 88.6
Bank loans and lease liabilities acquired through a business (37.7) -
combination
Lease liabilities entered into during the year (57.4) (27.1)
Lease liabilities cancelled during the year 5.4 1.5
Capitalisation of loan fees 0.3 1.6
Amortisation of loan fees (1.0) (1.9)
Exchange gain 2.6 0.8
Movement in net debt (91.2) 63.5
Total net debt at beginning of year (594.5) (658.0)
Total net debt at end of year (685.7) (594.5)
*The comparatives for lease liabilities and exchange gain have been restated due to a
prior year adjustment as explained in note 2 Basis of preparation.
12. Acquisitions and Disposals
Acquisitions
Acquisition of GMP Exploitatie B.V.
On 1 August 2022 the Group acquired 100% of the share capital of GMP Exploitatie B.V. and
its subsidiaries (subsequently renamed Renewi Westpoort Holding B.V.) for a cash
consideration of €53.5m. In addition to the cash purchase consideration paid of €53.5m,
the Group immediately settled an acquired €7.0m bank loan.
The business operates from a large and well permitted processing facility located in the
port area of Amsterdam. The site of 130,000m2 has excellent road and water access
operating two advanced sorting lines for processing mixed construction and demolition
waste as well as household waste. In addition, a minerals classification and washing
installation produces secondary construction materials from construction and demolition
waste. The acquisition will deliver synergies from site rationalisation, route and waste
flow optimisation and other operational benefits as part of the Group’s Netherlands
Commercial Waste division CGU.
The asset identification and fair value allocation processes has been finalised and the
table below shows the final values. External specialists were engaged to assist with
determining the final balance sheet specifically with regard to intangible assets
acquired. The Group has separately identified customer relationships and permits as
acquisition related intangibles. The goodwill arising on the acquisition is attributable
to management’s expectations of synergies to be achieved post acquisition. None of the
goodwill on this acquisition is deductible for tax, however deferred tax at a tax rate of
25.8% has been recognised on acquisition intangibles as required under IAS 12 Income
Taxes.
Key Valuation methods
Permits
The acquisition included a mix of permits with an infinite lifetime and these were valued
following the Income approach – multiperiod excess earning method. The key assumptions are
revenue, EBITDA and contributory asset charges in order to determine the appropriate cash
flows which are then discounted. As the permits are linked to the site which is located on
leased land, the remaining useful life is determined to be equal to the term of the 34
year lease.
Customer relationships
The acquisition included both inbound and outbound customers and the fair value has been
calculated by following the Income approach – with-or-without method. The key assumptions
are the post-tax cash flows and the time taken to ramp-up to the current customer base.
The remaining useful life is determined to be 8 years.
Land and buildings
The buildings are located on leasehold land. Two external real estate advisors performed
valuations based on the existing lease arrangement. The acquisition value was adjusted to
take account of the favourable element of the land lease which has been added to the
right-of-use asset. The remaining useful life is determined to be 34 years in line with
the lease term.
Fair value acquired
€m
Intangible assets – Permits 6.0
Intangible assets – Customer relationships 21.6
Property, plant and equipment 18.0
Right-of-use assets 38.4
Trade and other receivables 9.4
Inventories 0.3
Current tax receivable 0.2
93.9
Trade and other payables (8.9)
Provisions (1.3)
Deferred tax liabilities (9.6)
Borrowings – Bank loan (7.0)
Borrowings – Lease liabilities (30.7)
(57.5)
Net identifiable assets acquired 36.4
Add: Goodwill arising on acquisition 17.1
Net assets acquired 53.5
Total
Purchase consideration
€m
Cash consideration 53.5
Less: Cash balances acquired -
Net cash outflow – investing activities 53.5
In the period from the acquisition to 31 March 2023 the business contributed €30.2m to the
Group’s revenue and a loss of €2.6m to the Group’s profit after tax. If the acquisition
had been completed on the first day of the financial year, the business would have
contributed €51.8m to the Group’s revenue and a loss of €3.1m to the Group’s profit after
tax. Acquisition related costs of €0.4m were recognised within administrative costs.
Others
In addition, during September 2022 the Netherlands Commercial division completed a
business assets acquisition for cash consideration of €1.6m. The assets acquired were
€1.0m of plant and machinery with €0.3m allocated to an acquisition related intangible for
customer lists and the balance of €0.3m to goodwill.
During the prior year the Netherlands Commercial Division acquired plant and machinery
business assets of €0.2m and acquisition related intangible customer lists of €0.3m.
Disposals
On 27 June 2022 the Mineralz & Water division disposed of net liabilities totalling €3.6m
in relation to its North business for a cash
consideration of €0.2m generating a profit on sale of €3.8m which has been recorded as a
non-trading and exceptional item in line with the Group’s policy due to the significant
value of the profit.
On 5 August 2022 the Specialities division sold its Maltha Hungary entity. Net liabilities
of €0.8m were sold for a cash consideration net of cash sold of €0.1m which generated a
profit on sale of €0.9m. The profit on sale which included the impact of a recycled
cumulative currency translation has been recorded in underlying EBIT.
There were no disposals in the prior year.
13. Provisions
Site Restated* Restated*
restoration and Legal and Restructuring Other
aftercare Onerous warranty Total
contracts €m €m
€m €m €m
€m
At 31 March 2022 – 156.9 85.7 23.1 4.0 25.3 295.0
restated*
Impact of adopting
amendments to IAS 37 - 53.2 - - - 53.2
(note 2)
At 1 April 2022 156.9 138.9 23.1 4.0 25.3 348.2
Acquisition through - - - - 1.3 1.3
business combinations
Provided in the year 4.9 0.2 0.4 2.6 5.0 13.1
Released in the year - - (15.1) (1.5) (3.3) (19.9)
Disposed of in the year - - - - (1.8) (1.8)
Finance charges – 4.1 4.0 - - 0.2 8.3
unwinding of discount
Utilised in the year (5.5) (17.3) (0.9) (2.1) (1.5) (27.3)
Exceptional impact of
increase in discount
rates and reassessment 4.3 21.3 - - (0.2) 25.4
of UK Municipal
contracts (note 5)
Exchange rate changes (0.2) (5.2) - - - (5.4)
At 31 March 2023 164.5 141.9 7.5 3.0 25.0 341.9
Within one year 11.3 18.9 4.0 3.0 6.5 43.7
Between one and five 40.6 62.3 0.4 - 6.0 109.3
years
Between five and ten 61.9 32.8 0.5 - 3.3 98.5
years
Over ten years 50.7 27.9 2.6 - 9.2 90.4
At 31 March 2023 164.5 141.9 7.5 3.0 25.0 341.9
Within one year – 5.7 10.2 4.7 4.0 7.5 32.1
restated*
Between one and five 49.3 28.2 15.6 - 5.4 98.5
years – restated*
Between five and ten 50.8 23.1 0.5 - 3.4 77.8
years
Over ten years 51.1 24.2 2.3 - 9.0 86.6
At 31 March 2022 – 156.9 85.7 23.1 4.0 25.3 295.0
restated*
*The comparatives have been restated due to a prior year adjustment as explained in note 2
Basis of preparation.
Site restoration and aftercare
The Group’s unavoidable costs have been reassessed at the year end and the NPV fully
provided for. The site restoration provisions at 31 March 2023 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 28 years (2022: 30 years) from the
balance sheet date. Aftercare provisions cover post-closure costs of landfill sites which
include such items as monitoring, gas and leachate management and licensing. For aftercare
provisions relating to Dutch landfill sites where the province administers and controls
the aftercare fund, payments are made to the province at predetermined dates over a period
of up to 10 years. Where the Group is responsible for the aftercare the dates of payments
of these aftercare costs are uncertain but are anticipated to be over a period of at least
30 years from closure of the relevant landfill site. All site restoration and aftercare
costs have been estimated by management based on current best practice and technology
available and may be impacted by a number of factors including changes in legislation and
technology.
Onerous contracts
Onerous contract provisions arise when the unavoidable costs of meeting contractual
obligations exceed the cash flows expected. They are provided for at the lower of the NPV
of either exiting the contracts or fulfilling our obligations under the contracts. As a
result of the amendment to IAS 37 for Onerous contracts, at 1 April 2022 provisions for
onerous contracts have increased by €53.2m as the amendment now requires the costs of
fulfilling a contract consist of both the incremental cost of fulfilling that contract and
an allocation of other costs that related directly to fulfilling the contract. Prior to
this amendment the Group only included incremental direct costs with an allocation of
other divisional costs now included. The provisions have been calculated on the best
estimate of likely future cash flows over the contract term based on the latest
projections, including assumptions on inflationary increases, tonnage inputs, 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 have required the
Walloon Region to seek repayment from the Group and a provision of €15.1m was recognised.
On 3 March 2023 the European Commission concluded its formal investigation and determined
that the Belgian Walloon Region did not provide State Aid to the Group. As a result the
provision has been released during the year ended 31 March 2023 and there is no longer a
contingent liability.
Restructuring
The restructuring provision primarily relates to redundancy and related costs incurred as
a result of restructuring initiatives. The provision is expected to be spent in the
following twelve months as affected employees leave the business.
Other
Other provisions includes dilapidations €10.9m (2022: €9.1m), long-service employee awards
€6.0m (2022: €7.0m) and other environmental liabilities €8.1m (2022: €9.2m). 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 2072.
14. Defined benefit pension schemes
The Group has the legacy Shanks UK defined benefit scheme which provides pension benefits
for pensioners, deferred members and eligible UK employees which is closed to new entrants
and to future benefit accrual. In addition there are a number of defined benefit pension
schemes eligible for certain employees in both the Netherlands and Belgium.
The amounts recognised in the Income Statement were as follows:
2023 2022
€m €m
Current service cost 1.7 2.3
Curtailment (0.3) -
Interest (income) expense on scheme net liabilities (0.2) 0.1
Net defined benefit pension schemes charge before tax 1.2 2.4
The amounts recognised in the balance sheet were as follows:
2023 2022
€m €m
Present value of deferred benefit obligations (201.1) (275.7)
Fair value of plan assets 191.8 278.0
Defined benefit pension schemes net (deficit) asset (9.3) 2.3
Related deferred tax asset 2.4 (0.5)
Net defined pension schemes (liability) asset (6.9) 1.8
Classified as:
Defined benefit scheme surplus - included in non-current assets - 8.6
Defined benefit pension schemes deficit - included in non-current (9.3) (6.3)
liabilities
Defined benefit pension schemes net (deficit) asset (9.3) 2.3
The legacy Shanks UK defined benefit scheme moved by €12.9m from an asset of €8.6m at 31
March 2022 to a deficit of €4.3m at 31 March 2023. This was due to lower returns on
pension scheme assets which were only partly offset by an increase in the discount rate
assumption on scheme liabilities from 2.8% at 31 March 2022 to 4.9% at 31 March 2023. The
deficit for the overseas defined benefit schemes reduced by €1.3m to €5.0m as a result of
increased discount rate assumptions on scheme liabilities.
15. 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 ended 31 March 2023, there were no transfers between level 1 and level 2
fair value measurements and no transfers into or out of level 3.
Valuation techniques used to derive level 2 fair values:
• Unlisted non-current investments comprise unconsolidated companies where the fair
value approximates the book value
• Short-term investment valuations are provided by the fund manager
• Derivative financial instruments are determined by discounting the future cash flows
using the applicable period-end yield curve
• The fair value of the fixed interest rate bank loans and 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.
Level 2
2023 2022
€m €m
Assets
Unlisted non-current investments 4.6 4.6
Short-term investments 10.9 11.1
Derivative financial instruments 1.6 7.0
17.1 22.7
Liabilities
Derivative financial instruments 4.5 14.7
Bank loans and private placements – fixed interest rates 110.6 25.7
Retail bonds 196.5 300.2
311.6 340.6
16. Contingent liabilities
Since 2017 ATM faces challenges in the offtake of thermally treated soil. This resulted in
a criminal investigation, which was initiated in 2019 and closed in April 2022 without any
prosecution. It is noted, however, that there are discussions ongoing on the application
of thermally cleaned soil in certain areas in the Netherlands and it cannot be ruled out
that this could result in liability for damages resulting from third party claims in the
future.
All sites need to operate in alignment with the related permits and when new regulatory
requirements come into force, the Group may need to undertake additional expenditure to
align to new standards. No account is taken of any potential changes until the new
obligations are fully defined and enforceable. At one of the landfill sites in Belgium
there is a risk that when a new permit is issued during the next 12 months, there could be
a change in relation to the water treatment requirements as a result of new landfill
regulations expected to be approved during 2023. We consider the most likely impact to be
additional costs of up to €3m however the maximum exposure could be €14m. Due to the
uncertainty of the outcome, these costs have not been included within the landfill
provision and are therefore considered to be a contingent liability.
Due to the nature of the industry in which the business operates, from time to time the
Group is made aware of claims or litigation arising in the ordinary course of the Group’s
business. Provision is made for the Directors’ best estimate of all known claims and all
such legal actions in progress. The Group takes legal advice as to the likelihood of
success of claims and actions and no provision is made where the Directors consider, based
on that advice, that the action is unlikely to succeed or a sufficiently reliable estimate
of the potential obligation cannot be made. None of these other matters are expected to
have a material impact.
Under the terms of sale agreements, the Group has given a number of indemnities and
warranties relating to businesses sold in prior periods. Different warranty periods are in
existence and it is assumed that these will expire within 15 years. Based on management’s
assessment of the most likely outcome appropriate warranty provisions are held.
In respect of contractual liabilities the Group and its subsidiaries have given guarantees
and entered into counter indemnities of bonds and guarantees given on their behalf by
sureties and banks totalling €229.2m (2022: €226.0m).
17. Alternative performance measures (APMs) and reconciliations
In accordance with the Guidelines on APMs issued by the European Securities and Markets
Authority, additional information is provided on the APMs used by the Group below. The
Directors use APMs 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. There
have been no changes in approach.
Financial Measure How we define it Why we use it
Provides insight into
profit generation and is
the measure used by
Operating profit excluding non-trading management to make
Underlying EBIT and exceptional items which are defined decisions as it provides
in note 5 consistency and
comparability of the
ongoing performance between
periods
Underlying EBIT Underlying EBIT as a percentage of Provides insight into
margin revenue margin development
and trends
Underlying EBIT before depreciation,
amortisation and impairment of property,
plant and equipment, right-of-use assets, Measure of earnings and
Underlying EBITDA intangible assets and investments, profit cash generation to assess
or loss on disposal of property, plant operational performance
and equipment, intangible assets and
subsidiaries
Underlying EBITDA Underlying EBITDA as a percentage of Provides insight into
margin revenue margin development
and trends
Underlying profit Profit before tax excluding non-trading Facilitates underlying
before tax and exceptional items performance evaluation
Underlying EPS Earnings per share excluding non-trading Facilitates underlying
and exceptional items performance evaluation
Underlying effective The effective tax rate on underlying Provides a more comparable
tax rate profit before tax basis to analyse the tax
rate
Last 12 months underlying EBIT divided by Provides a measure of the
a 13-month average of net assets return on assets across the
Return on operating excluding core net debt, IFRS 16 lease Divisions and the Group
assets liabilities, derivatives, tax balances, excluding goodwill and
goodwill and acquisition related acquisition related
intangibles intangible balances
Last 12 months underlying EBIT as Provides a measure of the
Post-tax return on adjusted by the Group effective tax rate Group return on assets
capital employed divided by a 13-month average of net taking into account the
assets excluding core net debt, IFRS 16 goodwill and acquisition
lease liabilities and derivatives related intangible balances
Growth capital Growth capital projects which include the
innovation portfolio and other large Provides an understanding
expenditure strategic investments of how cash is being spent
to grow the business
Net cash generated from operating
activities including interest, tax and
replacement capital spend and excluding
cash flows from non-trading and Measure of cash generation
exceptional items, Covid-19 tax deferral in the underlying business
payments, settlement of historic ATM soil available to fund growth
liabilities and cash flows relating to capital projects and invest
the UK PPP contracts. Payments to fund in acquisition. We classify
Adjusted free cash defined benefit pension schemes are also our capital spend into
flow excluded as these schemes are now closed general replacement
to both new members and ongoing accrual expenditure and growth
and as such relate to historic capital projects which
liabilities. The Municipal contract cash include the innovation
flows are excluded because they portfolio and other large
principally relate to onerous contracts strategic investments
as reported in exceptional charges in the
past and caused by adverse market
conditions not identified at the
inception of the contract
Measure of cash available
Net cash generated from operating after regular replacement
activities principally excluding capital expenditure and
Free cash flow non-trading and exceptional items and historic liabilities 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 underlying Provides an understanding
conversion EBIT of how profits convert into
cash
Financial Measure How we define it Why we use it
Renewi 2.0 and other exceptional cash
Non-trading and flows are presented in cash flows from Provides useful information
exceptional operating activities and are included in on non-trading and
cash flow items the categories in note 5, net of opening exceptional cash flow spend
and closing Balance Sheet positions
Total cash flow is the movement in 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 PPP Group
non-recourse debt, additions to IFRS 16
lease liabilities and lease liabilities
acquired through a business combination
The cash relating to UK PPP
contracts is not freely
available to the Group and
is excluded from financial
Core cash Core cash excludes cash and cash covenant calculations of
equivalents relating to UK PPP contracts the main multicurrency
green finance facility
therefore excluding this
gives a suitable measure of
cash for the Group
The borrowings relating to
the UK PPP contracts are
non-recourse to the Group
and excluding these gives a
Core net debt includes core cash suitable measure of
Core net debt excludes debt relating to the UK PPP indebtedness for the Group
contracts and lease liabilities as a and IFRS 16 lease
result of IFRS 16 liabilities are excluded as
financial covenants on the
main multicurrency green
finance facility remain on
a frozen GAAP basis
Liquidity headroom includes core cash Provides an understanding
Liquidity and undrawn committed amounts on the of available headroom to
multicurrency green finance facility and the Group
the European Investment Bank facility
This is the key covenant of the Group’s
banking facilities which is calculated
following an agreed methodology to
protect the Group from potential
volatility caused by accounting standard
changes, sudden movements in exchange
rates and exceptional items. Net debt
and EBITDA are measured on a frozen GAAP Commonly used measure of
Net debt to basis with the main impact of this being financial leverage and
EBITDA/leverage ratio the exclusion of IFRS 16 Lease consistent with covenant
Liabilities. Exceptional items are definition
excluded from EBITDA and cash and debt
relating to UK PPP contracts is excluded
from net debt. Net debt and EBITDA are
translated to Euros using average
exchange rates for the period. Covenant
ratios are measured quarterly on a
rolling 12-month basis at March, June,
September and December
Reconciliation of operating profit (loss) to underlying EBITDA
Netherlands Belgium Mineralz & Group
Commercial Commercial Water Specialities central Total
2023 Waste Waste services
€m €m €m
€m €m €m
Operating profit (loss) 69.4 65.3 1.0 (3.0) (11.3) 121.4
Non-trading and exceptional
items (excluding finance 7.5 (12.9) (0.5) 20.1 (2.7) 11.5
items)
Underlying EBIT 76.9 52.4 0.5 17.1 (14.0) 132.9
Depreciation and impairment
of property, plant and 57.1 31.2 17.0 7.8 6.2 119.3
equipment and right-of-use
assets
Amortisation of intangible
assets (excluding 0.9 - 0.9 0.2 3.5 5.5
acquisition intangibles)
Impairment of investment in - - - 0.9 - 0.9
associate
Non-exceptional gain on
disposal of property, plant (1.9) (0.2) (0.1) (0.8) - (3.0)
and equipment, intangible
assets and subsidiaries
Underlying EBITDA 133.0 83.4 18.3 25.2 (4.3) 255.6
Netherlands Belgium Group
Commercial Commercial Mineralz & Specialities Total
2022 Waste Waste Water central
€m services €m
€m €m €m
€m
Operating profit (loss) 89.1 40.4 8.7 3.2 (17.4) 124.0
Non-trading and exceptional
items (excluding finance 4.0 2.2 (2.9) 0.9 5.4 9.6
items)
Underlying EBIT 93.1 42.6 5.8 4.1 (12.0) 133.6
Depreciation and impairment
of property, plant and 56.2 34.2 16.0 8.1 5.7 120.2
equipment and right-of-use
assets
Amortisation and impairment
of intangible assets 0.9 - 0.6 0.6 5.6 7.7
(excluding acquisition
intangibles)
Impairment of investment in - - - 1.9 - 1.9
associate
Non-exceptional (gain) loss
on disposal of property, (1.3) 0.7 - (0.2) - (0.8)
plant and equipment and
intangible assets
Underlying EBITDA 148.9 77.5 22.4 14.5 (0.7) 262.6
Calculation of return on operating assets
Netherlands Belgium Mineralz & Specialities
Commercial Waste Commercial Water excluding UK Group
2023 Waste Municipal
€m €m €m
€m €m
Underlying EBIT 76.9 52.4 0.5 15.9 132.9
13 month average of operating 398.2 110.8 64.4 44.9 360.0
assets
Return on operating assets 19.3% 47.3% 0.8% 35.4% 36.9%
2022
Underlying EBIT 93.1 42.6 5.8 11.3 133.6
13 month average of operating 355.3 92.3 51.8 39.3 313.6
assets
Return on operating assets 26.2% 46.2% 11.3% 28.9% 42.6%
Calculation of post-tax return on capital employed
2023 2022
€m €m
Operating profit 121.4 124.0
Non-trading and exceptional items in operating profit 11.5 9.6
Underlying EBIT 132.9 133.6
Tax at effective rate (2023: 27.1%, 2022: 25.0%) (36.0) (33.4)
Post tax underlying EBIT 96.9 100.2
13 month average of capital employed 915.3 860.6
Post-tax return on capital employed 10.6% 11.6%
Reconciliation of statutory profit before tax to underlying profit before tax
2023 2022
€m €m
Statutory profit before tax 93.1 95.7
Non-trading and exceptional items in operating profit 11.5 9.6
Non-trading and exceptional finance net income (0.9) (0.1)
Underlying profit before tax 103.7 105.2
Reconciliation of free cash flow and adjusted free cash flow as presented in the Finance
review
Restated*
2023
2022
€m
€m
Net cash generated from operating activities 188.4 179.7
Exclude non-trading and exceptional provisions and working capital 4.4 11.0
Exclude payments to fund defined benefit pension schemes 3.5 3.6
Include finance charges and loan fees paid (31.3) (28.4)
Include finance income received 10.6 9.9
Include repayment of obligations under lease liabilities (47.5) (43.5)
Include purchases of replacement items of intangible assets (9.9) (8.4)
Include purchases of replacement items of property, plant and equipment (84.2) (64.5)
Include proceeds from disposals of property, plant & equipment 6.8 4.7
Include capital received in respect of PPP financial asset net of 6.0 5.7
outflows
Include repayment of UK Municipal contracts PPP debt (8.1) (5.7)
Include movement in UK Municipal contracts PPP cash 1.1 (3.6)
Free cash flow 39.8 60.5
Exclude deferred Covid taxes paid 19.7 10.6
Exclude offtake of ATM soil 1.2 10.3
Exclude UK Municipal contracts 12.2 9.9
Adjusted free cash flow 72.9 91.3
*The comparatives have been restated due to a prior year adjustment as explained in note 2
Basis of preparation.
Reconciliation of net capital spend in the Finance review to purchases and disposal
proceeds of property, plant and equipment and intangible assets within Investing
activities in the consolidated Statement of Cash Flows
2023 2022
€m €m
Purchases of intangible assets (9.9) (8.4)
Purchases of replacement property, plant and equipment (84.2) (64.5)
Proceed from disposals of property, plant and equipment 6.8 4.7
Net replacement capital expenditure (87.3) (68.2)
Growth capital expenditure (30.8) (13.1)
Total capital spend as shown in the cash flow in the Finance review (118.1) (81.3)
2023 2022
€m €m
Purchases of intangible assets (9.9) (8.4)
Purchases of property, plant and equipment (replacement and growth) (115.0) (77.6)
Proceed from disposals of property, plant and equipment 6.8 4.7
Purchases and disposal proceeds of property, plant and equipment and
intangible assets within Investing activities in the consolidated Statement (118.1) (81.3)
of Cash Flows
Reconciliation of property, plant and equipment additions to replacement capital
expenditure as presented in the Finance review
2023 2022
€m €m
Property, plant and equipment additions (note 10) (117.9) (73.3)
Intangible asset additions (note 10) (8.7) (9.3)
Proceeds from disposals of property, plant and equipment 6.8 4.7
Movement in capital creditors (included in trade and other payables) 1.7 (1.9)
Growth capital expenditure – as disclosed in the Finance review 30.8 13.1
Government grants received in a prior period transferred to property, plant - (1.5)
and equipment
Replacement capital expenditure per the Finance review (87.3) (68.2)
Reconciliation of total cash flow as presented in the Finance review to the movement in
total net debt
Restated*
2023
2022
€m
€m
Total cash flow (64.9) 29.4
Additions to lease liabilities net of cancelled lease liabilities (52.0) (25.6)
Lease liabilities acquired through a business combination (30.7) -
Repayment of obligations under lease liabilities 47.5 43.5
Movement in PPP non-recourse debt 8.1 5.7
Movement in PPP cash and cash equivalents (1.1) 3.6
Capitalisation of loan fees net of amortisation (0.7) (0.3)
Exchange movements 2.6 0.8
Settlement of cross-currency interest rate swaps - 6.4
Movement in total net debt (note 11) (91.2) 63.5
*The comparatives have been restated due to a prior year adjustment as explained in note 2
Basis of preparation.
Reconciliation of total cash flow as presented in the Finance review to the movement in
cash
2023 2022
€m €m
Total cash flow (64.9) 29.4
Proceeds from retail bonds - 125.0
Repayment of retail bonds (100.0) -
Proceeds from bank borrowings 565.0 141.6
Repayment of bank borrowings (405.6) (312.2)
Bank loan acquired through business combination 7.0 -
Movement in PPP cash and cash equivalents (1.1) 3.6
Exchange movements (1.3) 1.0
Settlement of cross-currency interest rate swaps - 6.4
Movement in total cash (0.9) (5.2)
Reconciliation of total net debt to net debt under covenant definition
Restated*
2023
2022
€m
€m
Total net debt (685.7) (594.5)
Exclude PPP non-recourse debt 88.3 100.2
Exclude PPP cash and cash equivalents (19.0) (21.1)
Exclude IFRS 16 lease liabilities 245.8 212.4
Net debt aligned with covenant definition (370.6) (303.0)
*The comparatives have been restated due to a prior year adjustment as explained in note 2
Basis of preparation.
APPENDIX
Principal Risks and Uncertainties affecting the Group
Product pricing, demand and quality – That the value we receive for recycled product
falls, that markets contract, reducing demand for our product, or we become unable to
produce to the required quality.
Residue costs, capacity and specification – Lack of capacity at outlets and/or inability
to produce in specification, resulting in increased price or limitations of disposal of
burnable waste and other residues.
Input volumes – That incoming waste volumes in the market may fall.
Changes in law and policy – Adverse impacts from changes in law and policy, including
environmental, tax and similar legal and policy regimes, including changes in regulatory
attitude and behaviours as a result of shifts in public opinion.
Disruptive event – That a disruptive event such as a pandemic or war has severe
consequences for our incoming waste streams, market prices, access to energy and
workforce, causing business interruption or loss.
Health and safety – Injury or loss of life. That we incur reputational loss, or civil and
criminal costs.
Digitisation – That a disruptive technology or business model deployed by a competitor or
new entrant impacts our ability to compete.
Labour availability and cost – That there are shortages of certain labour types, leading
to unavailability or severe wage inflation.
Major plant failure or fire – Operational failure and/or fire at a key facility leading to
business interruption and other costs.
Unsustainable debt – That funding is not available or that funding sources are available,
but that cash generation is insufficient to allow access to funding.
Regulatory compliance – That we fail to comply with environmental permits and/or
environmental laws and regulations.
Talent development, leadership and diversity – That we fail to develop the required
management capabilities for future needs.
Long-term contracts – That we enter into long-term contracts at disadvantageous terms or
rely on a small number of large contracts.
Input pricing – That market pricing may put pressure on our margins.
ICT failure and cyber threat – That ICT failure and/or cyber crime causes business
interruption or loss.
Climate related physical risks – extreme heat, water stress and drought, flooding, storms
and wind.
Climate related transition risks – increasing pricing of greenhouse gas emissions, supply
chain emissions transparency, lack of developing climate policies, changes in waste volume
and composition due to reduce and reuse principles.
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Dissemination of a Regulatory Announcement that contains inside information in accordance
with the Market Abuse Regulation (MAR), transmitted by EQS Group.
The issuer is solely responsible for the content of this announcement.
══════════════════════════════════════════════════════════════════════════════════════════
ISIN: GB00BNR4T868
Category Code: FR
TIDM: RWI
LEI Code: 213800CNEIDZBL17KU22
OAM Categories: 1.1. Annual financial and audit reports
1.1. Annual financial and audit reports
Sequence No.: 246136
EQS News ID: 1637663
End of Announcement EQS News Service
══════════════════════════════════════════════════════════════════════════
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