REG-Renewi plc Renewi plc: Half-year report
10/11/2020 07:05
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Renewi plc (RWI)
Renewi plc: Half-year report
10-Nov-2020 / 07:00 GMT/BST
Dissemination of a Regulatory Announcement that contains inside information according
to REGULATION (EU) No 596/2014 (MAR), transmitted by EQS Group.
The issuer is solely responsible for the content of this announcement.
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10 November 2020
Renewi plc
("Renewi", the "Company" or, together with its subsidiaries, the "Group")
Resilient first half trading and positive outlook
Renewi plc (LSE: RWI), the leading international waste-to-product business, announces
its interim results for the six months ended 30 September 2020 ("H1").
Summary
• Resilient financial and operational performance through Covid-19
• Q2 volumes in Netherlands and Belgium Commercial recovered well to 97% and 91% of
prior year volumes respectively
• Revenue and underlying EBITDA from ongoing businesses down 3%1
• Underlying EBIT from ongoing businesses down 25% to €28.3m1
• Total exceptional items reduced by 86% to €8.1m
• Statutory profit of €3.5m up €38.9m from the prior year
• Cost savings of €10m in H1 and expect to exceed the €15m target for the full
year. Cash savings expect to exceed the target of €60m for the full year
• Free cash flow up 89% to €97.8m, aided by significant government tax deferrals
• Core net debt* reduced to €381m from €457m at March 2020, representing net debt to
EBITDA of 2.69x
• Liquidity remains strong at €325m (March 2020: €252m)
Drivers for sustained future earnings growth remain strong
• ATM earnings recovery on track
• Renewi 2.0 programme progressing well
• Innovation pipeline progressing, especially with bio-LNG, construction materials
and RetourMatras
• Continuing supportive regulation and increasing market demand for circular
solutions
• Full year outlook: the Board now anticipates a performance materially ahead of
previous expectations
1Numbers quoted on an ongoing business basis (excluding our Reym and Canadian
businesses which were disposed of in the prior year) and are stated on a consistent
IFRS 16 basis
*Core net debt, which is used for banking leverage calculations, excludes the impact
of IFRS 16 lease liabilities and net debt relating to the UK PPP contracts
Commenting on the results, Otto de Bont, Chief Executive Officer, said:
"We delivered a resilient performance in the first half, materially ahead of our
Covid-19 adjusted expectations, thanks to the determined efforts of our people. We
delivered seamless service to our customers and communities, introducing important
innovations in products, services and operational measures to keep our people safe.
Strong actions on cost and cash resulted in positive cash flows and a reduction in
both net debt and leverage. I would like to thank our 6,800 employees for their
ongoing commitment and flexibility to support our customers and continually make more
from waste in these challenging times.
"The Board remains cautious about the macroeconomic outlook, in particular any
potential future slowdown in the later-cycle Dutch construction market. Whilst further
lockdown measures to contain Covid-19 have recently been reintroduced in the Benelux
and could persist during the rest of the second half, our resilient trading in the
first half, which included a period of extensive lockdown measures in the first
quarter, allows us to anticipate a full year performance which is materially ahead of
our previous expectations.
"Longer term, whilst the speed and extent of economic recovery will influence our
performance, waste volumes have historically been resilient through cycles and the
transition to increased recycling will continue to support our business model. The
sustainability agenda and the potential for a "green recovery" supported by the EU and
national governments are expected to present attractive opportunities for Renewi to
convert waste into a wider range of high-quality secondary materials. We remain
confident that our three strategic growth initiatives - recovery of earnings at ATM,
the Renewi 2.0 programme and our innovation pipeline - will deliver significant
additional earnings over the next three years and beyond."
Financial Highlights
Sep 2020 Sep 2019 % change
UNDERLYING NON STATUTORY
Revenue1 ongoing businesses €821.4m €850.7m -3%
Underlying EBITDA1 ongoing businesses €88.5m €91.2m -3%
Underlying EBIT1 ongoing businesses €28.3m €37.8m -25%
Underlying profit before tax1 ongoing businesses €15.3m €20.2m -24%
Underlying EPS1 ongoing businesses (cents per 1.5c 1.9c -21%
share)
Free cash flow1 €97.8m €51.8m +89%
Core net debt* €381m €514m
STATUTORY
Revenue from continuing operations €821.4m €915.7m
Operating profit from continuing operations €17.0m €1.0m
Profit/(loss) before tax from continuing operations €4.4m €(17.8)m
Loss from discontinued operations - €(16.6)m
Basic EPS from continuing operations (cents) 0.5c (2.4)c
Cash flow from operating activities €133.9m €85.4m
1The definition and rationale for the use of non-IFRS measures are included in note
18. Ongoing businesses as presented for the prior year exclude the financial results
for the Canada Municipal business which was sold on 30 September 2019 and the Reym
business which was sold on 31 October 2019 as set out on page 4. The Canada Municipal
segment met the definition of a discontinued operation and is recorded as such.
* Core net debt, which is used for banking leverage calculations, excludes the impact
of IFRS 16 lease liabilities and net debt relating to the UK PPP contracts.
The results for both this year and the prior year comparative period are reported
applying IFRS 16. Where appropriate, we also disclose certain metrics on an IAS 17
basis as this is relevant particularly for the calculation of leverage with regard to
banking covenants.
Notes:
1. Management will be holding a virtual analyst presentation at 09:30 GMT today, 10
November
2. To watch and listen, join the webcast through the following link:
1 https://channel.royalcast.com/renewi/#!/renewi/20201110_1
3. A copy of this announcement is available on the Company's website,
( 2 www.renewiplc.com). A copy of the presentation being made today and an
on-demand webcast will also be available.
For further information:
FTI Consulting Renewi plc
+44 20 3727 1545 +44 7976 321 540
Susanne Yule Adam Richford, Head of IR
+44 20 3727 1340 +44 7773 813 180
Richard Mountain Michelle James, Communications
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'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
undertakes no obligation to revise or update such forward-looking statements.
GROUP RESULTS
Total Operations Revenue Underlying EBIT
Sep 20 Sep 19 Variance Sep 20 Sep 19 Variance
€m €m % €m €m %
Commercial Waste 595.0 630.8 -6% 29.4 40.7 -28%
Mineralz & Water 90.4 74.6 21% 2.3 2.5 -8%
Specialities 149.4 159.1 -6% - (0.2) N/A
Group central services - - (3.4) (5.2) 35%
Inter-segment revenue (13.4) (13.8) - -
Ongoing Businesses 821.4 850.7 -3% 28.3 37.8 -25%
Reym - 65.0 - 10.0
Continuing Operations 821.4 915.7 -10% 28.3 47.8 -41%
Discontinued Operations - 10.8 - 3.1
Total 821.4 926.5 -11% 28.3 50.9 -44%
Renewi made two strategic disposals in the prior year, generating €107m gross cash
proceeds. The table above includes the contribution that they made in the first half
of last year prior to their disposal: discontinued operations include the results of
the Canada Municipal segment, which was sold on 30 September 2019, and Reym is shown
separately and was sold on 31 October 2019. Renewi subsequently changed the
divisional and reporting structure from 1 April 2020 and the prior year comparatives
for the ongoing businesses have been restated. The underlying figures above are
reconciled to statutory measures in note 3 in the consolidated interim financial
statements. These results hereafter report on ongoing businesses as we believe that
this gives a clearer comparator unless otherwise stated.
Stronger than expected volumes and effective cost action enabled Renewi to materially
outperform its Covid-19 adjusted expectations in the first half. Group revenue from
ongoing businesses fell by just 3% to €821.4m, with growth in the Mineralz & Water
Division partially offsetting a fall in Commercial and Specialities Divisions.
Underlying EBITDA fell by 3% to €88.5m and underlying EBIT fell by 25% to €28.3m.
Non-trading and exceptional items after tax in the first half were reduced by 86% to
€8.1m (2019: €60.2m), resulting in a statutory profit after tax of €3.5m (2019: loss
of €35.4m).
The Group delivered an 89% increase in free cash inflow to €97.8m (2019: €51.8m).
Working capital inflow was €58.8m, reflecting €54.1m of government tax deferrals in
the period and no adverse movement in days sales outstanding in the first half. The
total taxation deferral of €60.1m principally relates to the Netherlands and is now
expected to be repaid in 36 equal monthly instalments from July 2021 onwards. Cash
outflow on onerous Municipal contracts was reduced to €8.2m from €21.2m, as
anticipated. Replacement capital expenditure was well controlled at €23.7m (2019:
€29.2m) and the Group is on track to deliver the committed €60m of cash savings for
the full year as set out later in this review. The Group generated net core cash of
€87.6m during the period.
Core net debt, excluding IFRS 16 lease liabilities, was reduced to €381m, representing
a net debt to EBITDA ratio of 2.69x (September 2019: 2.88x), well within the Group's
temporarily amended covenant of 5.5x. IFRS 16 increases the lease liabilities by €210m
in addition to this. There are no facility or bond redemptions until mid-2022.
The Board will not be declaring an interim dividend, taking into account the ongoing
uncertainty around Covid-19 and a primary focus on further leverage reduction.
Commercial Division
Sep 20 Sep 19 Variance
€m €m %
Netherlands Commercial 396.8 408.5 -3%
Belgium Commercial 198.5 222.9 -11%
Intra-segment revenue (0.3) (0.6)
Total revenue 595.0 630.8 -6%
Netherlands Commercial 50.3 52.3 -4%
Belgium Commercial 22.6 28.2 -20%
Total underlying EBITDA 72.9 80.5 -9%
Netherlands Commercial 21.1 26.1 -19%
Belgium Commercial 8.3 14.6 -43%
Total underlying EBIT 29.4 40.7 -28%
Netherlands Commercial 5.3% 6.4%
Belgium Commercial 4.2% 6.6%
Total underlying EBIT margin 4.9% 6.5%
Netherlands Commercial 12.0% 14.7%
Belgium Commercial 21.3% 29.8%
Total return on operating assets 14.1% 18.2%
Following the change in the composition of the reporting segments from 1 April 2020,
Netherlands Commercial now includes Orgaworld, previously in Monostreams, and includes
a proportion of group central costs. All prior year comparatives have been restated.
The return on operating assets for Belgium excludes all landfill related provisions.
Our Commercial Waste division is the market leader in the Benelux, collecting and
processing waste into product from almost every sector of the economy. It has
therefore been inevitable that the measures taken by governments to manage Covid-19,
especially in the first quarter, had a negative impact on volumes.
In the Netherlands, volumes recovered from 94% of prior year in the first quarter to
97% in the second quarter, with strong construction and bulky waste activity
offsetting weakness in commercial roller bin collection, especially in Covid-affected
sectors such as hospitality. Revenues were down 3% to €397m. Recyclate income fell
20%, with prices weak compared to prior year, although not as weak as expected. This
was offset by price increases successfully implemented on 1 January 2020 and by our
dynamic pricing which passes much of the impact of weak recyclate prices on to the
waste producing customer. EBITDA only reduced by 4% to €50.3m, although EBIT was 19%
lower at €21.1m, with a 110 bps fall in EBIT margin to 5.3%. Return on operating
assets remained accretive at 12.0% despite the weak markets.
In Belgium, government measures to manage Covid-19 were significantly more stringent
than in the Netherlands and accordingly volume falls during lockdown were greater.
Volumes fell to 76% of prior year in the first quarter, recovering to 91% in the
second quarter. Two processing lines in Belgium are being permanently closed in order
to manage the reduced activity as part of the structural cost programme described in
detail below. Revenues fell by 11% to €198m, EBITDA fell by 20% to €22.6m and EBIT by
43% to €8.3m. Margins fell to 4.2% but return on operating assets remained accretive
at 21.3%.
Mineralz & Water Division
Sep 20 Sep 19 Variance
€m €m %
Revenue 90.4 74.6 21%
Underlying EBITDA 10.0 8.1 23%
Underlying EBIT 2.3 2.5 -8%
Underlying EBIT margin 2.5% 3.4%
Return on operating assets 11.7% 20.4%
Following the change in the composition of the reporting segments from 1 April 2020,
this Division includes the previous Hazardous Waste division and Mineralz previously
in Monostreams and includes a proportion of group central costs. All prior year
comparatives have been restated. The return on operating assets excludes all landfill
related provisions.
Mineralz & Water Division is a new division comprising ATM, the hazardous waste
treatment facility, and the Mineralz business from our former Monostreams Division
which has facilities treating contaminated soils and bottom ashes as well as three
landfill sites. At ATM, soil volumes processed on the TRI line increased by 43% to
around 30% of capacity and the volume of new construction products sold also increased
by 46% at better prices and for lower processing costs per tonne. Water volumes fell
by 10% with Covid-19 and low oil prices reducing customer activity. Pyro volumes also
fell 5%, with the impact fully offset by higher pricing. At Mineralz the first
quarter saw lower volumes at the Braine and Zweekhorst landfills offset by a strong
recovery in the second quarter. Revenues increased by 21% to €90.4m. Underlying
EBITDA increased by 23% to €10.0m, while underlying EBIT fell by 8% to €2.3m,
primarily reflecting increased depreciation at the new Maasvlakte extension.
Specialities Division
Sep 20 Sep 19 Variance
€m €m %
Revenue 149.4 159.1 -6%
Underlying EBITDA 4.5 4.4 2%
Underlying EBIT - (0.2) N/A
Underlying EBIT margin 0.0% -0.1%
Return on operating assets 1.8% 0.7%
Following the change in the composition of the reporting segments from 1 April 2020,
this Division includes the previous UK Municipal business together with Coolrec and
Maltha previously in Monostreams and includes a proportion of group central costs.
All prior year comparatives have been restated. Underlying EBIT includes utilisation
of €6.1m (2019: €5.9m) from onerous contract provisions. Return on operating assets
excludes the UK Municipal business.
Specialities Division is a new division comprising the Municipal PPP contracts in the
UK alongside our Coolrec and Maltha businesses. Specialities was significantly
impacted in the first quarter with severe disruption to input volumes at Coolrec and
output volumes at Maltha and the volume impact of restrictions for HWRCs in the UK.
The Division recovered well in the second quarter, with volumes picking up especially
strongly in Coolrec. Revenues fell by 6% to €149.4m, while EBITDA increased by 2% to
€4.5m and EBIT by €0.2m to break even. Cash spend through the Municipal onerous
contracts reduced by 61% from €21.2m to €8.2m, reflecting the cash impact of the exit
from the Derby PPP contract last year.
Operational and financial actions to manage Covid-19
As previously reported, our response to Covid-19 focused on maintaining operations and
keeping people safe, alongside actions to cut cost, preserve cash and to ensure
significant liquidity and covenant headroom.
Thanks to the agility and the determination of our 6,500 people, we have been able to
maintain full-service capability across the Group. PPE, including new safety vests
and face masks, along with hygiene and social distancing measures have helped to
protect the operational workforce as they collect and process the waste. Office
workers have been able to transition to working from home with minimal impact on
productivity. Wide-ranging training, activities and programmes have focused on
protecting mental health as well as physical well-being. We were able to contribute
at the height of the first wave to an innovative recycling scheme to recycle used face
masks and return them to front line health workers. Our Ecosmart business has now
installed over 1,000 Qubic hand sanitising stations to offices in the Netherlands.
Actions across the Group have delivered cost savings of €10m in the first half, on
track to be ahead of our previously announced target for the year of €15m with a full
year expectation of greater than €18m, comprising €9m from operational cost savings,
€8m from staffing cost savings, and €1m from announced structural actions. These have
included both operational cost savings, such as route optimisation, reduced
maintenance spend, and lower discretionary costs, as well as staffing cost savings,
which have included reduction in temporary staff, overtime, hiring freezes, and
reductions in Board and executive salaries and incentives.
More structural reductions are also being put in place as part of a specific programme
to address Covid-19 volume drops and a potential subsequent recession, including the
permanent closure of two lines at Ghent and Houthalen. Depending upon future volumes,
further lines and sites may also be closed, reducing our cost base as we enter FY22.
The cost of this programme of structural action is being taken to exceptional items
and is reported on in the Finance Review below.
Additional strong action has also been taken on cash. Capex was €22m lower than
originally expected, and net replacement capital expenditure was restricted to
€23.7m, 19% below last year. Other cash spend on Municipal contracts, growth
capital projects and restructuring was significantly reduced compared to the prior
year. The outlook for the full year cash savings has increased by over 10% to
€67m. In addition there has been €60m of cash savings from tax deferrals.
FY21 FY21
Cost & cash savings FY21 Target Full Year FY21
H1 Outlook
- Operational costs €8m €6m €9m e.g. route optimisation, reduced
maintenance, discretionary costs
- Staffing costs €7m €4m €8m e.g. reduced temps, overtime and hiring
freezes, executive compensation
- Structural costs - - €1m e.g. closure of Ghent and Houthalen lines
with more under review
Total Costs €15m €10m >€18m Expect full year c20% ahead
Capex €35m €22m €35m On track
Dividend €10m €10m €14m Final FY20 & €4m FY21 Interim
Total Cash €60m €42m >€67m Expect full year >10% ahead
STRATEGIC PROGRESS
End markets positive
The long-term outlook for our core markets and activities remains positive. The EU
and national governments continue to progress their circular and low-carbon agendas
with a clear focus to "build back better" with a green recovery. Examples of this
ongoing supportive progress include consultation in the Netherlands regarding the
phased implementation of CO2 taxes on major carbon emitters, driving the low carbon
economy and the associated need for secondary raw materials. These are expected to
start from 2021 with a significant impact growing from 2023 towards a peak in 2030.
In Belgium, the Flemish government is intending to introduce the next phase of its key
recycling legislation, Vlarema 8, from 2023. Vlarema 8 will further require waste
producers to sort their waste streams more extensively themselves or to ensure that
their waste is collected by a processor who can do it on their behalf. This is
expected to drive increased demand for sorting capacity in Flanders. European
ambition for the circular economy, including high recycling targets and mandatory
recycled content in plastic goods, will further increase pressure for high quality
recycling, enhanced by further regulation on exports of plastic by OECD countries and
the increasing unwillingness of export markets to take plastic waste. Recycling
companies are considered key partners to allow governments to achieve the objectives
of the Circular Economy Action Plan.
Strategy and value drivers
Renewi outlined its new strategy with its full year results in June 2020, with three
key value drivers to deliver additional earnings of up to €60m in the coming three to
five years: our market facing strategy, including our circular innovations pipeline;
the recovery of full throughput of our thermal soil line at ATM; and our Renewi 2.0
programme to digitise and simplify our core processes.
The recovery of up to €20m of lost earnings at ATM is on track in the first year of a
three-year recovery plan. This is dependent upon reopening the thermally cleaned soil
market (TGG), increasing capacity, certification and sales for our new construction
materials and refilling the inbound contaminated soil project pipeline. An initial
shipment of TGG was completed in May and further outlets of up to 1MT are in late
stage discussions with the relevant authorities, some of which are expected to become
available in the second half. New silos and other storage equipment to enable the
separation of cleaned soil into construction materials, like sand, gravel and filler,
are being installed and will be commissioned on time in the fourth quarter. The order
book for contaminated soil is building steadily but projects may be subject to delay
as a result of Covid-19.
Our Renewi 2.0 programme has also made positive progress during the first half.
Secured savings are slightly ahead of plan at €2.5m, despite some elements of the
programme deliberately being delayed due to Covid-19. Initial modules of two projects
namely the MyRenewi customer interface and the digital procure-to-pay system are
expected to go live in the second half.
The market facing strategy focuses on three main objectives:
• increasing diversion from incineration and landfill to recycling from 65% to 75%.
This not only meets an important sustainability need, it also offers increased
margin potential for Renewi;
• increasing the quality of the products we make, to add additional value for our
product customers and higher margins for Renewi; and
• selectively increasing volumes through increasing market share organically and
inorganically, addressing new waste streams and through medium-term geographic
expansion.
In order to address these market opportunities, we have put in place an innovation
process and have a range of innovation opportunities for Renewi to invest in over the
coming five years.
Good progress in first half
Good progress has been made with the innovation pipeline, focused on high quality
secondary materials for the growing circular economy.
Project Partner Opportunity Status
Sand, gravel & filler Initial capacity installation
at ATM for Stand-alone €€€€€ underway, to complete in the
construction second half.
materials
Expansion in bio-gas Stand-alone € Permits received and ground
production broken.
Expansion of mattress Third facility commissioned on
recycling IKEA €€€ schedule and fourth facility in
planning.
Upgraded feedstock No material progress. Chemical
for chemical SABIC €€ - €€€€€ recycling remains highly promising
recycling of plastics potential market.
Transition bio-gas Agreements signed with Shell and
from electricity to SHELL €€ Nordsol. Permits received and due
bio-LNG to break ground this month
(November).
Upgraded wood flake €75m EU loan awarded to
supply for low-carbon ARCELOR-MITTAL €€ - €€€€ Arcelor-Mittal. Commercial and
steel technical discussions underway.
Cellulose from Technical feasibility trials
diapers and FMCG major € - €€€ encouraging. Engineering
incontinence products feasibility and commercial
discussions ongoing.
Next generation
bottom ash conversion Energy-from-waste €€€ Engineering feasibility continues
to construction major with waste-to-energy partner.
materials
Development project to purify
Polyurethane polyurethane from mattresses.
recycling Chemicals major € - €€€ Also now a separate development
project to purify polyurethane
from white goods.
Delivering our sustainability objectives
In June we launched our new sustainability strategy, centred around three themes:
Enable the circular economy; Reduce carbon emissions and waste; and Care for people.
We are pleased to report good progress in all three themes.
Sustainability theme Measure Progress
Enable the circular economy Recycling and recovery rate +0.6pp to 65.3%
Carbon avoidance to 3.3MT or 261kg pT
Reduce carbon emissions and waste Reduced emission trucks +112 trucks / +4pp to
53%
Carbon impact of operations New solar & wind power
Care for people >3 day accident rate -73 to 1,431
Sustainability highlights
• We have built and commissioned a third facility in our RetourMatras joint venture
with IKEA, taking recycling capacity in the Netherlands up to 1 million mattresses
per annum.
• Our first fully electric waste collection truck is now operational in Amsterdam
and we are shortly to start trials with Volvo's first electric waste truck. In
addition, we are now trialling two compressed natural gas trucks in Groningen.
• Our partner Purified Metals Company has started commissioning of their innovative
facility to recycle up to 25KT of contaminated steel per annum. Commercial
shipments are expected to begin in November 2020.
• We have installed three further solar panel roofs in the Benelux, adding to the 13
sites that have solar panel roofs already and collectively generating 2000 MWh
annually.
• We have secured a permit for a wind turbine at Ghent, which is expected to
generate between 3MW to 6MW and detailed engineering is now underway.
• Although our safety rate (> 3 day accident rate) has improved to 1,431, serious
incidents remain too common across our business and we aim to accelerate
progress.
Reinstated remuneration schemes
As previously announced, the Board and Executive Directors took a voluntary 20%
reduction in income during the first quarter and the Executive Committee took a 10%
reduction. Bonus payments relating to the prior year were also made in shares, saving
around €1.5m in cash. At the same time, we announced that the annual bonus scheme for
FY21 would be suspended until further notice. The remuneration committee has,
following consultation with advisers as to good practice, now put in place a reduced
revised scheme for FY21.
OUTLOOK
The Board remains cautious about the macroeconomic outlook, in particular any
potential future slowdown in the later-cycle Dutch construction market. Whilst further
lockdown measures to contain Covid-19 have recently been reintroduced in the Benelux
and could persist during the rest of the second half, our resilient trading in the
first half, which included a period of extensive lockdown measures in the first
quarter, allows us to anticipate a full year performance which is materially ahead of
our previous expectations.
Longer term, whilst the speed and extent of economic recovery will influence our
performance, waste volumes have historically been resilient through cycles and the
transition to increased recycling will continue to support our business model. The
sustainability agenda and the potential for a "green recovery" supported by the EU and
national governments are expected to present attractive opportunities for Renewi to
convert waste into a wider range of high-quality secondary materials. We remain
confident that our three strategic growth initiatives - recovery of earnings at ATM,
the Renewi 2.0 programme and our innovation pipeline - will deliver significant
additional earnings over the next three years and beyond.
FINANCE REVIEW
As reported above, we are presenting our underlying performance of ongoing businesses
using comparatives that exclude the prior year contributions of Reym, which was
reported in continuing business until its disposal on 31 October 2019, and our
Canadian business which was accounted for as a discontinued business until its
disposal on 30 September 2019.
Financial Performance Sep 20 Sep 19
€m €m
Continuing operations
Revenue 821.4 915.7
Underlying EBITDA 88.5 101.2
Underlying EBIT 28.3 47.8
Underlying profit before tax 15.3 29.8
Non-trading & exceptional items (10.9) (47.6)
Profit (loss) before tax 4.4 (17.8)
Total tax charge for the period (0.9) (1.0)
Profit (loss) for the period from continuing operations 3.5 (18.8)
Loss for the period from discontinued operations - (16.6)
Total operations: profit (loss) for the period 3.5 (35.4)
Performance in the first six months ending 30 September 2020 was materially ahead of
our initial Covid-19 expectations, with a strong recovery in the second quarter as the
lockdowns eased in all territories. Revenue and underlying EBITDA for the ongoing
businesses fell by 3% and underlying EBIT fell by 25% to €28.3m. EBITDA add backs
increased by €6.8m, primarily driven by depreciation on IFRS 16 truck investments and
the new Maasvlakte extension. A lower level of interest and exceptional charges in
the current period has resulted in a profit before tax of €4.4m compared to a loss of
€17.8m in the prior year.
Non-trading and exceptional items excluded from pre-tax underlying profits
To enable a better understanding of underlying performance, certain items are excluded
from underlying EBIT and underlying profit before tax due to their size, nature or
incidence. Total non-trading and exceptional items were reduced by 84% to €10.9m
(2019: €47.6m plus €18.9m from discontinued operations), of which €4.5m relates to
non-cash asset impairments and amortisation. We have two ongoing programmes to
deliver value to Renewi, the costs of which are accounted for as exceptional due to
their size and nature. These are the Renewi 2.0 programme, as launched with our year
end results in June 2020, and the other is a cost action programme to reduce capacity.
As previously announced, the Renewi 2.0 programme is intended to complete the creation
of a modern waste-to-product company with digital interfaces to customers and
suppliers, supported by modern, lean and efficient core processes. These include the
introduction of a cloud-based source to pay system and the creation of Global Process
Owners for core processes to standardise and reduce inefficiency. We believe that
Renewi 2.0 will deliver cost benefits at an annualised run rate of €20m by March
2023. The cost of the programme is expected to be €40m, split between capital and an
exceptional charge. This includes around €4m of IT integration costs carried over
from the original integration programme and now merged with the digitisation plans of
Renewi 2.0. Secured benefits of €2.5m are slightly ahead of plan, while costs
relating to Renewi 2.0 were €3.6m in the period, in line with expectations.
As reported earlier in the Group Results section, we are taking structural cost action
to reduce capacity in the light of Covid-19 and ongoing lower economic activity.
€2.8m of cash costs and €3.2m of asset impairments have been reflected following the
decision to close two processing lines in Belgium. We anticipate further actions will
be taken in the second half, depending on forecast volumes. While not yet fully
quantified, the cash cost is likely to be less than €5m.
Further details are provided in note 5 to the consolidated interim financial
statements.
Operating profit from continuing operations, after taking account of all non-trading
and exceptional items, was €17.0m (2019: €1.0m).
Net finance costs
Net finance costs from continuing operations, excluding exceptional items, decreased
by €4.2m to €13.5m (2019: €17.7m). The key drivers relate to changes to the Group
borrowings which benefit from lower debt following the €107m gross disposal proceeds
received in September and October 2019, a lower rate secured by new cross currency
swaps, and the impact of the 123 bps lower coupon on the retail bonds taken out in
July 2019 compared to the previous bonds. The reduction in rates for discount unwind
of provisions as reflected in March has resulted in the charge for the current period
being €0.6m lower than last year. Adjusting for the disposal of Reym, lease interest
costs have increased by €0.5m from the same period last year as a result of new IFRS
16 lease contracts entered into. Further details are provided in note 6 to the
consolidated interim financial statements.
Taxation
Total taxation for the year on continuing operations was a charge of €0.9m (2019:
€1.0m). The effective tax rate on underlying profits from continuing operations at
24.5% was unchanged from the prior year. A tax credit of €2.8m is attributable to the
non-trading and exceptional items of €10.9m as the majority of these are taxable.
The Group statutory profit after tax, including all discontinued and exceptional
items, was €3.5m (2019: €35.4m loss).
Earnings per share (EPS)
Underlying EPS from ongoing businesses, excluding non-trading and exceptional items,
was 1.5 cents per share, a decrease of 21% on a like for like basis. Basic EPS from
continuing operations was 0.5 cents per share compared to a loss of 2.4 cents per
share in the prior year.
Dividend
As announced previously, and taking into account the ongoing uncertainty around
Covid-19, the Board has decided not to pay an interim dividend for the period to
September.
CASH FLOW PERFORMANCE
The cash performance table is derived from the statutory cash flow statement and
reconciliations are included in note 18 in the consolidated interim financial
statements.
Sep 20 Sep 19
€m €m
EBITDA 88.5 104.3
Working capital movement 58.8 22.9
Movement in provisions and other - (3.3)
Net replacement capital expenditure (23.7) (29.2)
Interest, loan fees and tax (17.6) (21.7)
Underlying free cash flow 106.0 73.0
UK Municipal contracts (8.2) (21.2)
Free cash flow 97.8 51.8
Growth capital expenditure (3.3) (10.5)
Synergy, integration & restructuring spend (5.6) (13.1)
Other (1.3) (6.0)
Disposals net of acquisitions - 51.1
Dividends paid - (4.4)
Net core cash flow 87.6 68.9
Net debt disposed/acquired - 2.3
Replacement capital expenditure - new IFRS 16 leases (24.7) (21.2)
Total 62.9 50.0
Opening net debt excluding UK PPP net debt (659.9) (552.0)
Loan fee amortisation (0.5) (0.1)
IFRS 16 transition adjustment - (177.3)
Net debt movement excluding UK PPP net debt 62.9 50.0
Exchange 6.3 0.7
Closing net debt excluding UK PPP net debt (591.2) (678.7)
Free cash flow conversion 346% 102%
The numbers for the prior period include both continuing and discontinued operations.
Free cash flow conversion is free cash flow as a percentage of underlying EBIT.
Free cash flow was strong at €97.8m, an increase of €46m from the prior period boosted
by a strong working capital performance. Working capital was an inflow of €58.8m
benefitting from the Covid-19 tax deferrals, which increased from €6m at March to
€60.1m at September. Customer collections have remained strong in the first six
months despite Covid-19, with minimal impact on days sales outstanding. We continue to
expect a deterioration in this area in the second half if governmental support starts
to fall away.
Replacement capital spend, excluding new IFRS 16 leases, was well controlled at €23.7m
(2019: €29.2m) as capital spend was restricted given the pandemic. In addition,
€24.7m of new leases have been entered into, principally relating to the continuation
of the truck replacement programme. Total replacement capital spend of €48.4m
represents c.80% of depreciation. The growth capital spend includes the new silos and
infrastructure for construction materials at ATM and final payments relating to the
expansion of the Maasvlakte landfill site.
In line with expectations, spend on UK Municipal contracts at €8.2m was significantly
lower than in prior periods. Synergy, integration and restructuring spend of €5.6m
related to the Renewi 2.0 programme together with carry forward costs from the
original integration programme. Other cash flows include €1.7m funding for the closed
UK defined benefit pension scheme.
Net cash generated from operating activities increased from €81.2m in the prior period
to €129.4m in the current year. A reconciliation to the underlying cash flow
performance as referred to above is included in note 18 in the consolidated interim
financial statements.
INVESTMENT PROJECTS
Expenditure in 2020/21
The Group's long-term expectations for replacement capital expenditure remain around
80% of depreciation. This level may from time to time be supplemented with larger
scale replacement projects. As previously announced the total capital spend for FY21
was lowered as a result of the pandemic and remains at c.€75m. This spend will
include the new infrastructure for the construction materials at ATM which is well
underway in the first half and a new de-packaging hall in Organics in Commercial
Netherlands.
Return on assets
The Group return on operating assets (excluding debt, tax and goodwill, ongoing
businesses only) decreased from 19.0% at 31 March 2020 to 17.0% at 30 September 2020.
The Group post-tax return on capital employed was 5.3% (31 March 2020 ongoing
businesses only: 6.0%).
Treasury and cash management
Core net debt and leverage ratios
Core net debt excludes IFRS 16 lease liabilities and the net debt relating to the UK
PPP contracts which is non-recourse to the Group and secured over the assets of the
special purpose vehicles. Core net debt was better than management expectations at
€381.1m (31 March 2020: €457.2m) with working capital and capital expenditure well
controlled and the benefit of Covid-19 related tax deferrals principally in the
Netherlands. Net debt to EBITDA was 2.69x, comfortably within our amended covenant
limit for the period of 5.5x. Adjusting for the Covid-19 tax deferral of €60.1m would
result in an adjusted net debt to EBITDA ratio of 3.10x; these deferrals are now
expected to be repaid in 36 monthly instalments from July 2021 onwards. In May 2020
we secured a new structure of higher covenant test levels to ensure solvency through
the Covid-19 crisis. Leverage covenant peaks at 6.0x for March 2021, falling back to
3.5x in September 2021. Liquidity was also very strong with cash balances of €136m
and total liquidity, including undrawn facilities, of €325m.
Debt structure and strategy
Borrowings, excluding PPP non-recourse borrowings, are mainly long-term as set out in
the table below.
Debt Structure Drawn Term
€m
€100m Belgian Green retail bond 100.0 June 2022
€75m Belgian Green retail bond 75.0 July 2024
€495m Green RCF and term loan 306.1 May 2023/2024
Green EUPP 25.0 December 2023/2025
506.1
Historic IAS 17 finance leases and other 15.6
Loan fees (4.3)
Cash and Money market funds (136.3)
Core net debt (as per covenant definitions) 381.1
IFRS 16 lease liabilities 210.1
Net debt excluding UK PPP net debt (note 11) 591.2
All of our core borrowings of bonds and loans are green financed. The main facility
has been hedged with five cross currency swaps totalling €237.0m at fixed Euro
interest rates of between 1.27% and 1.41% which expire between July 2022 and December
2022. As at 30 September 2020, 86% of our core debt was fixed or hedged.
The introduction of IFRS 16 on 1 April 2019 brought additional lease liabilities onto
the balance sheet with an associated increase in assets. Covenants on our main bank
facilities remain on a frozen GAAP basis.
The Group operates a committed invoice discounting programme. The cash received for
invoices sold at 30 September 2020 was €74.7m (March 2020: €88.0m).
Debt borrowed in the special purpose vehicles (SPVs) created for the financing of UK
PPP programmes is separate from the Group core debt and is secured over the assets of
the SPVs with no recourse to the Group as a whole. Interest rates are fixed by means
of interest rate swaps at contract inception. At 30 September 2020 this debt amounted
to €84.2m (31 March 2020: €90.0m).
PROVISIONS AND CONTINGENT LIABILITIES
Around 85% of the Group's provisions are long-term in nature, with the onerous
contract provisions against the PPP contracts being utilised over 20 years and
landfill provisions for many decades longer. The provisions balance classified as due
within one year amounts to €45m, including €7m for restructuring, €21m for Municipal
onerous contracts and €6m for landfill related spend.
Details of contingent liabilities are set out in note 16 of the financial statements
and the Group does not expect any of these to crystallise in the coming year.
Retirement benefits
The Group has a defined benefit pension scheme for certain UK employees which has been
closed to new entrants since September 2002 and was closed to future benefit accrual
from 1 December 2019. At 30 September 2020, the scheme had moved back to a deficit of
€0.8m from a surplus of €16.0m at 31 March 2020. The move in the period was due to a
significant decrease in the discount rate assumption from March together with an
increase in inflation which was only partially offset by an increase in asset returns.
There are also several defined benefit pension schemes for employees in the
Netherlands and Belgium which had a retirement benefit deficit of €7.5m at 30
September 2020, unchanged from March.
PRINCIPAL RISKS AND UNCERTAINTIES
Renewi operates a risk management framework to identify, assess and control the most
serious risks facing the Group. The 2020 Annual Report (pages 80 to 83) provides a
discussion of the Group's principal risks and uncertainties. The Board believes that
the key risks and associated mitigation strategies have not changed in the period.
The principal risk event that Renewi, like all companies, has been addressing is the
short and longer term impact of Covid-19. The health and wellbeing of our people is
our key priority. We have put in place a full range of measures to mitigate the
impact of Covid-19 on our people, customers and operations. These are aligned with
guidance given by national governments. To date we have seen low levels of infection
in the workforce, an ongoing ability to serve customers, and an effective transition
of office-based workers to work from home with high productivity and appropriate
support for their well-being.
To address the economic impacts of Covid-19, we have implemented effective cost
reduction measures and plans to preserve cash. The ongoing risk factors related to the
pandemic are being monitored and are included in our key strategic risks. They are
primarily related to: health and safety; product pricing, demand and quality; residue
pricing and capacity; labour availability; input volumes; and cyber threat.
GOING CONCERN
The Directors have adopted the going concern basis in preparing these consolidated
interim financial statements after assessing the Group's principal risks including the
risks arising from the Covid-19 pandemic. 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, 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 its covenants.
STATEMENT OF THE DIRECTORS' RESPONSIBILITIES
The Directors confirm that these condensed consolidated interim financial statements
have been prepared in accordance with International Accounting Standard 34 Interim
Financial Reporting as adopted by the European Union, and that the interim management
report includes a fair review of the information required by DTR 4.2.7 R and DTR 4.2.8
R, namely:
• an indication of important events that have occurred during the first six months
and their impact on the condensed set of financial statements, and a description
of the principal risks and uncertainties for the remaining six months of the
financial year; and
• material related-party transactions in the first six months and any material
changes in the related-party transactions described in the last Annual Report.
A list of current Directors is maintained on the Renewi plc website:
www.renewiplc.com.
By order of the Board
O de Bont T Woolrych
Chief Executive Officer Chief Financial Officer
9 November 2020 9 November 2020
Consolidated Interim Income Statement (unaudited)
First half ended 30 September 2020
First half 2020/21 First half 2019/20
Non-trading Non-trading
& &
Note Underlying exceptional Underlying exceptional
items Total items Total
€m €m
€m €m €m €m
CONTINUING
OPERATIONS
Revenue 3,4 821.4 - 821.4 915.7 - 915.7
Cost of sales 5 (687.1) (7.7) (694.8) (756.2) (9.7) (765.9)
Gross profit 134.3 (7.7) 126.6 159.5 (9.7) 149.8
(loss)
Administrative 5 (106.0) (3.6) (109.6) (111.7) (37.1) (148.8)
expenses
Operating 3 28.3 (11.3) 17.0 47.8 (46.8) 1.0
profit (loss)
Finance income 5,6 5.6 0.4 6.0 4.9 0.2 5.1
Finance charges 5,6 (19.1) - (19.1) (22.6) (1.0) (23.6)
Share of
results from 0.5 - 0.5 (0.3) - (0.3)
associates and
joint ventures
Profit (loss) 3 15.3 (10.9) 4.4 29.8 (47.6) (17.8)
before taxation
Taxation 5,7 (3.7) 2.8 (0.9) (7.3) 6.3 (1.0)
Profit (loss)
for the period 11.6 (8.1) 3.5 22.5 (41.3) (18.8)
from continuing
operations
DISCONTINUED
OPERATIONS
Profit (loss)
for the period
from 15 - - - 2.3 (18.9) (16.6)
discontinued
operations
Profit (loss) 11.6 (8.1) 3.5 24.8 (60.2) (35.4)
for the period
Attributable
to:
Owners of the 11.9 (8.1) 3.8 24.7 (60.3) (35.6)
parent
Non-controlling (0.3) - (0.3) 0.1 0.1 0.2
interests
11.6 (8.1) 3.5 24.8 (60.2) (35.4)
Basic earnings (loss) per share attributable to owners of the parent (cent per share)
Continuing 9 1.5 (1.0) 0.5 2.8 (5.2) (2.4)
operations
Discontinued 9 - - - 0.3 (2.4) (2.1)
operations
1.5 (1.0) 0.5 3.1 (7.6) (4.5)
Diluted earnings (loss) per share attributable to owners of the parent (cent per
share)
Continuing 9 1.5 (1.0) 0.5 2.8 (5.2) (2.4)
operations
Discontinued 9 - - - 0.3 (2.4) (2.1)
operations
1.5 (1.0) 0.5 3.1 (7.6) (4.5)
Consolidated Interim Statement of Comprehensive Income (unaudited)
First half ended 30 September 2020
First half 2020/21 First half 2019/20
€m €m
Items that may be reclassified subsequently to
profit or loss:
Exchange differences on translation of foreign 1.8 5.1
subsidiaries
Fair value movement on cash flow hedges 2.0 (5.3)
Deferred tax on fair value movement on cash flow (0.6) 1.1
hedges
Share of other comprehensive income of
investments accounted for using the equity 0.1 -
method
Net other comprehensive income to be
reclassified to profit and loss in subsequent 3.3 0.9
periods
Items that will not be reclassified to profit or
loss in subsequent periods:
Actuarial (loss) gain on defined benefit pension (18.4) 5.0
schemes
Deferred tax on actuarial (loss) gain on defined 3.5 (0.8)
benefit pension schemes
Net other comprehensive (loss) income not being
reclassified to profit and loss in subsequent (14.9) 4.2
periods
Other comprehensive (loss) income for the (11.6) 5.1
period, net of tax
Profit (loss) for the period 3.5 (35.4)
Total comprehensive loss for the period (8.1) (30.3)
Attributable to:
Owners of the parent (7.8) (29.9)
Non-controlling interests (0.3) (0.4)
(8.1) (30.3)
Total comprehensive loss attributable to owners
of the parent arising from:
Continuing operations (7.8) (13.3)
Discontinued operations - (16.6)
(7.8) (29.9)
Consolidated Interim Balance Sheet (unaudited)
As at 30 September 2020
30 September 30 September 31 March
Note 2020 2019 2020
€m €m €m
Assets
Non-current assets
Goodwill and intangible assets 10 609.6 602.1 610.1
Property, plant and equipment 10 562.1 580.3 584.0
Right-of-use assets 10 211.8 181.9 206.9
Investments 14.8 17.1 15.6
Financial assets relating to PPP contracts 135.7 143.5 141.8
Derivative financial instruments 14 - 0.3 2.1
Defined benefit pension scheme surplus 13 - 5.1 16.0
Trade and other receivables 2.5 3.4 3.1
Deferred tax assets 39.7 37.9 37.2
1,576.2 1,571.6 1,616.8
Current assets
Inventories 20.6 25.0 20.7
Investments 14 8.5 9.2 8.1
Loans to associates and joint ventures 0.9 0.9 0.9
Financial assets relating to PPP contracts 6.2 5.7 6.0
Trade and other receivables 250.4 270.2 272.4
Derivative financial instruments 14 - 0.2 -
Current tax receivable - - 0.7
Cash and cash equivalents 136.3 107.9 194.5
422.9 419.1 503.3
Assets of disposal groups classified as held 15 - 101.4 -
for sale
422.9 520.5 503.3
Total assets 1,999.1 2,092.1 2,120.1
Liabilities
Non-current liabilities
Borrowings - PPP non-recourse net debt 11 (81.7) (87.1) (87.2)
Borrowings - Other 11 (687.0) (750.7) (816.1)
Derivative financial instruments 14 (35.5) (32.7) (32.4)
Other non-current liabilities (60.9) (6.8) (7.1)
Defined benefit pension schemes deficit 13 (8.3) (10.1) (7.5)
Provisions 12 (238.9) (211.9) (252.4)
Deferred tax liabilities (44.4) (52.8) (46.9)
(1,156.7) (1,152.1) (1,249.6)
Current liabilities
Borrowings - PPP non-recourse net debt 11 (2.5) (2.2) (2.8)
Borrowings - Other 11 (40.5) (35.9) (38.3)
Derivative financial instruments 14 (3.2) (4.3) (5.6)
Trade and other payables (509.7) (512.4) (534.3)
Current tax payable (14.5) (15.0) (16.5)
Provisions 12 (45.3) (35.6) (37.7)
(615.7) (605.4) (635.2)
Liabilities of disposal groups classified as 15 - (55.4) -
held for sale
(615.7) (660.8) (635.2)
Total liabilities (1,772.4) (1,812.9) (1,884.8)
Net assets 226.7 279.2 235.3
Issued capital and reserves attributable to
the owners of the parent
Share capital 99.5 99.5 99.5
Share premium 473.6 473.6 473.6
Exchange reserve (9.9) (12.9) (11.6)
Retained earnings (337.6) (282.4) (327.6)
225.6 277.8 233.9
Non-controlling interests 1.1 1.4 1.4
Total equity 226.7 279.2 235.3
Consolidated Interim Statement of Changes in Equity (unaudited)
First half ended 30 September 2020
Share Share Exchange Retained Non-controlling Total
reserve
capital premium earnings interests equity
€m
€m €m €m €m €m
Balance at 1 April 2020 99.5 473.6 (11.6) (327.6) 1.4 235.3
Profit (loss) for the period - - - 3.8 (0.3) 3.5
Other comprehensive income
(loss):
Exchange gain on translation - - 1.7 - 0.1 1.8
of foreign subsidiaries
Fair value movement on cash - - - 2.1 (0.1) 2.0
flow hedges
Actuarial loss on defined - - - (18.4) - (18.4)
benefit pension schemes
Tax in respect of other - - - 2.9 - 2.9
comprehensive income items
Share of other comprehensive
income of investments - - - 0.1 - 0.1
accounted for using the
equity method
Total comprehensive income - - 1.7 (9.5) (0.3) (8.1)
(loss) for the period
Share-based compensation - - - 0.7 - 0.7
Own shares purchased by the - - - (1.2) - (1.2)
Employee Share Trust
Balance as at 30 September 99.5 473.6 (9.9) (337.6) 1.1 226.7
2020
Balance at 31 March 2019 99.5 473.6 (17.9) (236.7) 1.0 319.5
Change in accounting policy - - - (7.5) - (7.5)
(IFRS 16 transition)
Restated total equity at 1 99.5 473.6 (17.9) (244.2) 1.0 312.0
April 2019
(Loss) profit for the year - - - (77.9) 0.8 (77.1)
Other comprehensive income
(loss):
Exchange gain on translation - - 6.3 - - 6.3
of foreign subsidiaries
Fair value movement on cash - - - (11.5) (0.7) (12.2)
flow hedges
Actuarial gain on defined - - - 15.2 - 15.2
benefit pension schemes
Tax in respect of other - - - (2.0) (0.5) (2.5)
comprehensive income items
Share of other comprehensive
income of investments - - - 0.2 - 0.2
accounted for using the
equity method
Total comprehensive income - - 6.3 (76.0) (0.4) (70.1)
(loss) for the year
Share-based compensation - - - 1.2 - 1.2
Non-controlling interest - - - - 0.8 0.8
capital injection
Dividends paid - - - (8.6) - (8.6)
Balance as at 31 March 2020 99.5 473.6 (11.6) (327.6) 1.4 235.3
Balance at 31 March 2019 99.5 473.6 (17.9) (236.7) 1.0 319.5
Change in accounting policy - - - (7.5) - (7.5)
(IFRS 16 transition)
Restated total equity at 1 99.5 473.6 (17.9) (244.2) 1.0 312.0
April 2019
(Loss) profit for the period - - - (35.6) 0.2 (35.4)
Other comprehensive income
(loss):
Exchange gain on translation - - 5.0 - 0.1 5.1
of foreign subsidiaries
Fair value movement on cash - - - (4.6) (0.7) (5.3)
flow hedges
Actuarial gain on defined - - - 5.0 - 5.0
benefit pension schemes
Tax in respect of other - - - 0.3 - 0.3
comprehensive income items
Total comprehensive income - - 5.0 (34.9) (0.4) (30.3)
(loss) for the period
Share-based compensation - - - 1.1 - 1.1
Non-controlling interest - - - - 0.8 0.8
capital injection
Dividends paid - - - (4.4) - (4.4)
Balance as at 30 September 99.5 473.6 (12.9) (282.4) 1.4 279.2
2019
The exchange reserve comprises all foreign exchange differences arising since 1 April
2005 from the translation of the financial statements of non-Euro denominated
operations, excluding those disposed of, as well as from the translation of
liabilities that hedge the Group's net investment in foreign operations.
Consolidated Interim Statement of Cash Flows (unaudited)
First half ended 30 September 2020
First half First half
2020/21 2019/20
€m €m
Profit (loss) before tax 4.4 (17.8)
Finance income (6.0) (5.1)
Finance charges 19.1 23.6
Share of results from associates and joint ventures (0.5) 0.3
Operating profit from continuing operations 17.0 1.0
Operating loss from discontinued operations - (15.8)
Amortisation and impairment of intangible assets 5.0 6.1
Depreciation and impairment of property, plant and equipment 40.8 37.7
Depreciation and impairment of right-of-use assets 19.5 14.1
Exceptional loss on disposal of subsidiaries/remeasurement of - 53.2
assets held for sale
Gain on disposal of property, plant and equipment (0.4) (2.0)
Net outflow in respect of PPP arrangements under the financial - (0.1)
asset model
Net decrease in provisions (6.1) (21.1)
Payment related to committed funding of the defined benefit (1.7) (1.7)
pension scheme
Share-based compensation 0.7 1.1
Operating cash flows before movement in working capital 74.8 72.5
Decrease in inventories - 0.8
Decrease (increase) in receivables 21.3 (1.5)
Increase in payables 37.8 13.6
Cash flows from operating activities 133.9 85.4
Income tax paid (4.5) (4.2)
Net cash inflow from operating activities 129.4 81.2
Investing activities
Purchases of intangible assets (4.5) (1.7)
Purchases of property, plant and equipment (24.6) (43.7)
Proceeds from disposals of property, plant and equipment 2.1 6.9
Acquisition of business assets - (2.6)
Proceeds from disposal of subsidiaries, net of cash disposed - 56.0
of and disposal costs paid
Purchase of associates and joint ventures - (1.7)
Net receipt of deferred consideration 0.4 0.2
Purchase of other short-term investments - (3.2)
Dividends received from associates and joint ventures 1.1 0.3
Outflows in respect of PPP arrangements under the financial (0.7) (0.3)
asset model
Capital received in respect of PPP financial assets 2.5 2.3
Finance income 4.8 5.8
Net cash (outflow) inflow from investing activities (18.9) 18.3
Financing activities
Finance charges and loan fees paid (18.0) (23.2)
Investment in own shares by the Employee Share Trust (1.2) -
Capital injection from non-controlling interest - 0.8
Dividends paid - (4.4)
Proceeds from retail bonds - 75.0
Repayment of retail bonds - (100.0)
(Repayment) proceeds from bank borrowings (125.7) 49.1
Repayment of PPP net debt (3.7) (3.6)
Repayment of obligations under lease liabilities (19.9) (17.7)
Net cash outflow from financing activities (168.5) (24.0)
Net (decrease) increase in cash and cash equivalents (58.0) 75.5
Effect of foreign exchange rate changes (0.2) 0.1
Cash and cash equivalents at the beginning of the period 194.5 50.4
Cash and cash equivalents at the end of the period* 136.3 126.0
*Cash and cash equivalents at 30 September 2019 represented €107.9m as shown on the
balance sheet and €18.1m included in assets of disposal groups classified as held for
sale as set out in note 15.
Notes to the Consolidated Financial Statements
1. General information
Renewi plc is a public limited company listed on the London Stock Exchange with a
secondary listing on Euronext Amsterdam. Renewi plc is incorporated and domiciled in
Scotland under the Companies Act 2006, registered number SC077438. The address of the
registered office is 16 Charlotte Square, Edinburgh, EH2 4DF. The nature of the
Group's operations and its principal activities are set out in note 3.
2. Basis of preparation
This condensed set of consolidated interim financial statements for the six months
ended 30 September 2020 has been prepared in accordance with the Disclosure and
Transparency Rules of the United Kingdom Financial Conduct Authority and with IAS 34
Interim Financial Reporting as adopted by the European Union (EU). They should be read
in conjunction with the 2020 Annual Report and Accounts, which have been prepared in
accordance with International Financial Reporting Standards (IFRS) and related
interpretations adopted by the EU and comply with Article 4 of the EU IAS Regulation
and with those parts of the Companies Act 2006 applicable for companies reporting
under IFRS. The 2020 Annual Report and Accounts are available from the Company's
website www.renewiplc.com.
These primary statements and selected notes comprise the unaudited consolidated
interim financial statements of the Group for the six months ended 30 September 2020
and 2019, together with the audited results for the year ended 31 March 2020. These
interim financial results do not comprise statutory accounts within the meaning of
Section 434 of the Companies Act 2006. The comparative figures as at 31 March 2020
have been extracted from the Group's statutory Annual Report and Accounts for that
financial year, but do not constitute those accounts. Those statutory accounts for the
year ended 31 March 2020 were approved by the Board of Directors on 4 June 2020 and
delivered to the Registrar of Companies. The report of the auditors on those accounts
was unqualified, did not contain an emphasis of matter paragraph and did not contain
any statement under Section 498 of the Companies Act 2006.
The Board of Directors approved, on 9 November 2020, these consolidated interim
financial statements which have been reviewed by BDO LLP but not been audited.
Going concern
The Directors have adopted the going concern basis in preparing these consolidated
interim financial statements after assessing the Group's principal risks including the
risks arising from the Covid-19 pandemic.
The Directors have carried out an assessment on the Group's ability to continue as a
going concern. This assessment has involved the review of medium-term cash flow
modelling over an 18 month period to 31 March 2022 which includes estimates of the
impact of Covid-19 on the Group's operations together with other factors that may
affect its performance and financial position. These factors include governments'
categorisation of the activities of the Group as an essential service in all its key
markets, actual trading performance in the period since the outbreak of Covid-19,
expectations on the future economic environment, the impact of mitigating actions,
available liquidity as well as other principal risks associated with the Group's
ongoing operations.
The assessment has included a base case scenario setting out the Directors' current
expectations of future trading and a plausible downside scenario applying mitigating
actions where appropriate to assess the potential impact on the Group's future
financial performance. The key judgement in both scenarios is the severity, extent and
duration of the disruption caused by the Covid-19 pandemic.
In light of further restrictions now in place in the Benelux and the UK, the base case
modelling includes a six week Covid-19 lockdown from November 2020 followed by ongoing
weaker macro-economic conditions throughout the year ending March 2022. The downside
scenario assumes an increased length and severity of second lockdown, further
weakening of macro-economic conditions throughout the year ending March 2022, as well
as other downside risks which are not linked to Covid-19. Appropriate cost and cash
mitigating actions, such as deferral of capital expenditure, site rationalisations,
reduction in indirect headcount and reduced discretionary spend, have been applied to
generate a plausible and mitigated downside position. For the year ending March 2021
the downside scenario assumes a further month of decline in volumes of up to 25% over
and above the base case together with other factors which reduces underlying EBIT by
20% prior to mitigations and 5% after mitigations. In the downside modelling for the
year ending March 2022 it has been assumed that there will be an ongoing reduction in
volumes due to the macro economic environment together with other factors with a
deterioration on underlying EBIT of 36% which reduces to 19% after mitigations. In
the base case and plausible downside scenarios the Group has sufficient liquidity and
headroom in its existing facilities and no covenants are breached at any of the
forecast testing dates.
In addition the downside case has been used to perform a reverse stress test to
consider the point at which the covenants may be breached. This test indicates that
only a significant reduction in volumes, beyond what is considered likely would be
required in order to breach covenants. The mitigating actions noted above have been
included in this reverse stress test. The likelihood of this scenario is considered to
be remote.
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 its covenants.
2. Basis of preparation - continued
Changes in presentation
The Group changed the composition of its reporting segments from 1 April 2020. This
was announced on 26 March 2020 and detailed in the 2020 Annual Report and Accounts.
The new structure is a logical step after recent disposals and the reorganisation
simplifies the Group's strategy, portfolio, organisation and processes. The segmental
information presented in this condensed set of consolidated interim financial
statements reflects the information now provided to the chief operating decision maker
in order to assess performance and to make decisions on allocating resources. The
following changes have been made to the Group's segments as previously reported at 31
March 2020:
• The Commercial Waste reportable segment comprises Netherlands and Belgium
Commercial Waste. The Netherlands Commercial Waste operating segment now includes
the Orgaworld organic waste processing activities previously included within the
Monostreams reportable segment. There is no change to Belgium Commercial Waste.
• The Mineralz & Water reportable segment comprises ATM previously included in the
Hazardous Waste reportable segment and Mineralz previously included within the
Monostreams reportable segment.
• The Specialities reportable segment comprises the Municipal, Maltha and Coolrec
business lines. Maltha and Coolrec were previously included within the
Monostreams reportable segment and Municipal was a separate reportable segment.
• The Group central services reportable segment is unchanged however all costs
except those related to investors, the Board and strategy are now allocated to the
divisions.
As required under IFRS 8 Operating Segments, the Group has restated the corresponding
segment information for the prior period to enable comparison to the new structure.
Accounting policies
The results have been prepared applying the accounting policies that were used in the
preparation of the 2020 Annual Report and Accounts except taxes on income in the
interim periods are accrued using the estimated tax rate that is expected for the full
financial year. Standards and interpretations issued by the International Accounting
Standards Board (IASB) are only applicable if endorsed by the European Union.
At the date of approval of these interim financial statements, there are no standards
or interpretations not yet effective that would be expected to have a material impact
on the Group and there were no new standards or interpretations which were early
adopted by the Group.
Exchange Rates
The most significant foreign currency for the Group is Sterling with the closing rate
on 30 September 2020 of €1:£0.907 (30 September 2019: €1:£0.885, 31 March 2020:
€1:£0.884) and an average rate for the period ended 30 September 2020 of €1:£0.891 (30
September 2019: €1:£0.886).
Significant judgements and estimates
The preparation of consolidated interim financial statements requires management to
make judgements, estimates and assumptions that affect the application of accounting
policies and the reported values of assets and liabilities, income and expense. Actual
results may differ from these estimates.
In preparing these consolidated interim financial statements, the nature of the
significant judgements made by management in applying the Group's accounting policies
and the key sources of estimation were the same as those that were applied to the
financial statements for the year ended 31 March 2020 and which are set out on pages
147 and 148 of the 2020 Annual Report and Accounts.
Impact of Covid-19
For the year ended 31 March 2020 management adjusted the future cash flows of cash
generating units to reflect the expected impact of Covid-19 when undertaking
impairment reviews and in assessing the recoverability of deferred tax assets. Overall
trading in the first half has been materially ahead of these original Covid-19
adjusted expectations. The full impact of the global pandemic on medium and long term
forecasts continues to be difficult to predict, however as the performance in the
first half shows no adverse indicators to those year end estimates there has been no
requirement to update goodwill impairment modelling. The pandemic is an inherently
uncertain event and the Group continues to monitor the impact on the business.
As a result of Covid-19 the outstanding trade receivables have been reviewed on a
detailed customer by customer basis taking into account the sector in which they
operate, the available government support and the likelihood of default in order to
assess the expected credit loss. The Group has taken advantage of Government support
to delay the payment of VAT and payroll taxes in both the Netherlands and the UK.
2. Basis of preparation - continued
Underlying business performance
The Group uses alternative performance measures as we believe these measures provide
additional useful information on the underlying trends, performance and position of
the Group. These underlying measures are used by the Group for internal performance
analysis and incentive compensation arrangements for employees. The term 'underlying'
refers to the relevant measure being reported 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 free cash flow, underlying earnings per share and underlying EBITDA
(earnings before interest, tax, depreciation and amortisation). The terms 'EBIT',
'exceptional items' and 'underlying' are not defined terms under IFRS and may
therefore not be comparable with similarly titled profit measures reported by other
companies. These measures are not intended to be a substitute for, or superior to,
GAAP measurements of profit. A full list of alternative performance measures and
non-IFRS measures together with reconciliations are set out in note 18.
Non-trading and exceptional items
Items classified as non-trading and exceptional are disclosed separately due to their
size or incidence to enable a better understanding of performance. 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, integration costs, synergy delivery 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 change in fair value of non-hedged derivatives, ineffectiveness of
derivative financial instruments, the impact of changing the discount rate on
provisions and amortisation of acquisition intangibles. The Group incurs costs each
year in maintaining intangible assets which include acquired customer relationships,
permits and licences and excludes amortisation of these assets from underlying EBIT to
avoid double counting such costs within underlying results. A full listing of those
items presented as non-trading and exceptional is shown in note 5.
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 and are set out below:
Following the implementation of the new divisional structure on 1 April 2020 the
Group's reportable segments are:
Commercial Waste Collection and treatment of commercial waste in the Netherlands
and Belgium.
Decontamination, stabilisation and re-use of highly
Mineralz & Waste contaminated materials to produce certified secondary products
for the construction industry in the Netherlands and Belgium.
Processing plants focusing on recycling and diverting specific
Specialities waste streams. The operations are in the UK, the Netherlands,
Belgium, France, Portugal and Hungary.
Group central services Head office corporate function.
The 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.
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 segmental information under the new structure at 30 September 2020 is set out
below. The 2019/20 numbers are presented on a consistent basis with 2020/21 as
explained in the changes in presentation section in note 2.
3. Segmental reporting - continued
First half 2020/21 First half 2019/20
Revenue
€m €m
Netherlands Commercial Waste 396.8 408.5
Belgium Commercial Waste 198.5 222.9
Intra-segment (0.3) (0.6)
Commercial Waste 595.0 630.8
Mineralz & Water 90.4 74.6
Specialities 149.4 159.1
Inter-segment revenue (13.4) (13.8)
Revenue from ongoing businesses 821.4 850.7
Operations disposed of in the prior year - 65.0
Revenue from continuing operations 821.4 915.7
First half 2020/21 First half 2019/20
Results
€m €m
Netherlands Commercial Waste 21.1 26.1
Belgium Commercial Waste 8.3 14.6
Commercial Waste 29.4 40.7
Mineralz & Water 2.3 2.5
Specialities - (0.2)
Group central services (3.4) (5.2)
Underlying EBIT from ongoing businesses 28.3 37.8
Operations disposed of in the prior year - 10.0
Underlying EBIT from continuing operations 28.3 47.8
Non-trading and exceptional items (note 5) (11.3) (46.8)
Operating profit from continuing operations 17.0 1.0
Finance income 5.6 4.9
Finance charges (19.1) (22.6)
Finance income - non trading and exceptional 0.4 0.2
items
Finance charges - non trading and exceptional - (1.0)
items
Share of results from associates and joint 0.5 (0.3)
ventures
Profit (loss) before taxation and discontinued 4.4 (17.8)
operations
Commercial Mineralz & Group Tax, net debt and
Waste Water Specialities central derivatives Total
Net assets services
€m €m €m €m €m
€m
30 September
2020
Gross
non-current 1,029.9 251.7 228.2 26.7 39.7 1,576.2
assets
Gross current 179.7 26.6 69.0 11.3 136.3 422.9
assets
Gross (387.6) (207.0) (180.4) (88.1) (909.3) (1,772.4)
liabilities
Net assets 822.0 71.3 116.8 (50.1) (733.3) 226.7
(liabilities)
31 March 2020
Gross
non-current 1,040.6 252.3 243.4 41.2 39.3 1,616.8
assets
Gross current 190.2 32.7 73.0 12.2 195.2 503.3
assets
Gross (379.8) (209.4) (191.7) (58.1) (1,045.8) (1,884.8)
liabilities
Net assets 851.0 75.6 124.7 (4.7) (811.3) 235.3
(liabilities)
4. Revenue
The following tables show the Group's continuing revenue by type of service delivered
and by primary geographic markets. The 2019/20 numbers are presented on a consistent
basis with 2020/21 as explained in the changes in presentation section in note 2:
Commercial Mineralz & Specialities Inter-segment Sub Prior period Total
By type of Waste Water total disposals
service €m €m €m
€m €m €m €m
30
September
2020
Inbound 510.1 73.0 104.2 (11.3) 676.0 - 676.0
Outbound 53.9 17.4 43.1 (1.2) 113.2 - 113.2
On-Site 18.2 - - (0.1) 18.1 - 18.1
Other 12.8 - 2.1 (0.8) 14.1 - 14.1
Total 595.0 90.4 149.4 (13.4) 821.4 - 821.4
revenue
30
September
2019*
Inbound 526.9 63.2 94.2 (11.7) 672.6 6.3 678.9
Outbound 68.1 11.4 59.8 (1.2) 138.1 - 138.1
On-Site 19.5 - - (0.1) 19.4 58.7 78.1
Other 16.3 - 5.1 (0.8) 20.6 - 20.6
Total 630.8 74.6 159.1 (13.8) 850.7 65.0 915.7
revenue
*The 2019 comparatives have been realigned for more consistent disclosure.
Commercial Mineralz Specialities Inter-segment Sub Prior period Total
By geographic Waste & Water total disposals
market €m €m €m
€m €m €m €m
30 September
2020
Netherlands 396.6 69.7 20.5 (12.7) 474.1 - 474.1
Belgium 198.4 20.7 13.0 (0.7) 231.4 - 231.4
UK - - 102.5 - 102.5 - 102.5
France - - 9.2 - 9.2 - 9.2
Other - - 4.2 - 4.2 - 4.2
Total revenue 595.0 90.4 149.4 (13.4) 821.4 - 821.4
30 September
2019
Netherlands 408.1 66.8 21.4 (12.8) 483.5 65.0 548.5
Belgium 222.7 7.8 25.2 (1.0) 254.7 - 254.7
UK - - 94.3 - 94.3 - 94.3
France - - 12.2 - 12.2 - 12.2
Other - - 6.0 - 6.0 - 6.0
Total revenue 630.8 74.6 159.1 (13.8) 850.7 65.0 915.7
Revenue recognised at a point in time amounted to €767.3m (2019/20: €802.1m) with the
remainder recognised over time. The majority of the Commercial and Specialities
revenue is recognised at a point in time, whereas for Mineralz & Water it is
recognised over time.
5. Non-trading and exceptional items
To improve the understanding of the Group's financial performance, items which are not
considered to reflect the underlying performance are presented in non-trading and
exceptional items.
First half 2020/21 First half 2019/20
€m €m
Renewi 2.0 improvement programme 3.6 -
Merger related costs - 6.5
Portfolio management activity:
Loss on remeasurement of assets held for sale - 35.5
Prior year disposals - (2.2)
2017 merger related - (1.8)
- 31.5
Other items:
Restructuring charges - cash 2.8 1.0
Restructuring charges - non-cash 3.2 -
Provision against AEB incinerator receivable - 3.0
ATM soil issues - 1.5
6.0 5.5
Ineffectiveness on cash flow hedges (0.4) 0.8
Amortisation of acquisition intangibles 1.7 3.3
Non-trading and exceptional items in profit 10.9 47.6
(loss) before tax (continuing operations)
Tax on non-trading and exceptional items (2.8) (3.8)
Exceptional tax credit - (2.5)
Non-trading and exceptional items in profit 8.1 41.3
(loss) after tax (continuing operations)
Discontinued operations - 18.9
Total non-trading and exceptional items in 8.1 60.2
profit (loss) after tax
The above non-trading and exceptional items include the following:
Renewi 2.0 improvement programme
Renewi 2.0 improvement programme is a new significant one-off project with expected
capital and one-off costs of €40m over a three year period and as a result is
considered to be exceptional. Following the transformational merger three years ago,
the goal of the Renewi 2.0 improvement programme is to make the Group more streamlined
and more efficient in order to improve customer experience and increase employee
engagement. The programme also includes around €4m of IT integration costs carried
over from the original integration programme and now merged with the Renewi 2.0
digitisation plans. This is the first year of the programme and the costs incurred of
€3.6m are all recorded in administrative expenses.
Merger related costs
The prior year costs of €6.5m related to the merger of Shanks Group and Van
Gansewinkel Groep (VGG) in 2017 and the associated synergy delivery projects. The
total cost of €6.5m was recorded in administrative expenses.
Portfolio management activity
The prior year costs related to the Reym disposal, release of a warranty provision in
relation to prior year disposals and a warranty settlement related to the 2017 merger.
The total cost of €31.5m was recorded in administrative expenses.
Other items
The restructuring charges in the current period relate to a Covid-19 cost action
programme started in the first half to address the challenges of the pandemic. These
costs are considered to be exceptional due to the total expected cost of the programme
and the one-off nature of the circumstances. The costs of €6.0m in the current year
relate to the closure of two production lines at Ghent and Houthalen in the Belgium
Commercial division including €3.2m of impairment of assets. The total cost was
recorded in cost of sales.
In the prior year an impairment provision of €3.0m was reflected relating to the
Amsterdam AEB incinerator unplanned shutdown which was reimbursed in full by March
2020. Following the reopening of the end market for ATM soil no further charges for
logistics or storage are recorded as exceptional. The total charge of €5.5m was split
€4.4m in cost of sales and €1.1m in administrative expenses.
5. Non-trading and exceptional items - continued
Items recorded in finance charges and finance income
The current period €0.4m credit for ineffectiveness on cash flow hedges is principally
in relation to the cross-currency interest rate swaps. The prior year charge of €0.8m
related to 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 €1.7m (2019/20:
€3.3m) is all recorded in cost of sales.
Exceptional tax credit
The prior year exceptional tax credit of €2.5m related to a release of provisions in
relation to pre-merger tax issues in Belgium and the Netherlands.
Discontinued operations
The sale of the Canadian disposal group was completed on 30 September 2019 which
resulted in a loss on disposal of €18.9m and further details are set out in note 15.
As a result of uncertainty of receipt, the contingent proceeds from this disposal will
only be recognised once more certain.
6. Net finance charges
First half
First half 2020/21
2019/20
€m
€m
Finance charges
Interest payable on borrowings 7.6 9.9
Interest payable on PPP non-recourse net debt 3.7 3.9
Lease liabilities interest 3.2 3.1
Unwinding of discount on provisions (note 12) 3.1 3.7
Interest charge on the retirement benefit schemes - 0.1
Amortisation of loan fees 0.7 0.7
Other finance costs 0.8 1.2
Total finance charges before non-trading and exceptional 19.1 22.6
items
Finance income
Interest receivable on financial assets relating to PPP (4.5) (4.7)
contracts
Unwinding of discount on deferred consideration (0.1) (0.1)
receivable
Interest income on the retirement benefit schemes (0.2) -
Other finance income (0.8) (0.1)
Total finance income before non-trading and exceptional (5.6) (4.9)
items
Non-trading and exceptional items
Ineffectiveness charge on cash flow hedges - 1.0
Ineffectiveness credit on cash flow hedges (0.4) (0.2)
Non-trading and exceptional items (0.4) 0.8
Net finance charges 13.1 18.5
7. Taxation
Tax expense is recognised based on management's best estimate of the full year
effective tax rate on expected full year profits to March 2021. The estimated average
underlying annual tax rate on continuing operations for the year to 31 March 2021 is
24.5% (2019/20: 24.5%).
In December 2019, the Dutch government enacted amendments to the Netherlands corporate
income tax rate so that the rate remains at 25% for the period ending 31 March 2021
and then reduces to 21.7% for the period ending 31 March 2022 and subsequent periods.
As a result, Netherlands deferred tax is calculated at the substantively enacted rates
depending on when the timing differences are expected to reverse. Further tax changes
were proposed by the Dutch government in the Budget announcement of 15 September 2020
including an amendment of the corporate income tax rate to 25% for the period ending
31 March 2022 and subsequent periods. However, these rates have not as yet been
enacted so are not reflected in the deferred tax balances at 30 September 2020.
8. Dividends
The Directors have not recommended an interim dividend for the current year (2019:
0.45 pence per ordinary share). The Directors did not recommend a final dividend for
the year ended March 2020 (2019: 0.5 pence per share).
9. Earnings per share
The Directors believe that adjusting earnings per share for the effect of the
non-trading and exceptional items, amortisation of acquisition intangibles and the
change in fair value of derivatives enables comparison with historical data calculated
on the same basis. Non-trading and exceptional items are those items that need to be
disclosed separately on the face of the Income Statement, because of their size or
incidence, to enable a better understanding of performance.
Continuing operations First half 2020/21 First half 2019/20
Basic Dilutions Diluted Basic Dilutions Diluted
Weighted average number of shares 795.2 - 795.2 794.6 0.9 795.5
(million)
Profit (loss) after tax (€m) 3.5 - 3.5 (18.8) - (18.8)
Non-controlling interests (€m) 0.3 - 0.3 (0.2) - (0.2)
Profit (loss) after tax
attributable to ordinary 3.8 - 3.8 (19.0) - (19.0)
shareholders (€m)
Basic earnings (loss) per share 0.5 - 0.5 (2.4) - (2.4)
(cents)
The weighted average number of shares excludes ordinary shares held by the Employee
Share Trust.
The reconciliation between underlying earnings per share and basic loss per share is
as follows:
First half 2020/21 First half 2019/20
Cents €m Cents €m
Underlying earnings per share/Underlying profit 1.5 11.9 2.8 22.4
after tax attributable to ordinary shareholders
Adjustments:
Non-trading and exceptional items (1.4) (10.9) (6.0) (47.7)
Tax on non-trading and exceptional items 0.4 2.8 0.5 3.8
Exceptional tax - - 0.3 2.5
Basic earnings (loss) per share/Profit (loss) 0.5 3.8 (2.4) (19.0)
after tax attributable to ordinary shareholders
Diluted underlying earnings per share/Underlying
profit after tax attributable to ordinary 1.5 11.9 2.8 22.4
shareholders
Diluted basic earnings (loss) per share/Profit
(loss) after tax attributable to ordinary 0.5 3.8 (2.4) (19.0)
shareholders
Discontinued operations First half 2020/21 First half 2019/20
Cents €m Cents €m
Underlying earnings per share/Underlying profit - - 0.3 2.3
after tax attributable to ordinary shareholders
Basic loss per share/Loss after tax attributable - - (2.1) (16.6)
to ordinary shareholders
10. Goodwill, intangible assets, property, plant and equipment and right-of-use
assets
Intangible Property, plant Right-of-use
Goodwill Total
assets and equipment assets
€m €m
€m €m €m
Net book value at 31 March 552.7 52.9 629.1 - 1,234.7
2019
IFRS 16 transition - - (35.5) 35.5 -
accounting policy change
Right-of-use assets on - - - 139.8 139.8
transition
Net book value at 1 April 552.7 52.9 593.6 175.3 1,374.5
2019 - restated
Additions - 8.5 65.6 61.8 135.9
Acquisition through 8.4 0.7 8.9 13.5 31.5
business combinations
Disposals - - (9.3) (0.9) (10.2)
Amortisation and - (12.8) (73.1) (32.4) (118.3)
depreciation charge
Impairment charge - - (1.7) (10.4) (12.1)
Exchange - (0.3) - - (0.3)
Net book value at 31 March 561.1 49.0 584.0 206.9 1,401.0
2020
Additions - 4.5 20.5 24.7 49.7
Disposals - - (1.6) (0.1) (1.7)
Amortisation and - (5.0) (37.2) (19.4) (61.6)
depreciation charge
Impairment charge - - (3.6) (0.1) (3.7)
Exchange - - - (0.2) (0.2)
Net book value at 30 561.1 48.5 562.1 211.8 1,383.5
September 2020
At 30 September 2020, the Group had property, plant and equipment commitments of
€16.6m (2019/20: €11.5m), right-of-use asset commitments of €23.3m (2019/20: €25.1m)
and intangible asset commitments of €2.4m (2019/20: €0.2m).
11. Borrowings
Borrowings are analysed as follows:
As at 30 As at 30 As at 31
September September March
2020 2019 2020
€m €m €m
Non-current borrowings
Retail bonds 174.4 174.2 174.3
European private placements 24.6 24.6 24.6
Term loans 80.4 137.5 81.5
Revolving credit facility 222.4 262.1 352.0
Lease liabilities 183.3 152.3 181.2
Other loans 1.9 - 2.5
Borrowings - Other 687.0 750.7 816.1
Borrowings - PPP non-recourse net debt 81.7 87.1 87.2
768.7 837.8 903.3
Current borrowings
Bank overdrafts 0.7 0.4 0.7
Lease liabilities 38.6 31.1 36.4
Other loans 1.2 4.4 1.2
Borrowings - Other 40.5 35.9 38.3
Borrowings - PPP non-recourse net debt 2.5 2.2 2.8
43.0 38.1 41.1
11. Borrowings - continued
Movement in net debt
As at As at
Other non-cash Exchange
1 April Cash flows changes movements 30 September
2020 €m €m €m 2020
€m €m
Cash and cash 194.5 (58.0) - (0.2) 136.3
equivalents*
Bank loans and (437.9) 125.7 (0.4) 6.0 (306.6)
overdrafts
European private (24.6) - - - (24.6)
placements
Retail bonds (174.3) - (0.1) - (174.4)
Lease liabilities (217.6) 19.9 (24.7) 0.5 (221.9)
(659.9) 87.6 (25.2) 6.3 (591.2)
PPP non-recourse net (90.0) 3.7 - 2.1 (84.2)
debt
Total net debt (749.9) 91.3 (25.2) 8.4 (675.4)
*Cash and cash equivalents include money market funds of €60.8m (1 April 2020:
€100.0m).
Analysis of movement in total net debt
First half First half Full year
2020/21 2019/20 2019/20
€m €m €m
Net (decrease) increase in cash and cash equivalents
excluding cash sold or acquired relating to disposals (58.0) 75.5 156.0
and acquisitions
Cash sold as part of business disposals, net of cash - (0.1) (13.0)
acquired as part of acquisitions
Net (decrease) increase in cash and cash equivalents (58.0) 75.4 143.0
Net decrease (increase) in borrowings and repayments 149.3 (4.7) (14.2)
under lease liabilities
Lease liabilities acquired as part of acquisitions - - (13.7)
Capitalisation of loan fees 0.2 0.5 2.2
Total cash flows in net debt 91.5 71.2 117.3
Adjustment for change in accounting policy (IFRS 16 - (155.4) (155.4)
transition)
Leases liabilities entered into during the period (24.7) (20.9) (61.8)
Amortisation of loan fees (0.7) (0.6) (1.3)
Transferred to disposal groups classified as held for - (18.1) -
sale
Exchange gain (loss) 8.4 3.2 (1.3)
Movement in net debt 74.5 (120.6) (102.5)
Total net debt at beginning of period (749.9) (647.4) (647.4)
Total net debt at end of period (675.4) (768.0) (749.9)
12. Provisions
Site Onerous Legal and
restoration contracts warranty Restructuring Other Total
and aftercare
€m €m €m €m €m
€m
At 31 March 2019 138.9 94.9 - 7.6 29.9 271.3
IFRS 16 transition - (6.0) - - - (6.0)
accounting policy change
At 1 April 2019 - 138.9 88.9 - 7.6 29.9 265.3
restated
Provided in the year 0.3 16.1 19.8 3.4 3.3 42.9
Released in the year - (0.1) (4.3) (0.7) (2.9) (8.0)
Adjustment as a result
of the change in 11.6 5.1 - - 1.2 17.9
discount rate
Finance charges - 4.4 3.2 - - 0.1 7.7
unwinding of discount
Utilised in the year (2.4) (20.6) (0.6) (6.0) (3.0) (32.6)
Reclassifications - - 10.4 - (10.4) -
Exchange - (2.9) (0.1) - (0.1) (3.1)
At 31 March 2020 152.8 89.7 25.2 4.3 18.1 290.1
Provided in the period - - 0.5 3.9 0.4 4.8
Released in the period - - (0.1) - - (0.1)
Finance charges - 1.8 1.2 - - 0.1 3.1
unwinding of discount
Utilised in the period (1.5) (7.2) (0.3) (1.6) (0.6) (11.2)
Exchange (0.1) (2.2) (0.2) - - (2.5)
At 30 September 2020 153.0 81.5 25.1 6.6 18.0 284.2
Current 6.3 20.6 8.2 6.6 3.6 45.3
Non-current 146.7 60.9 16.9 - 14.4 238.9
At 30 September 2020 153.0 81.5 25.1 6.6 18.0 284.2
Current 5.1 16.5 8.0 4.3 3.8 37.7
Non-current 147.7 73.2 17.2 - 14.3 252.4
At 31 March 2020 152.8 89.7 25.2 4.3 18.1 290.1
Current 5.5 16.1 - 2.7 11.3 35.6
Non-current 134.5 60.2 - 0.2 17.0 211.9
At 30 September 2019 140.0 76.3 - 2.9 28.3 247.5
Site restoration and aftercare
The site restoration provision at 30 September 2020 relates to the cost of final
capping and covering of the landfill sites and mineral extractions sites. These site
restoration costs are expected to be paid over a period of up to 31 years from the
balance sheet date. Aftercare provisions cover post-closure costs of landfill sites
which include such items as monitoring, gas and leachate management and licensing. The
timing of payments for 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 may be impacted by a number of factors including changes in
legislation and technology.
Onerous contracts
Onerous contracts are provided for at the lower of the net present value of either
exiting the contracts or fulfilling our obligations under the contracts. The
provisions 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.
Restructuring
The restructuring provision primarily relates to redundancy and related costs incurred
as a result of restructuring initiatives. As at 30 September 2020 the provision is
expected to be spent in the following twelve months as affected employees leave the
business.
Other
Other provisions principally cover dilapidations and long-service employee awards. The
provisions will be utilised over the period up to 2065.
13. Retirement benefit schemes
The Group has the legacy Shanks UK defined benefit scheme which provides pension
benefits for pensioners, deferred members and eligible UK employees which is closed to
new entrants and from 1 December 2019 closed to future benefit accrual. A bulk pension
increase exchange exercise and an at retirement pension increase exchange have
recently been introduced.
In addition there are a number of defined benefit schemes eligible for certain
employees in both the Netherlands and Belgium.
The amounts recognised in the Income Statement were as follows:
First half 2020/21 First half 2019/20
€m €m
Current service cost (credit) 0.7 (0.4)
Interest (income) expense on scheme net (0.2) 0.1
liabilities
Net retirement benefit charge (credit) before 0.5 (0.3)
tax
The amounts recognised in the balance sheet were as follows:
As at 31
As at 30 September As at 30 September
2020 March
2019
€m 2020
€m
€m
Present value of funded obligations (292.2) (301.9) (266.3)
Fair value of plan assets 283.9 296.9 274.8
Pension schemes (deficit) surplus (8.3) (5.0) 8.5
Related deferred tax 1.8 1.3 (1.4)
Net pension (deficit) surplus (6.5) (3.7) 7.1
Classified as:
Defined benefit scheme surplus - - 5.1 16.0
included in non-current assets
Defined benefit pension schemes deficit (8.3) (10.1) (7.5)
- included in non-current liabilities
Pension schemes (deficit) surplus (8.3) (5.0) 8.5
The legacy Shanks UK defined benefit scheme reduced by €16.8m from an asset of €16.0m
at 31 March 2020 to a deficit of €0.8m. This was due to a significant decrease in the
discount rate assumption on scheme liabilities from 2.40% at 31 March 2020 to 1.65% at
30 September 2020 together with an increase in RPI inflation which was only partly
off-set by an increase in asset returns. The overseas defined benefit schemes deficit
remained unchanged at €7.5m.
14. Financial instruments at fair value
The Group uses the following hierarchy of valuation techniques to determine the fair
value of financial instruments:
• Level 1: quoted (unadjusted) prices in active markets for identical assets or
liabilities
• Level 2: other techniques for which all inputs which have a significant effect on
the recorded fair value are observable, either directly or indirectly
• Level 3: techniques which use inputs which have a significant effect on the
recorded fair value that are not based on observable market data
During the period or preceding periods there were no transfers between level 1 and
level 2 fair value measurements and no transfers into or out of level 3.
14. Financial instruments at fair value - continued
Valuation techniques used to derive level 2 fair values are:
• 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
• Retail bonds, the fair value 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 was not materially different to their carrying value. The retail bonds are
held at their carrying value in the balance sheet.
As at 30 September As at 30 September As at 31 March 2020
2020 2019
Level 1 Level 2 Level 1 Level 2 Level 1 Level 2
€m €m €m €m €m €m
Assets
Money market funds 60.8 - - - 100.0 -
Unlisted non-current - 4.7 - 4.3 - 4.7
investments
Short term investments - 8.5 - 9.2 - 8.1
Derivative financial - - - 0.5 - 2.1
instruments
60.8 13.2 - 14.0 100.0 14.9
Liabilities
Derivative financial - 38.7 - 37.0 - 38.0
instruments
Retail bonds - 176.2 - 180.2 - 174.7
- 214.9 - 217.2 - 212.7
15. Assets classified as held for sale and discontinued operations
Assets classified as held for sale - Reym disposal
On 8 November 2018 the Group announced its intention to exit the Hazardous Waste Reym
industrial cleaning business and the disposal completed on 31 October 2019.Therefore
the assets and liabilities were presented as held for sale at 30 September 2019 with
details as follows:
September
2019
€m
Intangible assets 2.8
Right-of-use assets 18.2
Property, plant and equipment 35.8
Trade and other receivables 25.9
Inventories 0.6
Cash 18.1
Assets of disposal groups classified as held for sale 101.4
Trade and other payables (29.7)
Provisions (0.7)
Lease liabilities (20.2)
Tax (4.8)
Liabilities of disposal groups classified as held for sale (55.4)
Net assets of disposal groups classified as held for sale 46.0
15. Assets classified as held for sale and discontinued operations - continued
Discontinued operations - Canada disposal
The Group disposed of Municipal Canada on 30 September 2019, the disposal met the
definition of a discontinued operation as stated in IFRS 5 Non-current assets held for
sale and discontinued operations, therefore the net results were presented as
discontinued operations in the Income Statement.
Income Statement in relation to the discontinued operations:
First half First half
2020/21 2019/20
€m €m
Revenue - 10.8
Cost of sales - (6.8)
Gross profit - 4.0
Administrative expenses - (0.9)
Operating profit before non-trading and exceptional items - 3.1
Non-trading and exceptional items - (18.9)
Operating loss - (15.8)
Finance income - 0.6
Finance charges - (0.5)
Loss before tax on discontinued operations - (15.7)
Taxation - (0.9)
Loss after tax on discontinued operations - (16.6)
Cash flow information in relation to the discontinued operations:
First half First half
2020/21 2019/20
€m €m
Net cash inflow from operating activities - 38.6
Net cash outflow from investing activities - (3.7)
Net cash outflow from financing activities - (36.3)
Net movement in cash - (1.4)
16. Contingent liabilities
There is an ongoing investigation into the production of thermally cleaned soil by
ATM. This may or may not result in a prosecution and if so, we expect such a process
will likely take many years, should it proceed. ATM will defend its conduct vigorously
in such an event and, given that it is not even clear whether or what charges might be
brought and the claim is lower than €1m, we do not consider it appropriate at this
stage to provide for this.
There is an ongoing investigation by the European Commission in which it alleges the
Walloon region of Belgium provided state aid to the Group in relation to the Cetem
landfill. An adverse judgement would require the Walloon region to seek repayment
from the Group. Both the Walloon Region and Renewi believe that no state aid was
offered and will defend their conduct vigorously. The Group has provided €15m based
on legal advice which management considers to be their best estimate of the potential
exposure, noting that the potential maximum claim is €57m, and therefore there is a
potential further liability should the Group be wholly unsuccessful in its defence.
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 the disposed operations for which appropriate provisions are
held.
17. Related party transactions
The Group's significant related parties remain as disclosed in note 8.2 of the 2020
Annual Report and Accounts. There were no material differences in related parties or
related party transactions in the period compared to the prior year.
18. Explanation of non-IFRS measures and reconciliations
The Directors use alternative performance measures as they believe these measures
provide additional useful information on the underlying trends, performance and
position of the Group. These measures are used for internal performance analysis
including determining executive compensation under incentive schemes. These
alternative performance measures adopted by the Group are also commonly used in the
sectors in which the Group operates. These terms are not defined terms under IFRS and
may therefore not be comparable with similarly titled measures used by other
companies. These measures are not intended to be a substitute for, or superior to,
IFRS measurements. The alternative performance measures used and reconciliation of
non-IFRS measures are set out below.
Financial Measure How we define it Why we use it
Operating profit from either
continuing operations or ongoing
businesses (which excludes all Provides insight into
Underlying EBIT businesses disposed of) excluding ongoing profit generation
non-trading and exceptional items, and trends
amortisation of intangible assets
arising on acquisition and fair value
remeasurements.
Underlying EBIT Underlying EBIT as a percentage of Provides insight into
margin revenue ongoing margin development
and trends
Underlying EBIT before depreciation, Measure of earnings and
Underlying EBITDA amortisation, impairment and profit or cash generation to assess
loss on disposal of plant, property operational performance
and equipment
Profit before tax from either
continuing operations or ongoing
businesses (which excludes all
Underlying profit businesses disposed of) excluding Facilitates underlying
before tax non-trading and exceptional items, performance evaluation
amortisation of intangible assets
arising on acquisition and fair value
remeasurements
Earnings per share from either
continuing operations or ongoing
businesses (which excludes businesses
Underlying EPS disposed of) excluding non-trading and Facilitates underlying
exceptional items, amortisation of performance evaluation
intangible assets arising on
acquisition and fair value
remeasurements
Underlying effective The effective tax rate on underlying Provides a more comparable
tax rate profit before tax basis to analyse our tax
rate
Last 12 months underlying EBIT divided Provides a measure of the
by a 13 month average of net assets return on assets across
Return on operating excluding core net debt, IFRS 16 lease the Divisions and the
assets liabilities, derivatives, tax Group excluding goodwill
balances, goodwill and acquisition and acquisition intangible
intangibles balances
Last 12 months underlying EBIT as Provides a measure of the
adjusted by the Group effective tax Group return on assets
Post-tax return on rate divided by a 13 month average of taking into account the
capital employed net assets excluding core net debt, goodwill and acquisition
IFRS 16 lease liabilities and intangible balances
derivatives
Net cash generated from operating Measure of cash available
activities principally excluding after regular replacement
Underlying free cash non-trading and exceptional items and capital expenditure to pay
flow including interest, tax and dividends, fund growth
replacement capital spend capital projects and
invest in acquisitions
The ratio of free cash flow,
Free cash flow underlying free cash flow including Provides an understanding
conversion spend on UK Municipal contracts, to of how our profits convert
underlying EBIT from continuing and into cash
discontinued operations
Cash flow from core net debt excluding
loan fee amortisation, exchange Provides an understanding
Net core cash flow movements, movement in PPP of total cash flow of the
non-recourse net debt, movements in Group
IFRS 16 lease liabilities and
acquired/disposed of cash
Renewi 2.0, synergy delivery,
integration and restructuring cash Provides useful
Non-trading and flows are presented in cash flows from information on non-trading
exceptional cash operating activities and are included and exceptional cash flow
flow items in the categories in note 5, net of spend
opening and closing Balance Sheet
positions
18. Explanation of non-IFRS measures and reconciliations - continued
Financial Measure How we define it Why we use it
The borrowings relating to the UK
Core net debt includes cash PPP contracts are non-recourse to
and cash equivalents but the Group and excluding these gives
Core net debt or excludes the net debt relating a suitable measure of indebtedness
core funding to the UK PPP contracts and for the Group and IFRS 16 lease
lease liabilities as a result liabilities are excluded as
of IFRS 16 financial covenants on the main bank
facilities remain on a frozen GAAP
basis
Core net debt divided by an
annualised underlying EBITDA
with a net debt value based on Commonly used measure of financial
Net debt to EBITDA the terminology of financing leverage and consistent with
arrangements and translated at covenant definition
an average rate of exchange
for the period.
Reconciliation of operating profit to underlying EBITDA
First half 2020/21 First half 2019/20
€m €m
Operating profit 17.0 1.0
Non-trading and exceptional items 11.3 46.8
Underlying EBIT from continuing operations 28.3 47.8
Depreciation and impairment of property, plant 57.3 51.3
and equipment and right-of-use assets
Amortisation of intangible assets (excluding 3.3 2.8
acquisition intangibles)
Non-exceptional gain on disposal of property, (0.4) (0.7)
plant and equipment
Underlying EBITDA from continuing operations 88.5 101.2
Underlying EBITDA from discontinued operations - 3.1
Total underlying EBITDA 88.5 104.3
Reconciliation of underlying free cash flow as presented in the first half 2020/21
Finance Review
First half 2020/21 First half 2019/20
€m €m
Net cash generated from operating activities 129.4 81.2
Exclude non-trading and exceptional provisions,
working capital and 11.8 35.8
restructuring spend
Exclude exceptional proceeds from disposal of - 0.8
property, plant and equipment
Exclude payments to fund UK defined benefit 1.7 1.7
pension scheme
Exclude increase in Municipal Canada PPP - 0.1
financial asset
Include finance charges and loan fees paid (18.0) (23.2)
(excluding exceptional finance charges)
Include finance income received 4.8 5.8
Include purchases of replacement items of (4.5) (1.7)
intangible assets
Include purchases of replacement items of (21.3) (33.6)
property, plant and equipment
Include proceeds from disposals of property, 2.1 6.1
plant & equipment
Underlying free cash flow 106.0 73.0
The Group splits purchases of property, plant and equipment between replacement and
growth as shown in the cash flow in the Finance Review. The first half 2020/21
replacement spend shown above totalling €25.8m (2019/20: €35.3m) (being €4.5m
(2019/20: €1.7m) intangible assets and €21.3m (2019/20: €33.6m) property, plant and
equipment) plus the growth capital expenditure of €3.3m (2019/20: €10.5m) as shown in
the Finance Review less additions to IAS 17 finance leases of €nil (2019/20: €0.4m)
reconciles to the purchases of property, plant and equipment and intangible assets
cash outflow of €29.1m (2019/20: €45.4m) within investing activities in the
consolidated Statement of Cash Flows.
18. Explanation of non-IFRS measures and reconciliations - continued
Reconciliation of net core cash flow as presented in the first half 2020/21 Finance
Review
First half 2020/21 First half 2019/20
€m €m
Net core cash flow 87.6 68.9
Movement in PPP non-recourse net debt 5.8 6.1
Capitalisation of loan fees net of amortisation (0.5) (0.1)
Exchange movements 6.3 0.7
Replacement capital expenditure - new IFRS 16 (24.7) (21.2)
leases
Net debt disposed/acquired - 4.4
IFRS 16 transition additions - excluding assets - (155.4)
held for sale
IFRS 16 transition additions - assets held for - (21.9)
sale
IFRS 16 leases sold as part of business disposal - 16.0
- assets held for sale
Cash transferred to assets of disposal groups - (18.1)
classified as held for sale
Movement in total net debt (note 11) 74.5 (120.6)
Reconciliation of total net debt under covenant First half 2020/21 First half 2019/20
definition
€m €m
Total net debt (675.4) (768.0)
Less PPP non-recourse net debt 84.2 89.3
Less IFRS 16 lease liabilities 210.1 164.8
Net debt under covenant definition (381.1) (513.9)
19. Events after the balance sheet date
On 12 October 2020 the Group acquired the remaining 25% holding in 3SE (Barnsley,
Doncaster & Rotherham) Holdings Limited and this entity is now wholly owned by the
Group.
Subsequent to the balance sheet date both Belgium and the UK are in national lockdown
from early November and the Netherlands has tightened its partial lockdown measures.
The Group has determined that this does not lead to any material changes in key
estimates or judgements and the impact has been considered in the going concern
assessment as further explained in note 2.
INDEPENDENT REVIEW REPORT TO RENEWI PLC
Introduction
We have been engaged by the Company to review the condensed set of financial
statements in the half-yearly financial report for the six months ended 30 September
2020 which comprises Consolidated Interim Income Statement, Consolidated Interim
Statement of Comprehensive Income, Consolidated Interim Balance Sheet, Consolidated
Statement of Changes in Equity and Consolidated Interim Statement of Cash Flows.
We have read the other information contained in the half-yearly financial report and
considered whether it contains any apparent misstatements or material inconsistencies
with the information in the condensed set of financial statements.
Directors' responsibilities
The half-yearly financial report is the responsibility of and has been approved by the
directors. The directors are responsible for preparing the half-yearly financial
report in accordance with the Disclosure Guidance and Transparency Rules of the United
Kingdom's Financial Conduct Authority.
As disclosed in note 2, the annual financial statements of the group are prepared in
accordance with International Financial Reporting Standards (IFRSs) as adopted by the
European Union. The condensed set of financial statements included in this
half-yearly financial report has been prepared in accordance with International
Accounting Standard 34, ''Interim Financial Reporting'', as adopted by the European
Union.
Our responsibility
Our responsibility is to express to the Company a conclusion on the condensed set of
financial statements in the half-yearly financial report based on our review.
Scope of review
We conducted our review in accordance with International Standard on Review
Engagements (UK and Ireland) 2410, ''Review of Interim Financial Information Performed
by the Independent Auditor of the Entity'', issued by the Financial Reporting Council
for use in the United Kingdom. A review of interim financial information consists of
making enquiries, primarily of persons responsible for financial and accounting
matters, and applying analytical and other review procedures. A review is
substantially less in scope than an audit conducted in accordance with International
Standards on Auditing (UK) and consequently does not enable us to obtain assurance
that we would become aware of all significant matters that might be identified in an
audit. Accordingly, we do not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that causes us to believe that
the condensed set of financial statements in the half-yearly financial report for the
six months ended 30 September 2020 is not prepared, in all material respects, in
accordance with International Accounting Standard 34, as adopted by the European
Union, and the Disclosure Guidance and Transparency Rules of the United Kingdom's
Financial Conduct Authority.
Use of our report
Our report has been prepared in accordance with the terms of our engagement to assist
the Company in meeting its responsibilities in respect of half-yearly financial
reporting in accordance with the Disclosure Guidance and Transparency Rules of the
United Kingdom's Financial Conduct Authority and for no other purpose. No person is
entitled to rely on this report unless such a person is a person entitled to rely upon
this report by virtue of and for the purpose of our terms of engagement or has been
expressly authorised to do so by our prior written consent. Save as above, we do not
accept responsibility for this report to any other person or for any other purpose and
we hereby expressly disclaim any and all such liability.
BDO LLP
Chartered Accountants
London, UK
9 November 2020
BDO LLP is a limited liability partnership registered in England and Wales (with
registered number OC305127).
══════════════════════════════════════════════════════════════════════════════════════
ISIN: GB0007995243
Category Code: IR
TIDM: RWI
LEI Code: 213800CNEIDZBL17KU22
OAM Categories: 2.2. Inside information
Sequence No.: 87521
EQS News ID: 1146638
End of Announcement EQS News Service
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