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30.05.2024 08:00:06 - dpa-AFX: GNW-News: FY24 Full Year Results, Delivering on Commitments
THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION FOR THE PURPOSES OF ARTICLE 7 OF
REGULATION (EU) NO 596/2014 ('MAR'), AND MAR WHICH IS PART OF UK LAW BY VIRTUE
OF THE EUROPEAN UNION (WITHDRAWAL) ACT 2018, AS AMENDED ('UK MAR')
30 May 2024
Renewi plc ('Renewi' or the 'Group') (LSE: RWI.L: Euronext Amsterdam: RWI.AS), a
leading European waste-to-product company, today releases its results for the
full-year ended 31 March 2024 ('FY24').
Sale of UK Municipal
Following the strategic review of its UK Municipal operations ('UK Municipal')
announced in September 2023, Renewi has entered into a binding agreement to sell
UK Municipal to Biffa Limited ('Biffa'), a leading UK-wide integrated waste
management business (the 'Divestment').
Renewi's CEO, Otto de Bont: ''The sale of UK Municipal to Biffa delivers on our commitment to optimise our portfolio and strengthen our core business. This is a
transformational moment for Renewi which will enable us to unlock substantial profit and cashflow improvements and improve shareholder value.
We will now fully focus on growing in Europe's most attractive and advanced recycling markets. Biffa's financial position, operational expertise, and presence in the UK municipal landscape make them the right new home for our UK Municipal business and we are confident this transaction benefits all stakeholders.'
See a separate RNS dated 30 May 2024 'Renewi announces sale of UK Municipal
business to Biffa' for more information.
Transaction Highlights
Supporting Renewi's transformation, the Divestment:
* will immediately increase Renewi's free cash flow by EUR15-20m per annum and
The transaction will be effectuated through a combination of a nominal cash
consideration payable to Biffa and pre-completion capitalisation of UK Municipal
(together, the 'Capitalisation'). The Capitalisation ensures UK Municipals'
ability to fulfil its future contractual obligations.
* Capitalisation is expected to be approximately £125m* (EUR146m**) on
completion which, when offset against the reduction of liabilities of EUR89m,
The Divestment provides UK Municipal customers, employees and other stakeholders
with strong strategic backing from a respected scale operator in the UK market. The transaction is expected to complete before 31 December 2024, subject to receipt of a limited suite of regulatory and other consents.
* Subject to customary closing adjustments; Capitalisation at completion will be
net of any normal course capitalisation provided by Renewi to UK Municipal in the period between 31 March 2024 and completion of the Disposal.
** Based on GBP/EUR exchange rate of EUR1:£0.855.
For the purposes of UK Listing Rule 10.4, as at 31 March 2024 the gross assets of UK Municipal (adjusted for the estimated pre-completion Capitalisation) are EUR348m; and in the financial year ending 31 March 2024, UK Municipal contributed
EUR0.7m to the Group's statutory profit before tax.
FY24 Financial Highlights (note all financial results are shown with UK
Municipal held for sale)
* Underlying EBITDA from continuing operations of EUR230.2m: (FY23: EUR252.4m)
FY24 Strategic and Operational Highlights
the year, supported by the implementation of a new sales strategy, despite a
* Recyclate prices: Prices were stable throughout the year, having returned to
* Simplify (SG&A efficiency programme): Launched to streamline staff functions and reduce costs, Simplify achieved its EUR15m run rate at the end of March.
Outlook
* FY25 trading expectations include return to revenue growth and significant
margin improvement for the continuing Group, in line with current consensus.
Results
+------------------------------------------------+---------+---------+---------+
| | FY24 | FY23(#) |% change | +------------------------------------------------+---------+---------+---------+
|UNDERLYING NON-STATUTORY | | | | +------------------------------------------------+---------+---------+---------+
|Revenue from continuing operations |EUR1,689.2m|EUR1,703.9m| -1%|
+------------------------------------------------+---------+---------+---------+
|Underlying EBITDA(1) from continuing operations| EUR230.2m| EUR252.4m| -9%|
+------------------------------------------------+---------+---------+---------+
|Underlying EBIT(1) from continuing operations | EUR105.5m| EUR131.7m| -20%|
+------------------------------------------------+---------+---------+---------+
|Underlying EBIT(1 )margin from continuing| | | | |operations | 6.2%| 7.7%| -1.5pps| +------------------------------------------------+---------+---------+---------+
|Free cash flow(1) | EUR20.9m| EUR25.3m| |
+------------------------------------------------+---------+---------+---------+
|Free cash flow/EBITDA conversion(1) | 9.0%| 9.9%| | +------------------------------------------------+---------+---------+---------+
|Return on capital employed(1) | 7.7%| 10.6%| | +------------------------------------------------+---------+---------+---------+
|Core net debt* | EUR368.1m| EUR370.6m| |
+------------------------------------------------+---------+---------+---------+
| | | | | +------------------------------------------------+---------+---------+---------+
|STATUTORY | | | | +------------------------------------------------+---------+---------+---------+
|Revenue from continuing operations |EUR1,689.2m|EUR1,703.9m| -1%|
+------------------------------------------------+---------+---------+---------+
|Operating profit from continuing operations | EUR97.6m| EUR141.5m| -31%|
+------------------------------------------------+---------+---------+---------+
|Profit for the year from continuing operations | EUR45.2m| EUR86.0m| -47%|
+------------------------------------------------+---------+---------+---------+
|(Loss) profit for the year | EUR(30.9)m| EUR66.6m| |
+------------------------------------------------+---------+---------+---------+
|Basic EPS (cents per share) from continuing| | | | |operations | 53c| 104c| | +------------------------------------------------+---------+---------+---------+
|Cash flow from operating activities | EUR205.0m| EUR209.6m| |
+------------------------------------------------+---------+---------+---------+
|Total net debt (including IFRS 16 leases) | EUR616.0m| EUR685.7m| |
+------------------------------------------------+---------+---------+---------+
(1 )The definition and rationale for the use of non-IFRS measures are included in note 18.
(#) Certain March 2023 values have been adjusted to reflect discontinued operations as set out in note 2.
* Core net debt used for banking leverage calculations excludes the impact of IFRS 16 lease liabilities and UK PPP net debt.
Otto de Bont, CEO Renewi: 'We made three important commitments to our
shareholders at the Capital Markets Day in October 2023: optimise our portfolio,
build a stronger platform with improved margins and shareholder returns, and
drive organic growth. Despite a challenging market environment in commercial
waste, we made solid progress on these commitments.
We completed the strategic review of our UK Municipal business, resulting in a
sale of our UK Municipal activities to Biffa, immediately improving our.
Mineralz & Water is slightly ahead of schedule and we expect to further increase
the production volume and quality of new sand, filler and gravel products.
Three key initiatives are focused on strengthening our platform. With the
Simplify efficiency programme, we right-sized our SG&A costs. We announced the
streamlining of our organisational structure to unlock our growth potential and
better utilise our scale by merging Commercial Waste Netherlands and Belgium
under single leadership and integrating Mineralz & Water into the Specialities
division. Alongside this, we accelerated Future Fit, a multi-year digitisation
programme aimed at replacing our legacy IT systems, to give us a strong
foundation to improve efficiency and drive growth.
To further drive organic growth, we are progressing in the key sectors set out
at the Capital Markets Day, including monostreams like glass, plastics and
organics, and mixed waste streams from construction & demolition and commercial
& industrial. In addition we are expanding our Ecosmart services, offering
customers advice and resources to improve their waste management and reduce
their carbon footprint.
Finally, we are recommencing dividend payment as stated before and will propose
a dividend of 5p per share, underlining our commitment to our shareholders and
confidence in our future.
We celebrated notable client wins across The Netherlands and Belgium, including
Schiphol Airport, Rotterdam the Hague Airport, the Ministry of Defence and
Custodial Institution Agency, Total Energies, BPost, Limburg and Nike.
Partnerships were concluded with Shell Refineries Pernis and Moerdijk for total
waste management and Vattenfall for the offtake of Green Gas as of Q1FY25. The
wins of SPF Penitentiaire and hospital Mouscron, reflecting our successful
approach in the care sector.
We operate in a dynamic sector, where the perception of waste is changing and
where our customers realise the carbon footprint they create is impacted by the
waste they produce and by the raw materials they use. We help them reduce their
footprint, by improving their waste management and by offering them circular
materials as alternative to the virgin materials they use today. With our scale,
resources and expertise, Renewi iswell-positioned to grow in this dynamic
sector.'
FY24 results presentation
Today we will host a results presentation at 9:30am BST / 10:30am CET.
Registrations for the presentation: https://brrmedia.news/RWI_FY (https://eqs-
cockpit.com/cgi-
bin/fncls.ssp?fn=redirect&url=d01461a009e014067bc440beda3e3d00&application_id=
1888539&site_id=acquiremedia3&application_name=news)
For further information:
(mailto:investor.relations@renewi.com)
Information on Dividend
The Board is recommending a dividend of 5 pence per share. Subject to shareholder approval at the 2024 AGM, the final dividend will be paid on the 31July 2024 with an ex-dividend date of 27 June 2024 and a record date of 28
June 2024. Shareholders on the Register of Members or holding shares in Crest will automatically receive their dividends in Pounds Sterling, shareholders who hold shares through Euroclear Nederland will automatically receive their dividends in Euros. For shareholders holding shares trading on Euronext Amsterdam and held via Euroclear Nederland, the Euro equivalent dividend payment
will be announced on 25 July 2024, and a Dividend Reinvestment Programme ('DRIP') is available. ABN AMRO provide their DRIP fully on their account and not on behalf of the Company. Contact ABN AMRO at corporate.broking@nl.abnamro.com for information.
About Renewi
Renewi is a pure-play recycling company that focuses on extracting value from waste and used materials rather than disposing of them through incineration or landfill. The company plays an important role in combating resource scarcity by creating circular materials. In giving new life to used materials, Renewi addresses both social and regulatory trends, contributing to a cleaner and greener world.
Our vision is to be the leading waste-to-product company in the world's most advanced circular economies. With a recycling rate of 63.2%, one of the highest in Europe, Renewi puts 6.6 million tonnes of circular materials back into use each year. This contributes to mitigating climate change and promotes the circular economy. Our recycling efforts help to protect natural resources and prevent more than 2.5 million tonnes of CO(2) emissions annually.
Renewi leverages innovation and the latest technology to turn waste into circular materials such as paper, metals, plastics, glass, wood, building materials, compost, and water. We employ over 6,000 people across 154
operational sites in five countries in Europe. Renewi is recognised as a leading
waste-to-product company in the Benelux region and a European leader in advanced
recycling.
Visit our website for more information: www.renewi.com. (https://www.renewi.com.)
CEO's review
Our strategic ambitions encompass three priorities - optimise our portfolio,
build a stronger platform and accelerate our organic growth. While FY24 saw a
challenging market environment with limited macroeconomic growth, a fall in
recyclate prices and market declines in some of our key end markets, we focused
on operational agility and commitments.
Our portfolio optimisation is progressing well with the completion of the
strategic review of our UK Municipal business, resulting in a sale of our UK
Municipal activities to Biffa. This transaction entails a EUR154m cash outflow for
us, but thereafter will unburden our cashflow and free up management focus to
realise our growth ambitions for the core business. We are also on track with
the turn-around of Mineralz & Water within the envisaged timeframe, through the
growing uptake of our new materials. The new Mineralz & Water product line has
been created with the specific needs of the concrete and construction industries
in mind and we expect to further increase the production volume and quality of
our new sand, filler and gravel products. We expect the recovery of Mineralz &
Water to continue through FY25.
In order to strengthen our systems and processes, we launched three initiatives
over the course of FY24. The Simplify programme identified a number of areas for
efficiency gains, especially in our SG&A functions, where we were able to make
significant savings by combining activities and increasing efficiency. We
started the process of streamlining our organisational structure and bringing
Commercial Waste Netherlands and Belgium together under a single Commercial
Waste leader, to maximise the sharing of best practices, organisational
efficiency and economies of scale. We further developed and accelerated the
launch of Future Fit, our digitisation programme to replace our legacy IT
systems and increase the resilience and agility of our platform. Workday, a
comprehensive workforce management solution, was one of the tools we rolled out
to manage our human resources functions more efficiently.
While the financial results of FY24 were impacted by both recyclate prices
largely returning to historical averages and the challenging market in the
Commercial Waste Netherlands business, work continued across the organisation to
put the right measures in place to return to organic revenue growth and realise
higher margins. Within Commercial Waste, a simplified leadership structure, an
enhanced sales strategy and investments in high growth projects have set the
groundwork for accelerated growth in the future. Mineralz & Water continues to
improve its underlying EBIT in line with its recovery programme. Coolrec, while
impacted by the low plastics prices, processed record volumes and has started
constructing new processing lines which will further contribute to growth in
2025. Maltha showed impressive growth, with refinements in processes and
investments in plant improvements combined with strong price dynamics to yield
exceptional results.
If we look at the higher-growth materials and sectors we set out on our Capital
Markets Day, we have made progress on a number of areas of our 5 year commitment
to add EUR275m in revenues in glass, plastics, organics, construction & demolition
and zero waste solutions.
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The underlying figures above are reconciled to statutory measures in note 3 in the consolidated financial statements.
*The FY23 numbers have been reclassified to reflect discontinued operations as set out in note 2 in the consolidated financial statements.
Against a background of macroeconomic challenges including lower levels of
construction and demolition activities in the Netherlands and high inflation,
our financial performance for FY24 was weaker with revenue from continuing
operations down 1% and underlying EBIT down 20%. In the last quarter of the
year, volumes stabilised or returned to modest sequential growth. The planned
divestment of UK Municipal has been reflected as asset held for sale at 31 March
2024 and has resulted in an exceptional charge of EUR64.5m.
We continued to grow our operations and officially opened our Ghent sorting
line, which is capable of recycling 125kt of commercial residual waste annually.
The facility aligns with VLAREMA 8 legislation which requires that some 24
materials must be removed from commercial waste for recycling before any
residual waste can be incinerated. We also opened our new rigid plastics sorting
line in Acht, which produces high-quality Post-Consumer Recycled (PCR)
materials, focusing on polypropylene (PP) and polyethylene (PE). We are proud to
have achieved over 95% purity at the site, ensuring our recycled plastics meet
the highest standards.
In a ground-breaking achievement, our Coolrec subsidiary in partnership with
Electrolux, pioneered the creation of a refrigerator crafted from recycled
materials. This collaboration earned us the European Plastic Recycling Award for
Automotive, Electrical, or Electronic Product of the Year, recognising our
excellence in recycled material processing, innovative product design and
cutting-edge manufacturing in the European plastics recycling industry. Maltha
installed a new line at the Portugal site for the processing of ceramics, stone
and porcelain, a waste stream coming from glass sorting, and made a number of
upgrades to improve quality and yields. Looking forward, we expect to see
increasing demand for our services, as our offering is even more attractive in
light of upcoming regulatory requirements which will affect many of our
customers, such as CSRD regulation and will continue to drive higher levels of
recycling. We are well-positioned to meet this demand. We continue to focus on
customer experience and with the implementation of Future Fit, we expect to see
further improvement in customer satisfaction.
Ensuring health and safety in our workplace is paramount, we have made excellent
progress in maintaining a safe environment. We are proud to report a decrease in
Lost Time Injuries overall from 9.4 to 6.8, surpassing our 2025 target of 7. We
have proactively implemented enhanced traffic plans across all our sites to
mitigate risks. The rollout of safety leadership training is evidence of our
commitment to fostering a culture of safety at every level of the organisation.
We were pleased that our employee satisfaction levels stayed stable at an eNPS
23 against the backdrop of a strategic review and implementation of our Simplify
programme.
Group outlook
Our strategic focus for the coming year centres around completing the divestment
of our UK Municipal business, driving further improvements in Mineralz & Water
operations and driving efficiency through digitisation and simplification of our
organisation and processes. We aim to achieve further growth through organic
expansion and the strengthening of our core commercial waste business with the
targeted sales strategy and continuing investment in innovation in circular
materials. We expect Commercial Waste Belgium to continue its strong performance
in the second half, and Netherlands to show improvement despite the ongoing
weakness in the construction sector. We will see further margin improvement as
the existing programmes ramp up to their run-rate benefits. In line with our
upgraded capital allocation policy we shared at the Capital Markets Day in
October of last year, I am pleased to announce that we will be proposing a
dividend of 5p per share.
I want to express my gratitude to the diverse group of stakeholders who have
been instrumental in supporting us throughout this year. I appreciate our
customers for entrusting us with their business, our workforce for their
continued dedication, the Board for their valuable guidance and our shareholders
for their support of our vision.
CFO's review
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The underlying figures above are reconciled to statutory measures in notes 3 and
18 in the consolidated financial statements.
*The FY23 numbers have been reclassified to reflect discontinued operations as set out in note 2 in the consolidated financial statements.
We have continued to deliver against the strategic priorities previously
communicated at Renewi's Capital Markets Day in October 2023. However despite
these successes, a challenging operating environment for Commercial Waste
Netherlands, particularly in the Construction and Demolition sector, adversely
impacted the overall Group results in FY24. We achieved a number of goals
including further optimisation of the portfolio as Mineralz & Water continued
its recovery with its overall performance slightly ahead of the original
recovery plan. As announced an exit for the UK Municipal business has been
agreed with completion expected before 31 December 2024. Cost reduction and
efficiency in both the short and longer term, remains a key focus for the Group.
The Simplify programme launched in the third quarter has achieved its targeted
full year run-rate impact of EUR15m in SG&A costs by the end of March. This action
will contribute to our medium term objective of delivering high single-digit
EBIT margins.
Given the status of the UK Municipal strategic review at the end of the
financial year, the business is presented as an asset held for sale at 31 March
2024. This has resulted in this business being disclosed as a discontinued
operation with the financials now presented on a continuing and discontinued
operations basis with a restatement of the prior year comparatives. As a result
of this an exceptional charge of EUR64.5m has been recorded.
Revenue from continuing operations fell by 1%, to EUR1,689.2m driven by slow
economic growth and a reduction in recyclate prices. Overall volumes were down
year on year albeit stable in the second half and recyclate prices have remained
largely stable throughout the year. Underlying EBIT from continuing operations
was 20% lower than the prior year driven by volume and recyclate impact of EUR35m
as cost inflation was largely mitigated by pricing discipline and ongoing cost
initiatives. In addition, there has also been the impact this year of a higher
level of favourable one-off items of cEUR5m arising from some accrual releases and
other settlements. These one-off items do not qualify as non-trading or
exceptional in accordance with our accounting policy. The benefit of ongoing
cost reductions and execution of strategic initiatives has resulted in an
improved underlying EBIT margin performance in the second half of the year of
6.7% compared to 5.8% in the first half of the year. Net finance charges have
risen in FY24 as a result of increased costs of borrowing and higher average
debt balances across the year. The level of exceptional and non-trading items in
continuing operations was higher than last year as described below, resulting in
a statutory profit for the year from continuing operations of EUR45.2m compared to
EUR86.0m last year.
Additionally, during FY24, we have embarked on our Future Fit digital programme,
a strategic initiative expected to increase operational efficiency, asset
utilisation and customer satisfaction, also supporting the Group in achieving
its medium-term margin ambitions. Our capital allocation policy was reset during
the year to reflect an ongoing disciplined approach to capital, prioritising
shareholder returns and investing in profitable growth. In line with this a
final dividend of 5 pence per share is proposed which will be subject to
approval at the Annual General Meeting.
Non-trading and exceptional items excluded from underlying profits
To enable a better understanding of underlying performance, certain items are
excluded from underlying EBIT and underlying profit before tax due to their
size, nature or incidence.
Total non-trading and exceptional items in continuing operations were a cost of
EUR7.9m (FY23: EUR9.8m credit) and include the costs of the Simplify restructuring
programme, portfolio management activity, amortisation of acquisition related
intangibles reduced by profits from property disposals and other items. Further
details on all non-trading and exceptional items are provided in note 5 to the
consolidated financial statements.
Operating profit from continuing operations, after taking account of all non-
trading and exceptional items, was EUR97.6m (FY23: EUR141.5m).
Net finance costs
Net finance costs from continuing operations increased by EUR11.2m to EUR38.0m
(FY23: EUR26.8m) as a result of the impact of additional fixed rate borrowings in
the second half of FY23, increased interest rates, the level of borrowings on
the revolving credit facility and a non-cash write off of EUR1m of unamortised
loan fees following the August 2023 renewal of the EUR400m revolving credit
facility. Further details areprovided in note 6 to the consolidated financial
statements.
Profit before tax
Profit before tax from continuing operations on a statutory basis, including the
impact of non-trading and exceptional items, was EUR60.1m (FY23: EUR115.0m).
Taxation
Total taxation for the year from continuing operations was a charge of EUR14.9m
(FY23: EUR29.0m). The effective tax rate on underlying profits was 23.7% at
EUR16.1m, a decrease from 29.3% in the prior year, as a result of tax losses
claimed from the UK Municipal entities. A tax credit of EUR1.2m is attributable to
the non-trading and exceptional items of EUR7.9m as a number of items are not
subject to tax.
Looking forward, we anticipate the underlying tax rate to be approximately 27%.
Due to items disallowed for tax in both the Netherlands and Belgium, our
effective tax rate is higher than the nominal rates in the countries where we
operate. Our Group tax strategy remains unchanged and is fully documented on the
Group website.
The Group statutory profit for the year from continuing operations, including
all non-trading and exceptional items, was EUR45.2m (FY23: EUR86.0m).
Discontinued operations
The loss for the year from the disposal group was EUR76.1m including the re-
measurement impact in reflecting the business as asset held for sale. Further
details on the performance of the UK Municipal business and the implications of
the transaction are provided in note 12 to the consolidated financial
statements.
Earnings per share (EPS)
Underlying EPS from continuing operations excluding non-trading and exceptional
items was 61 cents per share, a decrease of 28 cents given the lower profits.
Basic EPS from total operations was a loss of 43 cents per share compared to
earnings of 79 cents per share in the prior year.
Dividend
The Board is recommending a final dividend of 5 pence per share. Subject to
shareholder approval at the 2024 AGM, the final dividend will be paid on 31 July
2024 to shareholders on the register at close of business on 28 June 2024.
Cash flow performance
The funds flow performance table is derived from the statutory cash flow
statement including both continued and discontinued operations and
reconciliations are included in note 18 in the consolidated financial
statements. The table shows the cash flows from an adjusted free cash flow to
total cash flow. The adjusted free cash flow measure focuses on the cash
generation excluding the impact of historical liabilities relating to Covid-19
tax deferrals, settlement of ATM soil liabilities, spend relating to the UK PPP
onerous contracts and other items including exceptional cash spend. Free cash
flow represents the cash available to fund growth capital projects, pay
dividends and invest in acquisitions.
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All numbers above contain both continued and discontinued operations. Free cash
flow conversion is free cash flow as a percentage of underlying EBITDA. The non-
IFRS measures above are reconciled to statutory measures in note 18 in the
consolidated financial statements.
Adjusted free cash flow was only slightly lower than last year at EUR69.6m (FY23:
EUR72.9m) despite the lower EBITDA, which was offset by improved working capital
management, increased utilisation of invoice discounting and disposal proceeds.
Replacement capital expenditure of EUR57.2m was significantly lower than last year
following the disposal of the Hemweg site in Amsterdam. The disposal of this
site was anticipated as part of the overall business plan for the RenewiWestpoort acquisition in 2022. Stripping out proceeds from this and other
exceptional property disposals, replacement capital expenditure was EUR77m, a
decrease of EUR17m on the prior year which included a number of catch up projects
delayed during Covid. In addition, EUR66.6m of new leases or modifications have
been entered into which are reported as right-of-use assets with a corresponding
lease liability. These leases include the continuation of the truck replacement
programme, property lease renewals or extensions and others. Growth capital
expenditure of EUR22.0m includes further spend on the VLAREMA 8 advanced sorting
investments in Belgium and the newly commissioned rigid plastics sorting line at
Acht in the Netherlands. As previously communicated, this level of growth spend
is lower than originally planned given delays at further sites for advanced
sorting in Belgium, as full enforcement of the new regulation ramps up.
The higher cash outflow relating to interest includes the settlement of EUR2.6m of
fees relating to the August 2023 renewal of the Group revolving credit facility
along with the impact of higher financing costs. Tax payments were higher in the
current year given the timing of settlements with some items falling into FY24.
Looking at the three legacy components that are shown below adjusted free cash
flow, there has been a further EUR19.9m repayment on Dutch Covid-19 tax deferrals
as expected. The remaining balance of EUR10m will be settled by the end of
September 2024. Cash spend for placement of TGG soil stocks has been limited in
the period. Cash outflow on UK PPP contracts was EUR15.8m. Following completion of
the UK Municipal divestment, we do not expect any further cash outflows in
respect of UK PPP contracts.
The acquisitions net of disposals inflow included the sale of an entity acquired
with the Renewi Westpoort acquisition in September 2023, net of the acquisition
of the Meeus rockwool business in Belgium. Other cash flows include funding for
the closed UK defined benefit scheme and the funding of the Renewi Employee
Share trust.
Net cash inflow from operating activities decreased from EUR188.4m in the prior
year to EUR168.7m in the current year. A reconciliation to the underlying cash
flow performance as referred to above is included in note 18 in the consolidated
financial statements and further details on cash flows from discontinued
operations in note 12.
Moving forward, our focus is on enhancing our capacity to generate free cash
flow and achieving a conversion rate of 40% of EBITDA by the end of FY26. We
will achieve this by eliminating legacy cash outflows, reducing exceptional
costs and optimising asset utilisation to decrease capital expenditures. By
bolstering our ability to generate cash, we can adopt a capital allocation
strategy that balances growth-oriented investments with enhanced returns for our
shareholders.
Investment projects
Expenditure in FY25
Asset optimisation is a key objective to improve our cash flow generation and
deliver a cash conversion rate of 40% of EBITDA in the coming years. As such
replacement capital expenditure will continue to be tightly controlled and is
expected to be between EUR70m and EUR80m in FY25. In addition, c.EUR50m of IFRS 16
lease investments are anticipated, as further deliveries on the replacement
truck programme continue. Our medium-term ambition is to earmark c. 30% of free
cash flow annually to growth capital projects with return hurdle rates of at
least 16% on a pre-tax basis. Total growth capital spend in FY25 is expected to
be around EUR30m on a number of projects across the divisions.
Return on assets
The Group return on operating assets on a continuing basis, excluding debt, tax
and goodwill, decreased to 19.9% at 31 March 2024 down from 30.0% at 31 March
2023 given the lower profits in FY24. The Group post-tax return on capital
employed on a total operations basis was 7.7% (FY23: 10.6%).
Treasury and cash management
Core net debt and leverage ratios
Core net debt excludes IFRS 16 lease liabilities and the net debt relating to
the UK PPP contracts which is non-recourse to the Group and secured over the
assets of the special purpose vehicles. Given the UK Municipal planned exit and
classification as asset held for sale all cash and borrowings relating to the
disposal group at 31 March 2024 are now shown in assets and liabilities held for
sale. Core net debt at 31 March 2024, excluding any core cash held in UK
Municipal, was EUR368.1m (FY23: EUR370.6m). Cash performance in the last half
resulted in lower net debt and a closing net debt to EBITDA ratio of 2.14x.
Liquidity headroom including cash and undrawn facilities remained sufficient at
EUR307m.
Debt structure and strategy
All our core borrowings of bonds and loans are green financed. As at 31 March
2024, 78% of our core net debt was on a fixed rate. Most borrowings are long
term with the exception of the EUR75m Belgian green retail bonds due for repayment
in July 2024.
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| | | | | Debt Structure Mar 24 Mar 23* Variance | | | | EURm EURm EURm |
| | | | | | | Belgian Green retail bonds (200.0) (200.0) - | | | | Green RCF (155.0) (102.5) (52.5) | | | | Other Green loans (90.0) (105.0) 15.0 | | -------------------------------- | | Gross borrowings before lease liabilities (445.0) (407.5) (37.5) | | | | IAS 17 lease liabilities and other (5.2) (9.1) 3.9 | | | | Loan fees 3.1 2.3 0.8 | | | | Core cash 79.0 43.7 35.3 | | -------------------------------- | | Core net debt (368.1) (370.6) 2.5 | | | | IFRS 16 lease liabilities (247.9) (245.8) (2.1) | | -------------------------------- | | Net debt continuing operations(616.0) (616.4) 0.4 |
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*The FY23 numbers have been reclassified to reflect discontinued operations as set out in note 2 in the consolidated financial statements.
In August 2023, the Group completed the renewal of its revolving credit
facility, part of its Euro denominated multicurrency green finance facility. The
size of the revolving credit facility ('RCF') remains unchanged at EUR400m and is
for an initial five-year term to 2028 with two one-year extension options to
2030 together with a EUR150m accordion option to increase the facility subject to
lender approval at that time. Interest remains based on Euribor plus a margin
grid based on leverage and green sustainability metrics performance. Financial
covenants remained unchanged and are now tested semi-annually at September and
March.
The introduction of IFRS 16 on 1 April 2019 brought additional lease liabilities
onto the balance sheet with an associated increase in assets. Covenants on our
main bank facilities remain on a frozen GAAP basis and exclude IFRS 16 lease
liabilities. The Group has complied with its banking covenants during the
period. The Group operates a committed invoice discounting programme. The cash
received for invoices sold at March 2024 was EUR116.4m (March 2023: EUR84.7m).
Provisions and contingent liabilities
Further to the recognition of the UK Municipal business as asset held for sale
all associated long-term onerous contracts are included in the liabilities for
disposal group held for sale and outside of the total provisions value in the
balance sheet. Looking at provisions in continuing operations around 88% of the
Group's provisions are long-term in nature relating to landfill provisions. The
provisions balance classified as due within one year amounts to EUR21m, including
EUR5m for restructuring, EUR1m for onerous contracts, EUR10m for landfill related
spend and EUR5m for environmental, legal and others. Further details are provided
in note 14 to the consolidated financial statements.
Retirement benefits
The Group has a closed UK defined benefit pension scheme and at 31 March 2024,
the scheme had an accounting deficit of EUR7.6m (FY23: EUR4.3m). The change in the
year was due to lower returns on pension scheme assets which were only partly
offset by an increase in the discount rate assumption on scheme liabilities. The
triennial actuarial valuation of the scheme as at 5 April 2024 is underway. The
Group's funding plan has been maintained at the current level of EUR3.5m per annum
until December 2024. There are also several defined benefit pension schemes for
employees in the Netherlands and Belgium which had a retirement benefit deficit
of EUR5.3m at 31 March 2024, a EUR0.3m increase from 31 March 2023.
Going concern
The Directors have adopted the going concern basis in preparing these
consolidated financial statements after assessing the Group's principal risks.
Further details of the modelling and scenarios prepared are set out in note 2 of
the consolidated financial statements. The key judgement in both scenarios is
the possibility of weaker macroeconomic conditions, delivery of the year on year
profit enhancements together with the Group's ability to finance the funding of
the UK Municipal exit through its existing RCF and EUR120m bridge facilities and
settle all other funding repayments as they fall due. Having considered all the
key judgements around the financial projections, including the availability of
financing and the achievability of mitigating actions included and other levers
not included, the Directors confirm they have a reasonable expectation that the
Group has adequate resources to continue in operational existence for the
foreseeable future and to meet all banking covenants.
Divisional operating review
Commercial waste
+---------------------------------------------------------------------------+
||
+---------------------------------------------------------------------------+
The return on operating assets excludes all landfill related provisions. The underlying figures above are reconciled to statutory measures in notes 3 and 18
in the consolidated financial statements.
Commercial Waste revenues were lower over FY24 at EUR1,385m (FY23 EUR1,397m) versus
prior year due to lower recyclate prices and a weaker construction and
demolition market in the Netherlands. Underlying EBIT declined to EUR98.5m (FY23
EUR129.3m) and operating profit was EUR96.1m (FY23 EUR134.7m). Recyclate prices
normalised following a sharp peak due to supply-chain disruption during and
directly after the Covid pandemic. In the second half of the year, recyclate
prices had largely stabilised around pre-covid levels, with the exception of
plastics which continued to be lower due to excess supply of low-cost virgin
plastic from abroad. C
30 May 2024
Renewi plc
FY24 Full Year Results, Delivering on Commitments
Renewi plc ('Renewi' or the 'Group') (LSE: RWI.L: Euronext Amsterdam: RWI.AS), a
leading European waste-to-product company, today releases its results for the
full-year ended 31 March 2024 ('FY24').
Sale of UK Municipal
Following the strategic review of its UK Municipal operations ('UK Municipal')
announced in September 2023, Renewi has entered into a binding agreement to sell
UK Municipal to Biffa Limited ('Biffa'), a leading UK-wide integrated waste
management business (the 'Divestment').
Renewi's CEO, Otto de Bont: ''The sale of UK Municipal to Biffa delivers on our commitment to optimise our portfolio and strengthen our core business. This is a
transformational moment for Renewi which will enable us to unlock substantial profit and cashflow improvements and improve shareholder value.
We will now fully focus on growing in Europe's most attractive and advanced recycling markets. Biffa's financial position, operational expertise, and presence in the UK municipal landscape make them the right new home for our UK Municipal business and we are confident this transaction benefits all stakeholders.'
See a separate RNS dated 30 May 2024 'Renewi announces sale of UK Municipal
business to Biffa' for more information.
Transaction Highlights
Supporting Renewi's transformation, the Divestment:
* will immediately increase Renewi's free cash flow by EUR15-20m per annum and
drive at least c.50bps of EBIT margin expansion.
* significantly de-risks the Group's balance sheet as unpredictable UK
Municipal liabilities, Onerous Contract Provisions (OCPs), will be replaced
by conventional and competitively priced debt financing, enabling increased
visibility on future capital outflows.
* focuses resources and management time on strategic initiatives for stronger
growth and shareholder returns.
The transaction will be effectuated through a combination of a nominal cash
consideration payable to Biffa and pre-completion capitalisation of UK Municipal
(together, the 'Capitalisation'). The Capitalisation ensures UK Municipals'
ability to fulfil its future contractual obligations.
* Capitalisation is expected to be approximately £125m* (EUR146m**) on
completion which, when offset against the reduction of liabilities of EUR89m,
equates to a net cost of c. EUR57m to Renewi and a total cash impact of EUR154m,
including transaction costs.
* Core net debt / EBITDA immediately following the transaction is expected to
be approximately 2.9x, falling to our target of 2.0x in the medium-term,
with improved margins and cash generation driving accelerated deleveraging.
* The transaction will be funded through the existing revolving credit
facility, supplemented by a EUR120m bridge facility.
The Divestment provides UK Municipal customers, employees and other stakeholders
with strong strategic backing from a respected scale operator in the UK market. The transaction is expected to complete before 31 December 2024, subject to receipt of a limited suite of regulatory and other consents.
* Subject to customary closing adjustments; Capitalisation at completion will be
net of any normal course capitalisation provided by Renewi to UK Municipal in the period between 31 March 2024 and completion of the Disposal.
** Based on GBP/EUR exchange rate of EUR1:£0.855.
For the purposes of UK Listing Rule 10.4, as at 31 March 2024 the gross assets of UK Municipal (adjusted for the estimated pre-completion Capitalisation) are EUR348m; and in the financial year ending 31 March 2024, UK Municipal contributed
EUR0.7m to the Group's statutory profit before tax.
FY24 Financial Highlights (note all financial results are shown with UK
Municipal held for sale)
* Revenue of EUR1,689m and underlying EBIT of EUR105.5m from continuing operations
(FY23: revenue of EUR1,704m and underlying EBIT of EUR131.7m).
* Underlying EBITDA from continuing operations of EUR230.2m: (FY23: EUR252.4m)
* Statutory loss of EUR30.9m: (FY23: profit of EUR66.6m) reflecting lower profits
and an exceptional charge of EUR64.5m on the UK Municipal divestment
* Free cash flow of EUR20.9m (FY23: EUR25.3m)
* Core net debt EUR368.1m: (FY23: EUR370.6m), representing 2.1x EBITDA
* Dividend: A final dividend of 5p per share has been recommended for FY24
FY24 Strategic and Operational Highlights
* Commercial Waste: Solid volume development in Belgium, supported by
legislation. Volumes in the Netherlands stabilised in the final quarter of
the year, supported by the implementation of a new sales strategy, despite a
continued challenging Dutch construction market.
* Mineralz & Water: Delivered a strong recovery, with increased uptake of new
sand, filler and gravel products alongside a strong performance in water-
related activities.
* Specialities: Continued strong momentum at both Maltha and Coolrec,
benefitting from their leading positions in high growth niches. Revenue and
underlying EBIT growth supported by pricing at Maltha and volumes at
Coolrec.
* Recyclate prices: Prices were stable throughout the year, having returned to
pre-Covid historical average levels, albeit plastic prices remain at lower
than average levels due to international oversupply of virgin material.
* Simplify (SG&A efficiency programme): Launched to streamline staff functions and reduce costs, Simplify achieved its EUR15m run rate at the end of March.
* Future Fit (Digitisation Project): Accelerated in the second half of FY24,
Future Fit aims to enhance operational efficiency, asset utilisation and
customer satisfaction. The project will be implemented over the next two to
three years and is fully accounted for in the existing medium term high-
single digit EBIT target.
* Commercial momentum: new customer wins include Schiphol and Rotterdam
airports, Dutch Ministry of Defense, Custodial Institution Agency, Total
Energies, BPost, Nike, and Mouscon Hospital.
* Recycling rate: was 63.2%, down slightly from 63.7% in FY23 due to lower
construction volumes which have a high recycling rate. This was partly
compensated by the increase of advanced recycling of plastics and mixed
residual waste.
* Lost Time Injuries Rate: decreased from 9.4 to 6.8, driven by cross-company
initiatives including safety trainings and investments in site safety,
resulting a safer workplace
Outlook
* FY25 trading expectations include return to revenue growth and significant
margin improvement for the continuing Group, in line with current consensus.
* Commercial Waste expects to continue its strong performance in Belgium and
to improve in the Netherlands, building on stabilised volumes, despite the
ongoing weakness in the construction sector. Further marginimprovement is
expected as existing programmes ramp up to their run-rate benefits.
* Continuing Mineralz & Water turn-around, underpinned by the higher run rate
achieved in late FY24 continuing into FY25. Additionally further
improvements are expected in the quality and consistency of the materials.
* Investment in innovative projects within Coolrec and Maltha in progress,
with returns expected during the second half of FY25
* The UK Municipal Divestment will increase near term leverage; deleveraging
expected at 0.4 - 0.5 turns per annum
* Reiteration of 3-5 year targets:
* 8-10% underlying EBIT margin
* Free cash flow/EBITDA conversion >40%
* ROCE >15%
* Organic annual revenue growth >5%
Results
+------------------------------------------------+---------+---------+---------+
| | FY24 | FY23(#) |% change | +------------------------------------------------+---------+---------+---------+
|UNDERLYING NON-STATUTORY | | | | +------------------------------------------------+---------+---------+---------+
|Revenue from continuing operations |EUR1,689.2m|EUR1,703.9m| -1%|
+------------------------------------------------+---------+---------+---------+
|Underlying EBITDA(1) from continuing operations| EUR230.2m| EUR252.4m| -9%|
+------------------------------------------------+---------+---------+---------+
|Underlying EBIT(1) from continuing operations | EUR105.5m| EUR131.7m| -20%|
+------------------------------------------------+---------+---------+---------+
|Underlying EBIT(1 )margin from continuing| | | | |operations | 6.2%| 7.7%| -1.5pps| +------------------------------------------------+---------+---------+---------+
|Free cash flow(1) | EUR20.9m| EUR25.3m| |
+------------------------------------------------+---------+---------+---------+
|Free cash flow/EBITDA conversion(1) | 9.0%| 9.9%| | +------------------------------------------------+---------+---------+---------+
|Return on capital employed(1) | 7.7%| 10.6%| | +------------------------------------------------+---------+---------+---------+
|Core net debt* | EUR368.1m| EUR370.6m| |
+------------------------------------------------+---------+---------+---------+
| | | | | +------------------------------------------------+---------+---------+---------+
|STATUTORY | | | | +------------------------------------------------+---------+---------+---------+
|Revenue from continuing operations |EUR1,689.2m|EUR1,703.9m| -1%|
+------------------------------------------------+---------+---------+---------+
|Operating profit from continuing operations | EUR97.6m| EUR141.5m| -31%|
+------------------------------------------------+---------+---------+---------+
|Profit for the year from continuing operations | EUR45.2m| EUR86.0m| -47%|
+------------------------------------------------+---------+---------+---------+
|(Loss) profit for the year | EUR(30.9)m| EUR66.6m| |
+------------------------------------------------+---------+---------+---------+
|Basic EPS (cents per share) from continuing| | | | |operations | 53c| 104c| | +------------------------------------------------+---------+---------+---------+
|Cash flow from operating activities | EUR205.0m| EUR209.6m| |
+------------------------------------------------+---------+---------+---------+
|Total net debt (including IFRS 16 leases) | EUR616.0m| EUR685.7m| |
+------------------------------------------------+---------+---------+---------+
(1 )The definition and rationale for the use of non-IFRS measures are included in note 18.
(#) Certain March 2023 values have been adjusted to reflect discontinued operations as set out in note 2.
* Core net debt used for banking leverage calculations excludes the impact of IFRS 16 lease liabilities and UK PPP net debt.
Otto de Bont, CEO Renewi: 'We made three important commitments to our
shareholders at the Capital Markets Day in October 2023: optimise our portfolio,
build a stronger platform with improved margins and shareholder returns, and
drive organic growth. Despite a challenging market environment in commercial
waste, we made solid progress on these commitments.
We completed the strategic review of our UK Municipal business, resulting in a
sale of our UK Municipal activities to Biffa, immediately improving our.
Mineralz & Water is slightly ahead of schedule and we expect to further increase
the production volume and quality of new sand, filler and gravel products.
Three key initiatives are focused on strengthening our platform. With the
Simplify efficiency programme, we right-sized our SG&A costs. We announced the
streamlining of our organisational structure to unlock our growth potential and
better utilise our scale by merging Commercial Waste Netherlands and Belgium
under single leadership and integrating Mineralz & Water into the Specialities
division. Alongside this, we accelerated Future Fit, a multi-year digitisation
programme aimed at replacing our legacy IT systems, to give us a strong
foundation to improve efficiency and drive growth.
To further drive organic growth, we are progressing in the key sectors set out
at the Capital Markets Day, including monostreams like glass, plastics and
organics, and mixed waste streams from construction & demolition and commercial
& industrial. In addition we are expanding our Ecosmart services, offering
customers advice and resources to improve their waste management and reduce
their carbon footprint.
Finally, we are recommencing dividend payment as stated before and will propose
a dividend of 5p per share, underlining our commitment to our shareholders and
confidence in our future.
We celebrated notable client wins across The Netherlands and Belgium, including
Schiphol Airport, Rotterdam the Hague Airport, the Ministry of Defence and
Custodial Institution Agency, Total Energies, BPost, Limburg and Nike.
Partnerships were concluded with Shell Refineries Pernis and Moerdijk for total
waste management and Vattenfall for the offtake of Green Gas as of Q1FY25. The
wins of SPF Penitentiaire and hospital Mouscron, reflecting our successful
approach in the care sector.
We operate in a dynamic sector, where the perception of waste is changing and
where our customers realise the carbon footprint they create is impacted by the
waste they produce and by the raw materials they use. We help them reduce their
footprint, by improving their waste management and by offering them circular
materials as alternative to the virgin materials they use today. With our scale,
resources and expertise, Renewi iswell-positioned to grow in this dynamic
sector.'
FY24 results presentation
Today we will host a results presentation at 9:30am BST / 10:30am CET.
Registrations for the presentation: https://brrmedia.news/RWI_FY (https://eqs-
cockpit.com/cgi-
bin/fncls.ssp?fn=redirect&url=d01461a009e014067bc440beda3e3d00&application_id=
1888539&site_id=acquiremedia3&application_name=news)
For further information:
Renewi plc FTI Consulting Anne Metz, Director of Investor Richard Mountain / Ben Fletcher Relations +44 203 727 1340 +31 6 4167 9233 FTI_RWI@FTIconsulting.com investor.relations@renewi.com (mailto:FTI_RWI@FTIconsulting.com)
(mailto:investor.relations@renewi.com)
Information on Dividend
The Board is recommending a dividend of 5 pence per share. Subject to shareholder approval at the 2024 AGM, the final dividend will be paid on the 31July 2024 with an ex-dividend date of 27 June 2024 and a record date of 28
June 2024. Shareholders on the Register of Members or holding shares in Crest will automatically receive their dividends in Pounds Sterling, shareholders who hold shares through Euroclear Nederland will automatically receive their dividends in Euros. For shareholders holding shares trading on Euronext Amsterdam and held via Euroclear Nederland, the Euro equivalent dividend payment
will be announced on 25 July 2024, and a Dividend Reinvestment Programme ('DRIP') is available. ABN AMRO provide their DRIP fully on their account and not on behalf of the Company. Contact ABN AMRO at corporate.broking@nl.abnamro.com for information.
About Renewi
Renewi is a pure-play recycling company that focuses on extracting value from waste and used materials rather than disposing of them through incineration or landfill. The company plays an important role in combating resource scarcity by creating circular materials. In giving new life to used materials, Renewi addresses both social and regulatory trends, contributing to a cleaner and greener world.
Our vision is to be the leading waste-to-product company in the world's most advanced circular economies. With a recycling rate of 63.2%, one of the highest in Europe, Renewi puts 6.6 million tonnes of circular materials back into use each year. This contributes to mitigating climate change and promotes the circular economy. Our recycling efforts help to protect natural resources and prevent more than 2.5 million tonnes of CO(2) emissions annually.
Renewi leverages innovation and the latest technology to turn waste into circular materials such as paper, metals, plastics, glass, wood, building materials, compost, and water. We employ over 6,000 people across 154
operational sites in five countries in Europe. Renewi is recognised as a leading
waste-to-product company in the Benelux region and a European leader in advanced
recycling.
Visit our website for more information: www.renewi.com. (https://www.renewi.com.)
CEO's review
Our strategic ambitions encompass three priorities - optimise our portfolio,
build a stronger platform and accelerate our organic growth. While FY24 saw a
challenging market environment with limited macroeconomic growth, a fall in
recyclate prices and market declines in some of our key end markets, we focused
on operational agility and commitments.
Our portfolio optimisation is progressing well with the completion of the
strategic review of our UK Municipal business, resulting in a sale of our UK
Municipal activities to Biffa. This transaction entails a EUR154m cash outflow for
us, but thereafter will unburden our cashflow and free up management focus to
realise our growth ambitions for the core business. We are also on track with
the turn-around of Mineralz & Water within the envisaged timeframe, through the
growing uptake of our new materials. The new Mineralz & Water product line has
been created with the specific needs of the concrete and construction industries
in mind and we expect to further increase the production volume and quality of
our new sand, filler and gravel products. We expect the recovery of Mineralz &
Water to continue through FY25.
In order to strengthen our systems and processes, we launched three initiatives
over the course of FY24. The Simplify programme identified a number of areas for
efficiency gains, especially in our SG&A functions, where we were able to make
significant savings by combining activities and increasing efficiency. We
started the process of streamlining our organisational structure and bringing
Commercial Waste Netherlands and Belgium together under a single Commercial
Waste leader, to maximise the sharing of best practices, organisational
efficiency and economies of scale. We further developed and accelerated the
launch of Future Fit, our digitisation programme to replace our legacy IT
systems and increase the resilience and agility of our platform. Workday, a
comprehensive workforce management solution, was one of the tools we rolled out
to manage our human resources functions more efficiently.
While the financial results of FY24 were impacted by both recyclate prices
largely returning to historical averages and the challenging market in the
Commercial Waste Netherlands business, work continued across the organisation to
put the right measures in place to return to organic revenue growth and realise
higher margins. Within Commercial Waste, a simplified leadership structure, an
enhanced sales strategy and investments in high growth projects have set the
groundwork for accelerated growth in the future. Mineralz & Water continues to
improve its underlying EBIT in line with its recovery programme. Coolrec, while
impacted by the low plastics prices, processed record volumes and has started
constructing new processing lines which will further contribute to growth in
2025. Maltha showed impressive growth, with refinements in processes and
investments in plant improvements combined with strong price dynamics to yield
exceptional results.
If we look at the higher-growth materials and sectors we set out on our Capital
Markets Day, we have made progress on a number of areas of our 5 year commitment
to add EUR275m in revenues in glass, plastics, organics, construction & demolition
and zero waste solutions.
+-----------------------------------------------------------------------------+
| | | | |Group Summary Revenue Underlying EBIT | | -------------------------- ------------------------ | | FY24 FY23* Variance FY24 FY23* Variance | | | | EURm EURm % EURm EURm % | | |
||
| | |Commercial Waste 1,384.7 1,397.3 -1% 98.5 129.3 -24% | | | |Mineralz & Water 181.6 190.9 -5% 9.6 0.5 n/a | | | |Specialities 175.2 160.2 9% 16.3 15.9 3% | | | |Group central services - - (18.9) (14.0) -35% | | | |Inter-segment revenue (52.3) (44.5) - - | | -------------------------- ------------------------ | |Continuing Operations 1,689.2 1,703.9 -1% 105.5 131.7 -20% | | | |Discontinued Operations 179.9 188.4 -5% 1.3 1.2 8% | | --------------------------------------------------- | |Total 1,869.1 1,892.3 -1% 106.8 132.9 -20% | | -------------------------- ------------------------ | | |
+-----------------------------------------------------------------------------+
The underlying figures above are reconciled to statutory measures in note 3 in the consolidated financial statements.
*The FY23 numbers have been reclassified to reflect discontinued operations as set out in note 2 in the consolidated financial statements.
Against a background of macroeconomic challenges including lower levels of
construction and demolition activities in the Netherlands and high inflation,
our financial performance for FY24 was weaker with revenue from continuing
operations down 1% and underlying EBIT down 20%. In the last quarter of the
year, volumes stabilised or returned to modest sequential growth. The planned
divestment of UK Municipal has been reflected as asset held for sale at 31 March
2024 and has resulted in an exceptional charge of EUR64.5m.
We continued to grow our operations and officially opened our Ghent sorting
line, which is capable of recycling 125kt of commercial residual waste annually.
The facility aligns with VLAREMA 8 legislation which requires that some 24
materials must be removed from commercial waste for recycling before any
residual waste can be incinerated. We also opened our new rigid plastics sorting
line in Acht, which produces high-quality Post-Consumer Recycled (PCR)
materials, focusing on polypropylene (PP) and polyethylene (PE). We are proud to
have achieved over 95% purity at the site, ensuring our recycled plastics meet
the highest standards.
In a ground-breaking achievement, our Coolrec subsidiary in partnership with
Electrolux, pioneered the creation of a refrigerator crafted from recycled
materials. This collaboration earned us the European Plastic Recycling Award for
Automotive, Electrical, or Electronic Product of the Year, recognising our
excellence in recycled material processing, innovative product design and
cutting-edge manufacturing in the European plastics recycling industry. Maltha
installed a new line at the Portugal site for the processing of ceramics, stone
and porcelain, a waste stream coming from glass sorting, and made a number of
upgrades to improve quality and yields. Looking forward, we expect to see
increasing demand for our services, as our offering is even more attractive in
light of upcoming regulatory requirements which will affect many of our
customers, such as CSRD regulation and will continue to drive higher levels of
recycling. We are well-positioned to meet this demand. We continue to focus on
customer experience and with the implementation of Future Fit, we expect to see
further improvement in customer satisfaction.
Ensuring health and safety in our workplace is paramount, we have made excellent
progress in maintaining a safe environment. We are proud to report a decrease in
Lost Time Injuries overall from 9.4 to 6.8, surpassing our 2025 target of 7. We
have proactively implemented enhanced traffic plans across all our sites to
mitigate risks. The rollout of safety leadership training is evidence of our
commitment to fostering a culture of safety at every level of the organisation.
We were pleased that our employee satisfaction levels stayed stable at an eNPS
23 against the backdrop of a strategic review and implementation of our Simplify
programme.
Group outlook
Our strategic focus for the coming year centres around completing the divestment
of our UK Municipal business, driving further improvements in Mineralz & Water
operations and driving efficiency through digitisation and simplification of our
organisation and processes. We aim to achieve further growth through organic
expansion and the strengthening of our core commercial waste business with the
targeted sales strategy and continuing investment in innovation in circular
materials. We expect Commercial Waste Belgium to continue its strong performance
in the second half, and Netherlands to show improvement despite the ongoing
weakness in the construction sector. We will see further margin improvement as
the existing programmes ramp up to their run-rate benefits. In line with our
upgraded capital allocation policy we shared at the Capital Markets Day in
October of last year, I am pleased to announce that we will be proposing a
dividend of 5p per share.
I want to express my gratitude to the diverse group of stakeholders who have
been instrumental in supporting us throughout this year. I appreciate our
customers for entrusting us with their business, our workforce for their
continued dedication, the Board for their valuable guidance and our shareholders
for their support of our vision.
CFO's review
+-------------------------------------------------------------------------+
| | | | |Financial Performance FY24 FY23* Variance | | | | EURm EURm % | | | | | | | |Continuing operations | | | |Revenue 1,689.2 1,703.9 -1% | | | |Underlying EBIT 105.5 131.7 -20% |
||
|Operating profit 97.6 141.5 -31% | | | | | | | |Underlying profit before tax 68.0 105.2 -35% | | | |Non-trading & exceptional items (7.9) 9.8 | | ----------------- | |Profit before tax from continuing operations 60.1 115.0 | | | |Total tax charge for the year (14.9) (29.0) | | ----------------- | |Profit for the year from continuing operations 45.2 86.0 | | | |Discontinued operations (76.1) (19.4) | | ----------------- | |(Loss) profit for the year (30.9) 66.6 | | ----------------- | | | | | |Organic annual revenue growth -1% 3% | | | |Underlying EBIT margin 6.2% 7.7% | | | |Free Cash Flow/EBITDA conversion 9.0% 9.9% | | | |Return on capital employed 7.7% 10.6% | | | | |
+-------------------------------------------------------------------------+
The underlying figures above are reconciled to statutory measures in notes 3 and
18 in the consolidated financial statements.
*The FY23 numbers have been reclassified to reflect discontinued operations as set out in note 2 in the consolidated financial statements.
We have continued to deliver against the strategic priorities previously
communicated at Renewi's Capital Markets Day in October 2023. However despite
these successes, a challenging operating environment for Commercial Waste
Netherlands, particularly in the Construction and Demolition sector, adversely
impacted the overall Group results in FY24. We achieved a number of goals
including further optimisation of the portfolio as Mineralz & Water continued
its recovery with its overall performance slightly ahead of the original
recovery plan. As announced an exit for the UK Municipal business has been
agreed with completion expected before 31 December 2024. Cost reduction and
efficiency in both the short and longer term, remains a key focus for the Group.
The Simplify programme launched in the third quarter has achieved its targeted
full year run-rate impact of EUR15m in SG&A costs by the end of March. This action
will contribute to our medium term objective of delivering high single-digit
EBIT margins.
Given the status of the UK Municipal strategic review at the end of the
financial year, the business is presented as an asset held for sale at 31 March
2024. This has resulted in this business being disclosed as a discontinued
operation with the financials now presented on a continuing and discontinued
operations basis with a restatement of the prior year comparatives. As a result
of this an exceptional charge of EUR64.5m has been recorded.
Revenue from continuing operations fell by 1%, to EUR1,689.2m driven by slow
economic growth and a reduction in recyclate prices. Overall volumes were down
year on year albeit stable in the second half and recyclate prices have remained
largely stable throughout the year. Underlying EBIT from continuing operations
was 20% lower than the prior year driven by volume and recyclate impact of EUR35m
as cost inflation was largely mitigated by pricing discipline and ongoing cost
initiatives. In addition, there has also been the impact this year of a higher
level of favourable one-off items of cEUR5m arising from some accrual releases and
other settlements. These one-off items do not qualify as non-trading or
exceptional in accordance with our accounting policy. The benefit of ongoing
cost reductions and execution of strategic initiatives has resulted in an
improved underlying EBIT margin performance in the second half of the year of
6.7% compared to 5.8% in the first half of the year. Net finance charges have
risen in FY24 as a result of increased costs of borrowing and higher average
debt balances across the year. The level of exceptional and non-trading items in
continuing operations was higher than last year as described below, resulting in
a statutory profit for the year from continuing operations of EUR45.2m compared to
EUR86.0m last year.
Additionally, during FY24, we have embarked on our Future Fit digital programme,
a strategic initiative expected to increase operational efficiency, asset
utilisation and customer satisfaction, also supporting the Group in achieving
its medium-term margin ambitions. Our capital allocation policy was reset during
the year to reflect an ongoing disciplined approach to capital, prioritising
shareholder returns and investing in profitable growth. In line with this a
final dividend of 5 pence per share is proposed which will be subject to
approval at the Annual General Meeting.
Non-trading and exceptional items excluded from underlying profits
To enable a better understanding of underlying performance, certain items are
excluded from underlying EBIT and underlying profit before tax due to their
size, nature or incidence.
Total non-trading and exceptional items in continuing operations were a cost of
EUR7.9m (FY23: EUR9.8m credit) and include the costs of the Simplify restructuring
programme, portfolio management activity, amortisation of acquisition related
intangibles reduced by profits from property disposals and other items. Further
details on all non-trading and exceptional items are provided in note 5 to the
consolidated financial statements.
Operating profit from continuing operations, after taking account of all non-
trading and exceptional items, was EUR97.6m (FY23: EUR141.5m).
Net finance costs
Net finance costs from continuing operations increased by EUR11.2m to EUR38.0m
(FY23: EUR26.8m) as a result of the impact of additional fixed rate borrowings in
the second half of FY23, increased interest rates, the level of borrowings on
the revolving credit facility and a non-cash write off of EUR1m of unamortised
loan fees following the August 2023 renewal of the EUR400m revolving credit
facility. Further details areprovided in note 6 to the consolidated financial
statements.
Profit before tax
Profit before tax from continuing operations on a statutory basis, including the
impact of non-trading and exceptional items, was EUR60.1m (FY23: EUR115.0m).
Taxation
Total taxation for the year from continuing operations was a charge of EUR14.9m
(FY23: EUR29.0m). The effective tax rate on underlying profits was 23.7% at
EUR16.1m, a decrease from 29.3% in the prior year, as a result of tax losses
claimed from the UK Municipal entities. A tax credit of EUR1.2m is attributable to
the non-trading and exceptional items of EUR7.9m as a number of items are not
subject to tax.
Looking forward, we anticipate the underlying tax rate to be approximately 27%.
Due to items disallowed for tax in both the Netherlands and Belgium, our
effective tax rate is higher than the nominal rates in the countries where we
operate. Our Group tax strategy remains unchanged and is fully documented on the
Group website.
The Group statutory profit for the year from continuing operations, including
all non-trading and exceptional items, was EUR45.2m (FY23: EUR86.0m).
Discontinued operations
The loss for the year from the disposal group was EUR76.1m including the re-
measurement impact in reflecting the business as asset held for sale. Further
details on the performance of the UK Municipal business and the implications of
the transaction are provided in note 12 to the consolidated financial
statements.
Earnings per share (EPS)
Underlying EPS from continuing operations excluding non-trading and exceptional
items was 61 cents per share, a decrease of 28 cents given the lower profits.
Basic EPS from total operations was a loss of 43 cents per share compared to
earnings of 79 cents per share in the prior year.
Dividend
The Board is recommending a final dividend of 5 pence per share. Subject to
shareholder approval at the 2024 AGM, the final dividend will be paid on 31 July
2024 to shareholders on the register at close of business on 28 June 2024.
Cash flow performance
The funds flow performance table is derived from the statutory cash flow
statement including both continued and discontinued operations and
reconciliations are included in note 18 in the consolidated financial
statements. The table shows the cash flows from an adjusted free cash flow to
total cash flow. The adjusted free cash flow measure focuses on the cash
generation excluding the impact of historical liabilities relating to Covid-19
tax deferrals, settlement of ATM soil liabilities, spend relating to the UK PPP
onerous contracts and other items including exceptional cash spend. Free cash
flow represents the cash available to fund growth capital projects, pay
dividends and invest in acquisitions.
+-------------------------------------------------------------------------+
| | | | | Funds flow performance FY24 FY23 | | | | EURm EURm | | | | | | | | Underlying EBITDA 232.3 255.6 | | | | Working capital movement 25.7 (5.8) | | | | Movement in provisions and other (8.5) (0.2) | | | | Net replacement capital expenditure (57.2) (87.3) | | | | Repayments of obligations under lease liabilities (55.3) (47.5) | | | | Interest and loan fees (31.1) (20.7) | | | | Tax (36.3) (21.2) | | ------------------- | | Adjusted free cash flow 69.6 72.9 | | | | Deferred Covid taxes (19.9) (19.7) | | | | Offtake of ATM soil (2.5) (1.2) | | | | UK Municipal contracts (15.8) (12.2) | | | | Renewi 2.0 and other exceptional spend (5.3) (4.1) | | | | Other (5.2) (10.4) | | ------------------- | | Free cash flow 20.9 25.3 | | | | Growth capital expenditure (22.0) (30.8) | | | | Acquisitions net of disposals 0.2 (59.4) | | ------------------- | | Total cash flow (0.9) (64.9) | | ------------------- | | | | | | Free cash flow/EBITDA conversion 9.0% 9.9% | | | | |
+-------------------------------------------------------------------------+
All numbers above contain both continued and discontinued operations. Free cash
flow conversion is free cash flow as a percentage of underlying EBITDA. The non-
IFRS measures above are reconciled to statutory measures in note 18 in the
consolidated financial statements.
Adjusted free cash flow was only slightly lower than last year at EUR69.6m (FY23:
EUR72.9m) despite the lower EBITDA, which was offset by improved working capital
management, increased utilisation of invoice discounting and disposal proceeds.
Replacement capital expenditure of EUR57.2m was significantly lower than last year
following the disposal of the Hemweg site in Amsterdam. The disposal of this
site was anticipated as part of the overall business plan for the RenewiWestpoort acquisition in 2022. Stripping out proceeds from this and other
exceptional property disposals, replacement capital expenditure was EUR77m, a
decrease of EUR17m on the prior year which included a number of catch up projects
delayed during Covid. In addition, EUR66.6m of new leases or modifications have
been entered into which are reported as right-of-use assets with a corresponding
lease liability. These leases include the continuation of the truck replacement
programme, property lease renewals or extensions and others. Growth capital
expenditure of EUR22.0m includes further spend on the VLAREMA 8 advanced sorting
investments in Belgium and the newly commissioned rigid plastics sorting line at
Acht in the Netherlands. As previously communicated, this level of growth spend
is lower than originally planned given delays at further sites for advanced
sorting in Belgium, as full enforcement of the new regulation ramps up.
The higher cash outflow relating to interest includes the settlement of EUR2.6m of
fees relating to the August 2023 renewal of the Group revolving credit facility
along with the impact of higher financing costs. Tax payments were higher in the
current year given the timing of settlements with some items falling into FY24.
Looking at the three legacy components that are shown below adjusted free cash
flow, there has been a further EUR19.9m repayment on Dutch Covid-19 tax deferrals
as expected. The remaining balance of EUR10m will be settled by the end of
September 2024. Cash spend for placement of TGG soil stocks has been limited in
the period. Cash outflow on UK PPP contracts was EUR15.8m. Following completion of
the UK Municipal divestment, we do not expect any further cash outflows in
respect of UK PPP contracts.
The acquisitions net of disposals inflow included the sale of an entity acquired
with the Renewi Westpoort acquisition in September 2023, net of the acquisition
of the Meeus rockwool business in Belgium. Other cash flows include funding for
the closed UK defined benefit scheme and the funding of the Renewi Employee
Share trust.
Net cash inflow from operating activities decreased from EUR188.4m in the prior
year to EUR168.7m in the current year. A reconciliation to the underlying cash
flow performance as referred to above is included in note 18 in the consolidated
financial statements and further details on cash flows from discontinued
operations in note 12.
Moving forward, our focus is on enhancing our capacity to generate free cash
flow and achieving a conversion rate of 40% of EBITDA by the end of FY26. We
will achieve this by eliminating legacy cash outflows, reducing exceptional
costs and optimising asset utilisation to decrease capital expenditures. By
bolstering our ability to generate cash, we can adopt a capital allocation
strategy that balances growth-oriented investments with enhanced returns for our
shareholders.
Investment projects
Expenditure in FY25
Asset optimisation is a key objective to improve our cash flow generation and
deliver a cash conversion rate of 40% of EBITDA in the coming years. As such
replacement capital expenditure will continue to be tightly controlled and is
expected to be between EUR70m and EUR80m in FY25. In addition, c.EUR50m of IFRS 16
lease investments are anticipated, as further deliveries on the replacement
truck programme continue. Our medium-term ambition is to earmark c. 30% of free
cash flow annually to growth capital projects with return hurdle rates of at
least 16% on a pre-tax basis. Total growth capital spend in FY25 is expected to
be around EUR30m on a number of projects across the divisions.
Return on assets
The Group return on operating assets on a continuing basis, excluding debt, tax
and goodwill, decreased to 19.9% at 31 March 2024 down from 30.0% at 31 March
2023 given the lower profits in FY24. The Group post-tax return on capital
employed on a total operations basis was 7.7% (FY23: 10.6%).
Treasury and cash management
Core net debt and leverage ratios
Core net debt excludes IFRS 16 lease liabilities and the net debt relating to
the UK PPP contracts which is non-recourse to the Group and secured over the
assets of the special purpose vehicles. Given the UK Municipal planned exit and
classification as asset held for sale all cash and borrowings relating to the
disposal group at 31 March 2024 are now shown in assets and liabilities held for
sale. Core net debt at 31 March 2024, excluding any core cash held in UK
Municipal, was EUR368.1m (FY23: EUR370.6m). Cash performance in the last half
resulted in lower net debt and a closing net debt to EBITDA ratio of 2.14x.
Liquidity headroom including cash and undrawn facilities remained sufficient at
EUR307m.
Debt structure and strategy
All our core borrowings of bonds and loans are green financed. As at 31 March
2024, 78% of our core net debt was on a fixed rate. Most borrowings are long
term with the exception of the EUR75m Belgian green retail bonds due for repayment
in July 2024.
+------------------------------------------------------------------------------+
| | | | | Debt Structure Mar 24 Mar 23* Variance | | | | EURm EURm EURm |
| | | | | | | Belgian Green retail bonds (200.0) (200.0) - | | | | Green RCF (155.0) (102.5) (52.5) | | | | Other Green loans (90.0) (105.0) 15.0 | | -------------------------------- | | Gross borrowings before lease liabilities (445.0) (407.5) (37.5) | | | | IAS 17 lease liabilities and other (5.2) (9.1) 3.9 | | | | Loan fees 3.1 2.3 0.8 | | | | Core cash 79.0 43.7 35.3 | | -------------------------------- | | Core net debt (368.1) (370.6) 2.5 | | | | IFRS 16 lease liabilities (247.9) (245.8) (2.1) | | -------------------------------- | | Net debt continuing operations(616.0) (616.4) 0.4 |
| -------------------------------- | | | +------------------------------------------------------------------------------+
*The FY23 numbers have been reclassified to reflect discontinued operations as set out in note 2 in the consolidated financial statements.
In August 2023, the Group completed the renewal of its revolving credit
facility, part of its Euro denominated multicurrency green finance facility. The
size of the revolving credit facility ('RCF') remains unchanged at EUR400m and is
for an initial five-year term to 2028 with two one-year extension options to
2030 together with a EUR150m accordion option to increase the facility subject to
lender approval at that time. Interest remains based on Euribor plus a margin
grid based on leverage and green sustainability metrics performance. Financial
covenants remained unchanged and are now tested semi-annually at September and
March.
The introduction of IFRS 16 on 1 April 2019 brought additional lease liabilities
onto the balance sheet with an associated increase in assets. Covenants on our
main bank facilities remain on a frozen GAAP basis and exclude IFRS 16 lease
liabilities. The Group has complied with its banking covenants during the
period. The Group operates a committed invoice discounting programme. The cash
received for invoices sold at March 2024 was EUR116.4m (March 2023: EUR84.7m).
Provisions and contingent liabilities
Further to the recognition of the UK Municipal business as asset held for sale
all associated long-term onerous contracts are included in the liabilities for
disposal group held for sale and outside of the total provisions value in the
balance sheet. Looking at provisions in continuing operations around 88% of the
Group's provisions are long-term in nature relating to landfill provisions. The
provisions balance classified as due within one year amounts to EUR21m, including
EUR5m for restructuring, EUR1m for onerous contracts, EUR10m for landfill related
spend and EUR5m for environmental, legal and others. Further details are provided
in note 14 to the consolidated financial statements.
Retirement benefits
The Group has a closed UK defined benefit pension scheme and at 31 March 2024,
the scheme had an accounting deficit of EUR7.6m (FY23: EUR4.3m). The change in the
year was due to lower returns on pension scheme assets which were only partly
offset by an increase in the discount rate assumption on scheme liabilities. The
triennial actuarial valuation of the scheme as at 5 April 2024 is underway. The
Group's funding plan has been maintained at the current level of EUR3.5m per annum
until December 2024. There are also several defined benefit pension schemes for
employees in the Netherlands and Belgium which had a retirement benefit deficit
of EUR5.3m at 31 March 2024, a EUR0.3m increase from 31 March 2023.
Going concern
The Directors have adopted the going concern basis in preparing these
consolidated financial statements after assessing the Group's principal risks.
Further details of the modelling and scenarios prepared are set out in note 2 of
the consolidated financial statements. The key judgement in both scenarios is
the possibility of weaker macroeconomic conditions, delivery of the year on year
profit enhancements together with the Group's ability to finance the funding of
the UK Municipal exit through its existing RCF and EUR120m bridge facilities and
settle all other funding repayments as they fall due. Having considered all the
key judgements around the financial projections, including the availability of
financing and the achievability of mitigating actions included and other levers
not included, the Directors confirm they have a reasonable expectation that the
Group has adequate resources to continue in operational existence for the
foreseeable future and to meet all banking covenants.
Divisional operating review
Commercial waste
+---------------------------------------------------------------------------+
| | | | |Commercial Waste Underlying Operating | | Revenue EBIT profit | | ----------------- --------------- ---------------- | | FY24 FY23 FY24 FY23 FY24 FY23 | | | | | | | |Netherlands Commercial 911.5 932.0 52.9 76.9 53.2 69.4 | | | |Belgium Commercial 476.2 468.4 45.6 52.4 42.9 65.3 | | | |Intra-segment revenue (3.0) (3.1) - - - - | | ----------------- --------------- ---------------- | |Total (EURm) 1,384.7 1,397.3 98.5 129.3 96.1 134.7 | | ----------------- --------------- ---------------- | | | | | |Year on year variance % | | | |Netherlands Commercial -2% -31% -23% | | | |Belgium Commercial 2% -13% -34% | | --------- ------ ------- | |Total -1% -24% -29% | | --------- ------ ------- | | | | | | Underlying Return on | | | | operating | | EBIT margin assets | | --------------- ---------------- | | FY24 FY23 FY24 FY23 | | | | | | | |Netherlands Commercial 5.8% 8.3% 12.0% 19.3% |
||
|Belgium Commercial 9.6% 11.2% 27.9% 47.3% | | --------------- ---------------- | |Total 7.1% 9.3% 16.3% 25.4% | | --------------- ---------------- | | |
+---------------------------------------------------------------------------+
The return on operating assets excludes all landfill related provisions. The underlying figures above are reconciled to statutory measures in notes 3 and 18
in the consolidated financial statements.
Commercial Waste revenues were lower over FY24 at EUR1,385m (FY23 EUR1,397m) versus
prior year due to lower recyclate prices and a weaker construction and
demolition market in the Netherlands. Underlying EBIT declined to EUR98.5m (FY23
EUR129.3m) and operating profit was EUR96.1m (FY23 EUR134.7m). Recyclate prices
normalised following a sharp peak due to supply-chain disruption during and
directly after the Covid pandemic. In the second half of the year, recyclate
prices had largely stabilised around pre-covid levels, with the exception of
plastics which continued to be lower due to excess supply of low-cost virgin
plastic from abroad. C
| Name | WKN | Börse | Kurs | Datum/Zeit | Diff. | Diff. % | Geld | Brief | Erster | Schluss | |
|---|---|---|---|---|---|---|---|---|---|---|---|
 |
RENEWI LS 1, | A3CRFF | Frankfurt | 7,760 | 20.09.24 08:05:07 | +0,140 | +1,84% | 0,000 | 0,000 | 7,760 | 7,620 |
