PowerHouse Energy Group (PHE); reports ongoing commercialisation of DMG® process

Commercial progress offsets other areas in FY19

Renewi 3 June 2019 Update
Download PDF

Renewi

Commercial progress offsets other areas in FY19

FY19 results

Industrial support services

3 June 2019

Price

35.95p

Market cap

£288m

£/€1.13

Core group ongoing net debt (ex PPP/PFI finance, €m) at end March 2019

552

Shares in issue

800.1m

Free float

99.5%

Code

RWI

Primary exchange

LSE

Secondary exchange

N/A

Share price performance

%

1m

3m

12m

Abs

2.1

34.2

(54.3)

Rel (local)

5.9

33

(50.9)

52-week high/low

87p

21.9

Business description

Renewi is a waste-to-product company with operations primarily in the Netherlands, Belgium and the UK and was formed from the merger between Shanks Group and Van Gansewinkel Group in 2017. Its activities span the collection, processing and resale of industrial, hazardous and municipal waste.

Next event

FY19 results

23 May 2019

Analyst

Toby Thorrington

+44 (0)20 3077 5721

Renewi is a research client of Edison Investment Research Limited

FY19 was a mixed year for Renewi with variable portfolio performances and two particular external challenges faced (at ATM and Derby). Despite this, the company still delivered profitability in line with the prior year. Net debt reduction and operational improvements will be key focus areas for FY20 and beyond and these remain key near-term sentiment drivers in our view. The share price has started to recover over the last couple of months although the rating suggests this has further to go.

Year end

Revenue (€m)

PBT*
(€m)

EPS*
(c)

DPS
(c)

P/E
(x)

Yield
(%)

03/18

1,760.3

63.0

5.9

3.5

6.9

8.5

03/19

1,780.7

63.1

6.0

1.7

6.7

4.1

03/20e

1,833.5

49.2

4.6

1.7

8.8

4.1

03/21e

1,890.3

70.5

6.7

2.7

6.1

6.7

Note: *PBT and EPS (fully diluted) are normalised, excluding pension net finance costs, amortisation of acquired intangibles and exceptional items. Canada Municipal excluded.

Profitability maintained in mixed-business trading

FY19 results slightly exceeded revised guidance at the year end and included good progress in the Commercial Waste division following flagged Q4 momentum. PBT was flat year on year, reflecting mixed trading in other divisions, most notably constrained soil remediation activity at ATM due to industry permitting issues. Excluding the amortisation of acquired intangibles, non-trading/exceptional items totalled c €145m, the largest elements of which related to post merger synergy/integration actions (c €57m), the delayed Derby UK Municipal facility (c €64m, substantially non-cash) and pre-disposal goodwill write-downs. Net debt ended FY19 at €556m (or €552m in ongoing operations) equivalent to just over 3x EBITDA in the year. The reduced dividend payout was in line with previous guidance.

Earnings estimates maintained, strategy refreshed

Our PBT estimates are unchanged and point to lower group earnings in FY20 before recovering strongly thereafter, with ATM modelled to return to meaningful profitability on the assumption the permitting issues are resolved. New CEO Otto de Bont has presented a refreshed business case highlighting Renewi’s strong positions in leading European circular economies where the regulatory onus is on producing higher-quality, higher-value secondary materials enabling the delivery of growth and a strengthening competitive position in relatively low-volume growth markets. At the same time, the company will be pursuing only waste-to-product activities and aims to simplify and lower the cost to serve.

Valuation: Corporate actions to be next catalyst

Since our year end update note, Renewi’s share price has picked up a further c 9% and is now in positive territory for the year to date (marginally underperforming the FTSE All Share Index). On unchanged earnings estimates, the company’s rating is now a P/E of 8.8x, EV/EBITDA (adjusted for pensions cash) of 5.4x and a prospective dividend yield of 4.1% for FY20. As before, we believe that disposals and/or ATM coming fully back on stream would have positive implications for group net debt and the company’s share price.

FY19 results overview

Renewi’s largest division performed well and offset weakness elsewhere – most notably at ATM – to maintain group PBT at prior-year levels. Exceptional charges (including greater clarity regarding the new Derby Municipal facility) caught the eye but progress at Commercial Waste is a key message in the continuing businesses in our view. Core ongoing net debt was up slightly more than we had anticipated but not materially so and ended the year at just over 3x FY19 EBITDA. Dividends were in line with revised guidance and our headline PBT estimates are unchanged.

Exhibit 1: Renewi divisional and interim splits

Mar y/e €m

H1

H2

2018

H1

H2

2019

H119

FY19

% chg yoy

% chg yoy

Group Revenue

882.5

877.8

1,760.3

890.6

890.1

1,780.7

1%

1%

Commercial Waste

574.6

583.6

1158.2

586.3

608.1

1194.4

2%

3%

Netherlands

363.9

373.0

736.9

375.8

388.9

764.7

3%

4%

Belgium

211.3

210.9

422.2

210.9

219.9

430.8

0%

2%

Hazardous Waste

117.3

113.6

230.9

108.0

103.3

211.3

-8%

-8%

Monostreams

102.4

102.0

204.4

110.5

102.8

213.3

8%

4%

Municipal - UK

104.4

96.2

200.5

103.6

91.6

195.2

-1%

-3%

Services / Interco

-16.2

-17.6

-33.8

-17.8

-15.7

-33.5

Group Operating Profit

51.1

31.4

82.5

43.0

42.6

85.5

-16%

4%

Commercial Waste

41.1

32.2

73.3

40.5

46.0

86.5

-1%

18%

Netherlands

25.1

18.9

44.0

25.3

27.9

53.2

1%

21%

Belgium

16.0

13.3

29.3

15.2

18.0

33.2

-5%

13%

Hazardous Waste

15.7

4.2

19.9

5.9

1.1

7.0

-62%

-65%

Monostreams

10.8

7.4

18.2

8.8

4.1

12.9

-19%

-29%

Municipal - UK

-4.0

-2.6

-6.6

2.5

-1.7

0.8

-163%

-112%

Services / Central

-12.5

-9.8

-22.3

-14.7

-7.0

-21.7

Source: Company. NB Interim results originally reported Municipal performance including Canada; this business was treated as discontinued in FY19 and FY18 was restated accordingly. We have presented both interim periods on the same basis here for consistency.

As we commented at the interim stage, divisional business models vary. We have updated the table shown to incorporate full-year data and show relatively low H1/H2 seasonality in Exhibit 2. Notwithstanding weaker second half trading periods in Monostreams and UK Municipal in FY19, we are struck by the strong comparability/low level variation between the numbers presented below and their FY18 equivalents in core revenue streams. We believe this demonstrates significant business model stability, which suggests that ingrained operational improvements can lead to sustained uplifts in profitability. This is not to deny the short-term impacts that occur from pricing variations (eg in recyclates or incinerator costs) but is a reference to potential medium- and longer-term trends.

Exhibit 2: Renewi interim splits and full-year divisional revenue breakdown

Commercial

Hazardous

Monostreams

Municipal UK

Inter-co

Total

Revenue

1,194.4

211.3

213.3

195.2

-33.5

1,780.7

H1

49%

51%

52%

53%

53%

51%

H2

51%

49%

48%

47%

47%

49%

Inbound

81%

43%

34%

86%

 

72%

Outbound

13%

2%

65%

3%

 

17%

On-site

4%

55%

 

 

 

9%

Other

2%

 

1%

11%

 

3%

Total

100%

100%

100%

100%

 

100%

Source: Company data. Note: Inbound: fee received for treatment at Renewi facility. Outbound: sale of processed waste outputs (ie recyclates, energy). Onsite: fee received for treatment at customer’s site.

Commercial Waste: good momentum visible at the end of FY19

Headline growth rates of 3% and 18% for divisional revenue and EBIT respectively clearly indicate the benefit of post Shanks/VGG merger synergies continuing to come through.The incremental uplift was €9.9m, which is slightly more than the €9.2m reported EBIT increase. In the face of both rising incinerator costs and lower recyclate income during the year, we consider the substantial retention of synergy gains to be a very creditable result. Collection route consolidation was completed in Belgium in H1 and the Netherlands equivalent was progressively rolled out during H2 (with some outstanding actions to take place in FY20). Additionally ‘significant’ price increases were put through in Q4 to recover higher prevailing residue/non-recyclable material disposal costs and together these features provided a notable boost to H2 EBIT margins in both countries and good momentum entering FY20.

Hazardous: testing market characteristics, remedial strategy in place

Management considered markets generating waste streams processed in this division to be active at similar levels to the prior year; headline declines of 8% in revenue and 65% in EBIT reflected two distinctly different features affecting the financial performances of Reym (cleaning services for industrial equipment) and ATM (treatment of contaminated materials). In the former case, there were fewer plant shutdowns and service schedule variability whereas at ATM there was a regulatory stop on the use of thermally treated soil. In each case, this led to cost control/ unrecovered overhead challenges. These characteristics were visible at the interim stage and did not improve materially in H2. Renewi re-set expectations for both businesses at the end of FY19 by commencing a disposal process for Reym and guiding towards no resumption of thermal soil treatment during FY20. In FY19, Reym was included in the Hazardous Waste figures reported in the earlier exhibits and although it is now seen as non-core, improved commercial terms have been put in place. At ATM, work continues with regulators to agree industry soil permit T&Cs and the company itself is running pilot-scale processes to separate constituent materials with a view to generating new market opportunities. Non-soil markets (ie water and chemical treatment) have not been affected.

Monostreams: mixed bag as in H1, actions taken to turn around weak performers

As Exhibit 2 shows, this division is the most dependent on outbound revenues (ie sale of processed materials and by-products including energy generation), which represented almost two-thirds of divisional income in FY19. In value terms, there was a small y-o-y drop in this category and Coolrec (electrical equipment recycling) was the most affected by this. In fact, divisional inbound revenues grew well (+ c €11m to c €72m) with both Orgaworld (organic waste processing) and Mineralz (incinerator ash re-processing) both likely to have been beneficiaries. Internal operational problems in glass recycling (Maltha and van Tuijl) negatively affected profitability. We note that the reduction in divisional outbound revenues was more marked in H1 and overall profitability was well down sequentially versus H1 and y-o-y against H218. New management teams are now in place at both of the underperforming businesses and a modest level of profit improvement is the guidance for this division in FY20.

Municipal UK:1 headline profitability improves but returns still at low levels

Pending its expected disposal, Municipal Canada was classified as discontinued in FY19 and so is excluded from the figures shown in earlier Exhibits and the discussion in this section

The headline figures state that UK Municipal profitability swung from a c €7m loss to a small profit in FY19 despite a 3% reduction in revenues. This was the result of some structural changes, long-term contract provisioning and a number of positive and negative trading features for the ongoing facilities. Exits from three facilities during the year (Westcott Park, Cumbernauld and Dumfries & Galloway) will have contributed to both reduced losses and revenue reduction although we are unable to quantify the aggregate effect here. We believe onerous contract provisions at Wakefield (essentially advance recognition of future lifetime losses released annually against actual performance) represented a swing of c €4m y-o-y. Otherwise, operational improvements at Cumbria and BDR supported improved profitability from ongoing facilities but the division also saw headwinds in the form of lower recyclate pricing and higher incinerator costs. With regard to the delayed new Derby plant, Renewi has fully written down its investment to date and delay-related damages carried and also provided for ongoing losses to an expected termination point at the end of September. As a result, the financial performance of the division overall should more closely reflect underlying performance. Management has guided to a weaker profit contribution expectation for FY20 versus FY19.

Increase in core net debt driven by exceptional cash items

Core net debt for continuing operations ended FY19 at €552m, (excludes c €4m in businesses for sale), an increase of just over €50m on the year before non-cash, reclassification and FX translation effects which broadly offset each other. This was more than outweighed by outflows relating to exceptional items and ongoing contract provisions.

EBITDA showed a small y-o-y uplift, coming in at c €180m in our model. In reported operating cash flow terms, this was substantially retained given only a marginal group working capital cash outflow in the statutory cash flow statement in the period. With a relatively stable group revenue position this appears to be intuitively consistent. (It was, however, clearly less favourable than the payables-driven working capital inflow of c €19m seen in the prior year.) Pension deficit recovery cash payments were similar to the prior year at €3.4m.

Putting exceptional cash outflows to one side, net interest costs were lower y-o-y at c €18m – including positive effects from green finance certification – although minority dividend receipts were also lower. Cash tax payments rose to c €13m having utilised Belgian tax losses previously. Gross capex exceeded €107m, which was well above c €94m depreciation and internal amortisation combined. Almost €12m of this spend was categorised as growth oriented and included expansion at Mineralz (part of Monostreams, where a 20-year operator extension was secured at its Maasvlakte specialist landfill site) and at the Canada Municipal Ottawa composting facility. Asset disposal proceeds of c €8m brought net capex down to just below €100m in the year which, before exceptional cash items, left positive overall group free cash flow generation of c €46m.

This cash inflow was supplemented by c €24m proceeds from the disposal of interests in Energen Biogas (an anaerobic digestion facility in Cumbernauld) and a newly created ATM venture. Other net investments, including employee share trust purchases, were c €8m and cash dividend payments made in the year were just over €27m, in line with FY18.

Lastly, we note that non-recourse PFI/PPP net debt stood at €95.4m at the end of FY19, marginally higher than a year earlier, and the net result of modest cash inflows and adverse FX translation effects.

Exceptional items

The above free cash flow discussion is of course not an entirely fair representation given that some of the improved profit performance arose following post-merger actions taken incurring associated exceptional cash costs. We now show the breakdown of new P&L exceptional charges in FY19 and exceptional cash outflows in the year. We estimate that around one third of the €145.1m P&L charges had cash implications, not all of which flowed out during FY19. On our analysis, gross cash outflows approached €90m; integration/synergy actions and UK Municipal onerous contracts were the largest contributors to this, as shown in Exhibit 3.

Exhibit 3: FY19 exceptional P&L charges and operating cash flow (normal and exceptional) adjustments

Source: Company, Edison Investment Research. Note: This table does not include charges related to Municipal Canada operations (€22.5m goodwill impairment, now treated as discontinued) or acquisition-related intangible amortisation (€6.4m). Additionally, the figures shown are before related tax and exceptional tax credits. Cash-related P&L exceptionals shown in bold.

Cash flow outlook

In broad terms, we expect a neutral underlying cash performance in FY20, implicitly with free cash flow sufficient to fund a c €14m projected dividend payout. Consequently, the outflow shown in our model approaching €40m is driven by further exceptional items, the majority of which relate to additional integration/synergy actions and UK Municipal onerous contracts. Renewi expects to deliver €10m further synergy benefits during FY20 to take the total to €40m, as in the original merger plan. Our estimates do not factor in prospective proceeds from the disposals of Reym and Canada Municipal; management has states that together they could reduce the group net debt:EBITDA ratio (with both variables changing) by c 0.5x compared to 3.06x at the end of FY19.

Existing core banking arrangements include a net debt:EBITDA covenant of 3.5x which reduces to 3.0x in June 2020. In the context of our model, this suggests that disposals are likely to complete during FY20. Over 70% of Renewi’s c €800m facilities run at least to 2023, the notable exception being a €100m retail bond maturing in 2019. This is to be repaid from existing €252m (undrawn RCF and cash) headroom and we assume that average borrowing costs will reduce as a result.

Earnings estimates unchanged; FY20 dip followed by growth

The economic backdrop is for low single-digit GDP growth in Renewi’s primary markets. Price increases at the beginning of 2019 and the delivery of further synergy benefits and operational improvements together should drive progress in the Commercial and Monostreams divisions. However, both Hazardous Waste and UK Municipal are expected to make reduced contributions in FY20 and we anticipate c 10% lower group EBIT y-o-y. The expected ramp up of activity at ATM from FY21 onwards is an important contributor to our projected earnings profile. Our headline PBT estimates are unchanged for FY20 and FY21 (with lower central service costs offsetting the now removed Municipal Canada profit in our model) and the FY22 year is added for the first time.

Exhibit 4: Financial summary

m's

2012

2013

2014

2015

2016

2017

2018

2018

2019

2020e

2021e

2022e

March y/e

IFRS

IFRS

IFRS

IFRS

IFRS

IFRS

IFRS

IFRS

IFRS

IFRS

IFRS

IFRS

PROFIT & LOSS

 

 

Sterling

Sterling

Sterling

Sterling

Sterling

Sterling

Sterling

Euros

Euros

Euros

Euros

Euros

Revenue

 

 

750.1

614.6

633.4

601.4

614.8

779.2

1,565.7

1,760.3

1,780.7

1,833.5

1,890.3

1,927.1

Cost of Sales

 

 

(622.9)

(511.6)

(528.3)

(506.1)

(517.8)

(653.3)

(1,276.9)

(1,419.2)

(1,470.4)

(1,501.6)

(1,548.2)

(1,578.3)

Gross Profit

 

 

127.2

103.0

105.1

95.3

97.0

125.9

288.8

341.1

310.3

331.9

342.1

348.8

EBITDA

 

 

105.0

88.4

88.5

72.6

69.2

81.6

156.9

176.3

179.7

173.9

194.3

200.8

Operating Profit (pre GW and except.)

53.4

44.9

45.6

34.3

33.4

36.5

69.1

82.5

85.5

78.2

97.1

102.1

Net Interest

 

 

(10.8)

(10.8)

(12.6)

(11.4)

(11.2)

(10.3)

(14.2)

(15.0)

(14.4)

(20.0)

(17.5)

(17.0)

Other Finance

 

 

(6.4)

(3.9)

(2.9)

(1.5)

(1.6)

(2.2)

(5.1)

(7.1)

(8.4)

(9.0)

(9.0)

(9.0)

JV/Associates

 

 

0.1

0.3

0.3

0.8

1.0

2.0

2.3

2.6

0.4

0.0

0.0

0.0

Intangible Amortisation

 

 

(3.7)

(2.5)

(2.3)

(1.9)

(1.8)

(2.1)

(5.8)

(6.7)

(6.4)

(6.4)

(6.4)

(6.4)

Non Trading & Exceptional Items

 

 

(2.9)

(37.8)

(20.2)

(40.3)

(21.8)

(85.0)

(95.7)

(108.4)

(145.1)

(25.0)

0.0

0.0

Profit Before Tax (Edison norm)

 

36.3

30.5

30.4

22.2

21.6

26.0

52.1

63.0

63.1

49.2

70.5

76.1

Pension net finance costs

 

 

0.2

(0.3)

(0.3)

(0.5)

(0.5)

(0.3)

(0.6)

0.0

0.0

0.0

0.0

(0.6)

Profit Before Tax (Renewi norm)

 

36.5

30.2

30.1

21.7

21.1

25.7

51.5

63.0

63.1

49.2

70.5

75.5

Profit Before Tax

 

 

29.9

(10.1)

7.6

(20.5)

(2.5)

(61.4)

(50.0)

(52.8)

(89.0)

17.2

63.5

69.1

Tax - headine

 

 

(4.2)

(1.1)

(5.8)

2.3

(1.5)

0.5

2.6

1.4

12.4

(12.1)

(16.9)

(18.3)

Profit After Tax (norm)

 

 

26.6

22.8

23.2

20.5

19.3

20.1

39.1

47.2

47.5

37.2

53.6

57.8

Profit After Tax

 

 

25.7

(11.2)

1.8

(18.2)

(4.0)

(60.9)

(47.4)

(51.5)

(76.6)

5.2

46.6

50.8

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Average Number of Shares Outstanding (m)

 

448.0

448.3

448.9

449.1

449.5

536.3

799.9

799.9

796.7

796.7

796.7

796.7

EPS - Edison norm (p/c) FD

 

 

5.9

5.1

5.1

4.5

4.3

3.7

4.9

5.9

6.0

4.6

6.7

7.2

EPS - Renewi norm (p/c) FD

 

 

6.0

5.0

5.1

4.4

4.2

3.7

4.8

5.4

6.0

4.6

6.6

7.2

EPS - (p/c)

 

 

5.7

(7.9)

(6.3)

(3.8)

(0.9)

(11.4)

(5.9)

(6.8)

(11.7)

0.6

5.8

6.3

Dividend per share (p/c)

 

 

3.05

3.05

3.05

3.05

3.05

3.05

3.05

3.46

1.68

1.68

2.73

2.90

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross Margin (%)

 

 

17.0

16.8

16.6

15.9

15.8

16.2

18.4

19.4

17.4

18.1

18.1

18.1

EBITDA Margin (%)

 

 

14.0

14.4

14.0

12.1

11.3

10.5

10.0

10.0

10.1

9.5

10.3

10.4

Operating Margin (pre GW and except.) (%)

7.1

7.3

7.2

5.7

5.4

4.7

4.4

4.7

4.8

4.3

5.1

5.3

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

BALANCE SHEET

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fixed Assets

 

 

751.6

772.1

744.4

737.3

670.4

1,420.9

1,456.3

1,669.2

1,439.6

1,454.1

1,462.8

1,470.0

Intangible Assets

 

 

271.4

251.8

211.1

173.8

194.5

603.3

606.3

699.3

605.6

596.9

585.9

574.9

Tangible Assets

 

 

390.9

375.3

322.7

282.9

297.0

587.4

623.0

710.8

629.1

652.3

672.0

690.2

Investments

 

 

89.3

145.0

210.6

280.6

178.9

230.2

227.0

259.1

204.9

204.9

204.9

204.9

Current Assets

 

 

233.6

247.3

265.1

224.0

177.0

348.2

366.2

418.0

533.3

501.5

493.9

497.1

Stocks

 

 

10.5

11.0

9.4

6.9

6.8

19.9

23.3

26.6

26.0

26.6

27.4

27.9

Debtors

 

 

163.3

160.9

151.5

156.3

135.5

253.4

279.0

318.4

456.9

463.5

470.5

475.4

Cash

 

 

59.8

75.4

104.2

60.8

34.7

74.9

63.9

73.0

50.4

11.5

(3.9)

(6.2)

Current Liabilities

 

 

(238.7)

(248.9)

(229.6)

(277.4)

(227.2)

(483.2)

(545.8)

(631.0)

(758.3)

(750.5)

(721.2)

(697.8)

Creditors

 

 

(226.5)

(230.7)

(226.3)

(202.4)

(224.8)

(466.8)

(532.9)

(616.3)

(639.6)

(631.8)

(632.5)

(639.1)

Short term borrowings

 

 

(12.2)

(18.2)

(3.3)

(75.0)

(2.4)

(16.4)

(12.9)

(14.7)

(118.7)

(118.7)

(88.7)

(58.7)

Long Term Liabilities

 

 

(375.9)

(444.2)

(504.7)

(432.5)

(434.2)

(845.7)

(894.3)

(1,019.9)

(895.1)

(894.0)

(892.8)

(891.7)

Long term borrowings

 

 

(253.8)

(234.5)

(253.8)

(140.8)

(224.9)

(482.4)

(489.7)

(558.9)

(483.7)

(483.7)

(483.7)

(483.7)

Other long term liabilities

 

 

(122.1)

(209.7)

(250.9)

(291.7)

(209.3)

(363.3)

(404.6)

(461.0)

(411.4)

(410.3)

(409.1)

(408.0)

Net Assets

 

 

370.6

326.3

275.2

251.4

186.0

440.2

382.4

436.3

319.5

311.2

342.8

377.7

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CASH FLOW

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating Cash Flow

 

 

109.9

67.7

78.6

55.8

72.2

27.9

128.4

143.6

86.8

123.2

176.3

191.2

Net Interest

 

 

(13.4)

(11.5)

(13.2)

(12.8)

(12.8)

(19.0)

(16.9)

(19.1)

(17.7)

(20.0)

(17.5)

(17.0)

Tax

 

 

(7.1)

1.9

(1.6)

(5.7)

(4.8)

(5.3)

(6.7)

(7.6)

(13.2)

(12.1)

(16.9)

(18.3)

Net Capex

 

 

(74.8)

(50.1)

(27.1)

(37.2)

(25.8)

(41.2)

(81.2)

(92.3)

(99.4)

(116.6)

(112.3)

(112.3)

Acquisitions/disposals

 

 

(19.6)

(59.2)

(54.1)

(67.3)

18.2

39.5

(4.1)

(4.8)

22.7

0.0

0.0

0.0

Equity Financing

 

 

0.0

0.4

0.2

0.1

0.3

136.5

0.6

0.6

(2.7)

0.0

0.0

0.0

Dividends

 

 

(13.3)

(13.7)

(13.7)

(13.7)

(13.7)

(15.1)

(24.4)

(27.6)

(27.4)

(13.5)

(15.0)

(15.9)

Net Cash Flow

 

 

(18.3)

(64.5)

(30.9)

(80.8)

33.6

123.3

(4.3)

(7.3)

(50.9)

(38.9)

14.5

27.7

Opening core net debt/(cash)

 

 

207.4

206.2

177.3

152.9

155.0

192.6

423.9

492.7

500.0

552.0

590.9

576.3

HP finance leases

 

 

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

Other

 

 

19.5

93.4

55.3

78.7

(71.2)

(354.6)

(10.5)

(0.0)

(1.3)

0.0

(0.0)

(0.0)

Closing core net debt/(cash)

 

 

206.2

177.3

152.9

155.0

192.6

423.9

438.7

500.0

552.2

590.9

576.3

548.6

Closing PPP/PFI non-recourse net debt

 

52.0

100.1

151.2

222.6

91.1

87.1

82.9

94.6

95.4

95.4

95.4

95.4

Source: Company, Edison Investment Research

General disclaimer and copyright

This report has been commissioned by Renewi and prepared and issued by Edison, in consideration of a fee payable by Renewi. Edison Investment Research standard fees are £49,500 pa for the production and broad dissemination of a detailed note (Outlook) following by regular (typically quarterly) update notes. Fees are paid upfront in cash without recourse. Edison may seek additional fees for the provision of roadshows and related IR services for the client but does not get remunerated for any investment banking services. We never take payment in stock, options or warrants for any of our services.

Accuracy of content: All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report and have not sought for this information to be independently verified. Opinions contained in this report represent those of the research department of Edison at the time of publication. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations.

Exclusion of Liability: To the fullest extent allowed by law, Edison shall not be liable for any direct, indirect or consequential losses, loss of profits, damages, costs or expenses incurred or suffered by you arising out or in connection with the access to, use of or reliance on any information contained on this note.

No personalised advice: The information that we provide should not be construed in any manner whatsoever as, personalised advice. Also, the information provided by us should not be construed by any subscriber or prospective subscriber as Edison’s solicitation to effect, or attempt to effect, any transaction in a security. The securities described in the report may not be eligible for sale in all jurisdictions or to certain categories of investors.

Investment in securities mentioned: Edison has a restrictive policy relating to personal dealing and conflicts of interest. Edison Group does not conduct any investment business and, accordingly, does not itself hold any positions in the securities mentioned in this report. However, the respective directors, officers, employees and contractors of Edison may have a position in any or related securities mentioned in this report, subject to Edison's policies on personal dealing and conflicts of interest.

Copyright: Copyright 2019 Edison Investment Research Limited (Edison). All rights reserved FTSE International Limited (“FTSE”) © FTSE 2019. “FTSE®” is a trade mark of the London Stock Exchange Group companies and is used by FTSE International Limited under license. All rights in the FTSE indices and/or FTSE ratings vest in FTSE and/or its licensors. Neither FTSE nor its licensors accept any liability for any errors or omissions in the FTSE indices and/or FTSE ratings or underlying data. No further distribution of FTSE Data is permitted without FTSE’s express written consent.

Australia

Edison Investment Research Pty Ltd (Edison AU) is the Australian subsidiary of Edison. Edison AU is a Corporate Authorised Representative (1252501) of Myonlineadvisers Pty Ltd who holds an Australian Financial Services Licence (Number: 427484). This research is issued in Australia by Edison AU and any access to it, is intended only for "wholesale clients" within the meaning of the Corporations Act 2001 of Australia. Any advice given by Edison AU is general advice only and does not take into account your personal circumstances, needs or objectives. You should, before acting on this advice, consider the appropriateness of the advice, having regard to your objectives, financial situation and needs. If our advice relates to the acquisition, or possible acquisition, of a particular financial product you should read any relevant Product Disclosure Statement or like instrument.

New Zealand

The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are “wholesale clients” for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a “personalised service” and, to the extent that it contains any financial advice, is intended only as a “class service” provided by Edison within the meaning of the FAA (i.e. without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision.

United Kingdom

This document is prepared and provided by Edison for information purposes only and should not be construed as an offer or solicitation for investment in any securities mentioned or in the topic of this document. A marketing communication under FCA Rules, this document has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research.

This Communication is being distributed in the United Kingdom and is directed only at (i) persons having professional experience in matters relating to investments, i.e. investment professionals within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "FPO") (ii) high net-worth companies, unincorporated associations or other bodies within the meaning of Article 49 of the FPO and (iii) persons to whom it is otherwise lawful to distribute it. The investment or investment activity to which this document relates is available only to such persons. It is not intended that this document be distributed or passed on, directly or indirectly, to any other class of persons and in any event and under no circumstances should persons of any other description rely on or act upon the contents of this document.

This Communication is being supplied to you solely for your information and may not be reproduced by, further distributed to or published in whole or in part by, any other person.

United States

The Investment Research is a publication distributed in the United States by Edison Investment Research, Inc. Edison Investment Research, Inc. is registered as an investment adviser with the Securities and Exchange Commission. Edison relies upon the "publishers' exclusion" from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940 and corresponding state securities laws. This report is a bona fide publication of general and regular circulation offering impersonal investment-related advice, not tailored to a specific investment portfolio or the needs of current and/or prospective subscribers. As such, Edison does not offer or provide personal advice and the research provided is for informational purposes only. No mention of a particular security in this report constitutes a recommendation to buy, sell or hold that or any security, or that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person.

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1,185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1,185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

General disclaimer and copyright

This report has been commissioned by Renewi and prepared and issued by Edison, in consideration of a fee payable by Renewi. Edison Investment Research standard fees are £49,500 pa for the production and broad dissemination of a detailed note (Outlook) following by regular (typically quarterly) update notes. Fees are paid upfront in cash without recourse. Edison may seek additional fees for the provision of roadshows and related IR services for the client but does not get remunerated for any investment banking services. We never take payment in stock, options or warrants for any of our services.

Accuracy of content: All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report and have not sought for this information to be independently verified. Opinions contained in this report represent those of the research department of Edison at the time of publication. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations.

Exclusion of Liability: To the fullest extent allowed by law, Edison shall not be liable for any direct, indirect or consequential losses, loss of profits, damages, costs or expenses incurred or suffered by you arising out or in connection with the access to, use of or reliance on any information contained on this note.

No personalised advice: The information that we provide should not be construed in any manner whatsoever as, personalised advice. Also, the information provided by us should not be construed by any subscriber or prospective subscriber as Edison’s solicitation to effect, or attempt to effect, any transaction in a security. The securities described in the report may not be eligible for sale in all jurisdictions or to certain categories of investors.

Investment in securities mentioned: Edison has a restrictive policy relating to personal dealing and conflicts of interest. Edison Group does not conduct any investment business and, accordingly, does not itself hold any positions in the securities mentioned in this report. However, the respective directors, officers, employees and contractors of Edison may have a position in any or related securities mentioned in this report, subject to Edison's policies on personal dealing and conflicts of interest.

Copyright: Copyright 2019 Edison Investment Research Limited (Edison). All rights reserved FTSE International Limited (“FTSE”) © FTSE 2019. “FTSE®” is a trade mark of the London Stock Exchange Group companies and is used by FTSE International Limited under license. All rights in the FTSE indices and/or FTSE ratings vest in FTSE and/or its licensors. Neither FTSE nor its licensors accept any liability for any errors or omissions in the FTSE indices and/or FTSE ratings or underlying data. No further distribution of FTSE Data is permitted without FTSE’s express written consent.

Australia

Edison Investment Research Pty Ltd (Edison AU) is the Australian subsidiary of Edison. Edison AU is a Corporate Authorised Representative (1252501) of Myonlineadvisers Pty Ltd who holds an Australian Financial Services Licence (Number: 427484). This research is issued in Australia by Edison AU and any access to it, is intended only for "wholesale clients" within the meaning of the Corporations Act 2001 of Australia. Any advice given by Edison AU is general advice only and does not take into account your personal circumstances, needs or objectives. You should, before acting on this advice, consider the appropriateness of the advice, having regard to your objectives, financial situation and needs. If our advice relates to the acquisition, or possible acquisition, of a particular financial product you should read any relevant Product Disclosure Statement or like instrument.

New Zealand

The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are “wholesale clients” for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a “personalised service” and, to the extent that it contains any financial advice, is intended only as a “class service” provided by Edison within the meaning of the FAA (i.e. without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision.

United Kingdom

This document is prepared and provided by Edison for information purposes only and should not be construed as an offer or solicitation for investment in any securities mentioned or in the topic of this document. A marketing communication under FCA Rules, this document has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research.

This Communication is being distributed in the United Kingdom and is directed only at (i) persons having professional experience in matters relating to investments, i.e. investment professionals within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "FPO") (ii) high net-worth companies, unincorporated associations or other bodies within the meaning of Article 49 of the FPO and (iii) persons to whom it is otherwise lawful to distribute it. The investment or investment activity to which this document relates is available only to such persons. It is not intended that this document be distributed or passed on, directly or indirectly, to any other class of persons and in any event and under no circumstances should persons of any other description rely on or act upon the contents of this document.

This Communication is being supplied to you solely for your information and may not be reproduced by, further distributed to or published in whole or in part by, any other person.

United States

The Investment Research is a publication distributed in the United States by Edison Investment Research, Inc. Edison Investment Research, Inc. is registered as an investment adviser with the Securities and Exchange Commission. Edison relies upon the "publishers' exclusion" from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940 and corresponding state securities laws. This report is a bona fide publication of general and regular circulation offering impersonal investment-related advice, not tailored to a specific investment portfolio or the needs of current and/or prospective subscribers. As such, Edison does not offer or provide personal advice and the research provided is for informational purposes only. No mention of a particular security in this report constitutes a recommendation to buy, sell or hold that or any security, or that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person.

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1,185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1,185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

Share this with friends and colleagues