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Expectations raised

Renewi 18 November 2020 Update
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Renewi

Expectations raised

H121 results

Industrial support services

18 November 2020

Price

24.6p

Market cap

£197m

€1.12/£

Core group ongoing net debt
(ex-PPP/PFI finance and IFRS 16 leases, €m) at end September 2020

381

Shares in issue

800.1m

Free float

98.8%

Code

RWI

Primary exchange

LSE

Secondary exchange

Euronext Amsterdam

Share price performance

%

1m

3m

12m

Abs

11.8

0.4

(15.8)

Rel (local)

3.5

(4.5)

(5.4)

52-week high/low

45.0p

18.1p

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 events

FY21 end

March 2021

Analyst

Toby Thorrington

+44 (0)20 3077 5721

Renewi is a research client of Edison Investment Research Limited

H121 ended strongly for Renewi, recovering from earlier COVID-19 impacts that turned out to be less than management had previously anticipated. Relatively more resilient waste markets and actions taken to control cash flows and reduce costs contributed to this outturn. We have moved estimates ahead in all three forecast years.

Year end

Revenue (€m)

PBT*
(€m)

EPS*
(c)

DPS
(c)

P/E
(x)

Yield
(%)

03/19

1,780.7

63.1

6.0

1.7

4.6

6.2

03/20

1,775.4

54.3

5.4

0.5

5.1

1.8

03/21e

1,587.1

22.2

2.0

0.0

13.8

N/A

03/22e

1,691.3

46.4

4.3

0.0

6.4

N/A

03/23e

1,754.5

69.8

6.6

0.6

4.2

2.2

Note: *PBT and EPS (fully diluted) are normalised, excluding pension net finance costs, amortisation of acquired intangibles and exceptional items. FY20- are on an IFRS 16 basis.

Managing through COVID-19-disrupted markets

Group revenue and EBITDA for the period were both down just 3% although underlying EBIT fell c 25% year-on-year. Within the divisions, Commercial volumes recovered well in Q2 versus Q1 and although EBIT was lower, and effectively drove the overall group result, a €29.4m contribution was impressive in the circumstances. Mineralz & Water (M&W) made a small profit, with signs of momentum picking up at ATM. Specialties broke even overall and group central service costs were squeezed down. It is early days in the implementation of Renewi’s new strategy but there are indications of progress already in the three main strands (Renewi 2.0 cost reduction, investment in process innovation and recovery at ATM). Core net debt was €381m at the end of H1; adjusting for COVID-19-related deferred tax benefits underlying cash inflow was a positive c €10–15m. Reduced capex, no final FY20 dividend and much reduced exceptional outflows all contributed to this outturn. No H121 dividend was declared, as expected.

FY21 outlook and lower finance costs raise estimates

Management remains cautious against a background of the latest lockdowns but is still very positive about the medium-/longer-term business drivers. This said, FY21 is flagged as likely to be materially ahead of previous expectations. Consequently, we have raised our current year divisional and group EBIT estimates, with lower expected interest costs contributing to higher PBT and EPS projections in all three of our estimate years. Specifically, our earnings forecasts have more than doubled for FY21 and increased by 6–10% in the following two years.

Valuation: Improving risk/reward

Renewi’s share price picked up ahead of the H121 results announcement but has not continued to do so since, despite positive management messaging, and is at a similar level to the end of March when the outlook was much more uncertain. On our revised estimates, the FY22e P/E and EV/EBITDA multiples are 6.4x and 4.2x respectively. With markets stabilising, debt under control and a new strategy starting to be implemented, the risk/reward balance looks to be on an improving trend, in our view.

H121 results overview

After an uncertain start, trading performance and visibility improved as H121 progressed and to a greater extent than management had anticipated. Actions taken to reduce costs and contain cash outflows resulted in a lower net-debt position at the end of the period and a stable group financing position.

Exhibit 1: Renewi interim divisional splits (€m)

€m

H120

H121

% change y-o-y

Group revenue

850.7

821.4

-3.4

Commercial Waste

630.8

595.0

-5.7

Netherlands (inc Orgaworld)

408.5

396.8

-2.9

Belgium

222.9

198.5

-10.9

Intra-segment

-0.6

-0.3

Mineralz & Water

74.6

90.4

21.2

Specialities

159.1

149.4

-6.1

Inter-company adjustment

-13.8

-13.4

-2.9

Group operating profit

37.8

28.3

-25.1

Commercial Waste

40.7

29.4

-27.8

Netherlands (inc Orgaworld)

26.1

21.1

-19.2

Belgium

14.6

8.3

-43.2

Mineralz & Water

2.5

2.3

-8.0

Specialities

-0.2

0.0

Group central services

-5.2

-3.4

Source: Company

Commercial Waste: Volumes recover as H121 progressed

The Commercial division is the leading operator of waste collection services and sorting and processing facilities in the Netherlands (now including Orgaworld) and Belgium. The primary waste sectors served are industrial and commercial, domestic, construction and demolition (Netherlands only) and Hazardous (Belgium only). Of the c 13m tonnes processed per year, c 65% is recycled generating a secondary revenue stream.

The division experienced an initial impact from COVID-19 lockdowns at the beginning of FY21 but maintained full operational capacity throughout, with limited use of furlough schemes, and saw volumes recover well as the half progressed. Restrictions in the Netherlands were less severe but this pattern was reflected there with year-on-year volumes in Q1 down 6% and Q2 down 3% and we presume that in broad terms, this applied to both received waste and secondary materials produced. Revenue in the Netherlands was c 3% lower year-on-year, which indicates there was some improvement in average pricing in overall terms; given that recyclate income was down by 20%, entirely a market pricing effect, the inference is that inbound/gate fees were raised to compensate. A combination of dynamic pricing agreements (which inversely link intake charges with market recyclate prices such as cardboard, plastics, metals) and annual price reviews were responsible for this average pricing uplift. For the same reason, we understand there has been less market pressure on incineration costs; Renewi typically has volume contracts in place for significant proportions of its expected non-recyclable waste streams. With regard to the mix of waste streams handled in the Netherlands, bulk/domestic subsector volumes were c 30% up year-on-year in H1, reflecting more home working we believe. Construction/demolition volumes were also slightly ahead, commercial slightly behind while roller bin waste was down more substantially (c 25%) with core hospitality and leisure customer trade much reduced. In general terms, the Netherlands sector trends were also seen in Belgium, although its more restrictive lockdown (with higher apparent COVID-19 mortality rates and guidelines more similar to the UK in closing down non-essential businesses) amplified year-on-year volume shortfalls. Core volumes fell by 18%, comprising a drop of 24% in Q1 and a 10% decrease in Q2, which signifies a marked recovery as the half progressed. With revenue tracking c 11% below H120, positive average pricing effects on inbound waste helped to dampen the underlying volume performance, as seen in the Netherlands. Nevertheless, some capacity is being taken out in Belgium with the closure of two lines, in Ghent and Houthalen, with the associated cost reported as a H121 exceptional item. This is part of a wider structural cost-reduction programme at group level aiming to generate c €18m of savings this year.

Divisional level profitability reduced c 28% on a c 6% lower revenue base. The percentage decline in the Netherlands was less than in Belgium although in value terms the movements were similar, including higher depreciation in the former case. Overall, the divisional EBIT margin was 160bp lower at 4.9%.

M&W: ATM rebuilding soil activities

M&W has a broad soil treatment service capability (including thermal and washing processes) based in the Netherlands, with a developing model to produce graded building materials as an additional revenue stream. This division also undertakes specialist water, chemical and sludge processing services and operates three landfill sites (one in the Netherlands, two in Belgium).

Physical soil treatment volumes at ATM ramped up in H1 (c 300,000 tonnes of thermally treated soil, or TGG, produced +43%) and was one of the key drivers behind the M&W revenue uplift seen in H1. This activity pulled through untreated soil inventory and freed up hitherto full storage space, permitting the intake of new volumes from the market. Water and chemical/sludge treatment volumes were both down y-o-y (by 10% and 5% respectively); other things being equal this would infer that soil-related revenues actually rose by more than the c €16m divisional headline revenue increase. This was made up of c €10m from inbound volume (+c 15% y-o-y) and €6m from treated outbound (+c 53%). Information in the H121 results presentation showed that soil-related revenues were well ahead y-o-y throughout the first half (Q1+15%, Q2 +87% y-o-y), albeit from a relatively low base. In addition, Mineralz activity was constrained in Q1 but came back strongly in Q2 (-22% and +24% y-o-y respectively), with landfill income especially positive.

Soil shipments from ATM rose during H1 and almost 200,000 tonnes of thermally treated soil was placed in the period. We believe that the majority of this was TGG with relatively small amounts of graded volumes for use in building materials. Hence, most of this tonnage would have had an associated disposal cost which, along with carrying third-party offsite soil storage costs (previously treated as an exceptional cost), represented a headwind in H1. Nevertheless, divisional EBITDA increased by almost €2m to €10m (11.1% margin) in H1. After a slightly bigger rise in depreciation (by €2.1m to €7.7m, due to bringing the Maasvlakte landfill site extension onstream), M&W EBIT came in slightly lower than in H120.

The M&W division is understood to have 1m+ tonnes of TGG in its outbound business development pipeline which generates a disposal cost. In the newly developed business stream of graded gravel, sand and filler materials, Renewi is seeking to maximise product quality certification following processing to achieve the highest possible revenue per tonne and is investing in storage silos for separated fine filler materials.

Specialities: Solid UK Municipal performance

This division contains two niche European waste stream processors and producers of recycled secondary materials (recycling glass and white goods) as well as Renewi’s UK Municipal waste processing operations, with all three companies operating independently.

Collectively, volumes in this division were possibly the most resilient in the group during the COVID-19 lockdown periods with Q1 tracking just 2% lower y-o-y and then 2% ahead in Q2. That said, the period was not without its challenges with temporary UK household waste recycling centres and European customer glass furnace closures (affecting UK Municipal and Maltha respectively) included within these figures.

In revenue terms, UK Municipal is the largest business in this division; taking the geographic split as a proxy, in euros revenue rose by almost 9% (slightly more in sterling). That said, the quarterly volume performance (Q1: +24%, Q2: +12%) suggests firmer underlying activity levels. In simple terms, this is likely to reflect increased numbers of people working from home or furloughed and generating more domestic waste for recycling while doing so. This is consistent with Biffa’s recent H1 results announcement which showed headline Municipal revenues +5.5% y-o-y (and Industrial and Commercial revenue -27.7% for the same period).

In Europe, Maltha (glass recycling) and Coolrec (white goods – principally fridges – and small electrical appliance recycling) are both exposed to the Belgian market, which experienced more severe lockdown conditions, as seen in the Commercial Waste division. Maltha (volume y-o-y, Q1: -22%, Q2: -8%) was hindered by closures across the leisure and hospitality industries generating less bottle waste. Coolrec’s volumes (Q1: -7%, Q2: +15% y-o-y) reflected the initial closure of container parks/recycling centres and then pent-up demand effects on reopening. Outbound revenues (ie sale of materials recovered, processed and sold for re-use) were down by almost 30% for the division from a combination of lower overall volumes and some softness in recyclate prices.

The division as a whole broke even and all three constituent companies recorded a similar outturn in our view. For UK Municipal, this would represent a noteworthy improvement compared to prior years, especially after taking into account some central cost reallocation under the new divisional structure. Our only other observation is to note that the outstanding 25% minority in the Barnsley, Doncaster & Rotherham entity was acquired after the period end.

Net-debt reduction and stable group financing position

According to the pre-close statement, core net debt1 stood at €407m at the end of August (compared to c €457m at the end of FY20) and this reduced further to €381m by the half-year end. Around €68m positive cash inflow was the primary driver here and most of the remaining movement was due to favourable FX translation of sterling borrowings.

Pre-IFRS 16 lease liabilities of €210.1m (end March €202.7m) and non-recourse PPP entity funding of €84.2m (€90m)

H121 operating cash inflow before working capital effects was a robust €75m, which was similar to and slightly ahead of the levels generated in the prior year and from a slimmer corporate structure. Lower profitability was compensated for by reduced cash leakage from non-trading outflows. Specifically, underlying EBITDA was €88.5m while released UK Municipal onerous contract provisions reduced to c €8m and other cash exceptional costs of €4m related to initial actions under the new Renewi 2.0 strategy programme. Pension deficit cash recovery payments of c €2m were in line with H120. There was also an underlying working capital inflow of c €5m with a favourable net payables/receivables movement, including larger than normal individual line item movements due the COVID-19-affected pattern of trading. In addition, tax payment deferrals under government coronavirus support schemes boosted the reported working capital inflow by a further €54m (in addition to the €6m recorded on the FY20 balance sheet). As a result, the total group operating cash inflow was €134m for the first half as a whole and double the H120 level.

Further down the cash flow statement, the most significant items were:

Lower average debt levels and, as a result, cost of borrowing resulted in lower interest costs (down by €4m to €13m including lease interest).

Net capex was constrained to €27m (compared to owned asset depreciation of c €38m), the majority of which was of a replacement nature save for some growth spend in M&W (ie ATM silos and Maasvlakte landfill capacity expansion).

IFRS 16 lease capital repayments of c €20m

A number of smaller items made up the remaining net cash outflows, leaving the c €68m overall group inflow noted earlier.

COVID-19 response review: FY20 ended in the early phase of lockdowns in Renewi’s main markets triggered by the developing COVID-19 pandemic. With significant uncertainty prevalent at this time, Renewi had €195m cash drawn down (from total facilities of over €700m) contributing to €252m liquidity headroom under existing facilities at that time. No change in the scale of borrowing arrangements has been made subsequently, although the existing 3.5x net debt: EBITDA covenant was relaxed to 5.5x in September 2020 and 6.0x in March 2021 before reverting to 3.5x in September 2021 in agreement with banking partners.

The COVID-19 impact on trading has been less material than management initially estimated. This is partly due to business resilience and recovery seen in most segments but also due to actions taken to reduce operating and staff costs (amounting to €10m, captured in EBIT). In addition, the decisions not to declare an FY20 final dividend and to restrict capex (saving €10m and €22m respectively) led to combined cash outflow savings of €42m in H1.

The group core net debt:EBITDA multiple on a trailing 12-month basis measured in September was barely changed at 3.1x (after adding back the temporary tax deferral benefit) versus 2.98x for FY20. In an unprecedented trading period, this stability is commendable.

Amended banking terms explicitly allowed for secondary COVID-19 outbreaks in calendar 2020, which is effectively what is being seen now. The group liquidity position had increased to €325m at the end of H1 and we take reduced cash on hand (now below €100m) as a sign of increased comfort levels with current borrowing levels in the context of more settled market conditions.

Cash flow outlook: taking the deferred tax position first, the discrete COVID-19 related €60m is to be repaid in 36 monthly instalments from July 2021, so there will be no unwinding of this benefit in FY21. Management has inferred higher capex in H2 (taking the total to c €75m for the year) as well as some exceptional costs relating to Renewi 2.0, expected to be less than €5m. We should add that significant reductions in ATM’s existing treated ungraded soil inventory would also represent a cost and cash drag, although this is unlikely to complete during the current financial year. Allowing for these factors and H2 trading being at typically seasonally lower activity levels in a normal year, we expect end FY21 core net debt to nudge above €400m again with 3.2x net debt:EBITDA level slightly above the half-year stage. Beyond this, our model projects this multiple reducing to 2.7x and then 2.3x at the end of FY22 and FY23 respectively. Management’s stated medium-term target is to reduce core net debt to EBITDA to below 2x. Renewi’s next scheduled financing event is a €100m retail bond redemption in June 2022. The company’s RCF and term loan – which together approach €500m of the €700m facilities on hand – run to May 2023 with an option to extend by a further year.

FY21 trading and lower finance costs raise estimates

We raised FY21 estimates by €4m with the half-year update, leaving subsequent years unchanged (from when they were set in June) at that time. Management has raised its FY21 cost-saving projection (from €15m originally – with €10m achieved in H1 – to a revised €18m) contributing to a ‘full year performance materially ahead of previous expectations’. Resilience in Commercial and greater stability within Specialities cause us to raise our FY21 EBIT estimate by c €8m to c €52m. We have also revised down interest costs, which benefits all three of our forecast years.

Exhibit 2: Renewi revised estimates

EPS, fully diluted, normalised (p)

PBT, normalised (£m)

EBITDA (£m)

Old*

New

% chg.

Old*

New

% chg.

Old*

New

% chg.

FY21e

0.9

2.0

+118

10.6

22.2

+110

125.5

133.3

+6.2

FY22e

3.9

4.3

+10.6

42.2

46.4

+10.3

159.1

159.0

N/A

FY23e

6.2

6.6

+6.0

66.1

69.8

+5.8

183.0

182.9

N/A

Source: Edison Investment Research. Note: EBITDA = banking covenant basis, pre-IFRS 16 (ie excluding depreciation on Right of Use assets).

Exhibit 3: Financial summary

m's

2018

2018

2019

2020

2021e

2022e

2023e

March

IFRS

IFRS

IFRS

IFRS

IFRS

IFRS

IFRS

PROFIT & LOSS

 

 

Sterling

Euros

Euros

Euros

Euros

Euros

Euros

Revenue

 

 

1,565.7

1,760.3

1,780.7

1,775.4

1,587.1

1,691.3

1,754.5

Cost of Sales

 

 

(1,276.9)

(1,419.2)

(1,470.4)

(1,467.5)

(1,317.3)

(1,399.6)

(1,447.5)

Gross Profit

 

 

288.8

341.1

310.3

307.9

269.8

291.7

307.0

EBITDA

 

 

156.9

176.3

179.7

167.1

133.3

159.0

182.9

Operating Profit (before GW and except.)

 

69.1

82.5

85.5

87.6

52.3

76.5

98.9

Net Interest

 

 

(14.2)

(15.0)

(14.4)

(18.5)

(18.5)

(18.0)

(17.0)

Other Finance

 

 

(5.1)

(7.1)

(8.4)

(15.7)

(12.1)

(12.1)

(12.1)

JV/Associates

 

 

2.3

2.6

0.4

0.9

0.5

0.0

0.0

Intangible Amortisation

 

 

(5.8)

(6.7)

(6.4)

(6.4)

(3.4)

(3.4)

(3.4)

Non Trading & Exceptional Items

 

 

(95.7)

(108.4)

(145.1)

(107.1)

(17.2)

(10.0)

(6.0)

Profit Before Tax (Edison norm)

 

 

52.1

63.0

63.1

54.3

22.2

46.4

69.8

Pension net finance costs

 

 

(0.6)

(0.7)

(0.6)

(0.2)

0.2

0.0

0.0

Profit Before Tax (Renewi norm)

 

 

51.5

62.3

62.5

54.1

22.4

46.4

69.8

Profit Before Tax (statutory)

 

 

(50.0)

(52.8)

(89.0)

(59.4)

1.8

33.0

60.4

Tax - headline

 

 

2.6

1.4

12.4

(1.1)

(2.6)

(11.1)

(16.8)

Profit After Tax (norm)

 

 

39.1

47.2

47.5

41.0

16.8

35.3

53.1

Profit After Tax

 

 

(47.4)

(51.5)

(76.6)

(60.5)

(0.8)

21.9

43.7

 

 

 

 

 

 

 

 

 

 

Average Number of Shares Outstanding (m)

 

799.9

799.9

796.7

794.9

795.2

795.2

795.2

EPS - Edison norm (p/c) FD

 

 

4.9

5.9

6.0

5.4

2.0

4.3

6.6

EPS - Renewi norm (p/c) FD

 

 

4.8

5.4

6.0

5.4

2.1

4.3

6.6

EPS - (p/c)

 

 

(5.9)

(6.8)

(11.7)

(9.8)

(0.2)

2.7

5.4

Dividend per share (p/c)

 

 

3.05

3.46

1.68

0.52

0.00

0.00

0.56

 

 

 

 

 

 

 

 

 

 

Gross Margin (%)

 

 

18.4

19.4

17.4

17.3

17.0

17.3

17.5

EBITDA Margin (%)

 

 

10.0

10.0

10.1

9.4

8.4

9.4

10.4

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

 

4.4

4.7

4.8

4.9

3.3

4.5

5.6

 

 

 

 

 

 

 

 

 

 

BALANCE SHEET

 

 

 

 

 

 

 

 

 

Fixed Assets

 

 

1,456.3

1,669.2

1,439.6

1,616.8

1,577.4

1,578.8

1,583.7

Intangible Assets

 

 

606.3

699.3

605.6

610.1

607.3

599.8

592.3

Tangible Assets (inc RoU assets)

 

 

623.0

710.8

629.1

790.9

777.4

786.3

798.7

Investments

 

 

227.0

259.1

204.9

215.8

192.7

192.7

192.7

Current Assets

 

 

366.2

418.0

533.3

503.3

392.2

399.7

425.0

Stocks

 

 

23.3

26.6

26.0

20.7

18.6

19.7

20.4

Debtors

 

 

279.0

318.4

456.9

288.1

280.1

294.0

303.2

Cash

 

 

63.9

73.0

50.4

194.5

93.5

86.0

101.4

Current Liabilities

 

 

(545.8)

(631.0)

(758.3)

(635.2)

(598.0)

(611.8)

(624.5)

Creditors

 

 

(532.9)

(616.3)

(639.6)

(618.4)

(584.3)

(598.1)

(610.8)

Short term borrowings

 

 

(12.9)

(14.7)

(118.7)

(16.8)

(13.7)

(13.7)

(13.7)

Long Term Liabilities

 

 

(894.3)

(1,019.9)

(895.1)

(1,249.6)

(1,149.3)

(1,122.5)

(1,096.3)

Long term borrowings

 

 

(489.7)

(558.9)

(483.7)

(634.9)

(503.7)

(503.7)

(503.7)

Other long term liabilities

 

 

(404.6)

(461.0)

(411.4)

(614.7)

(645.6)

(618.8)

(592.6)

Net Assets

 

 

382.4

436.3

319.5

235.3

222.4

244.2

287.9

 

 

 

 

 

 

 

 

 

 

CASH FLOW

 

 

 

 

 

 

 

 

 

Operating Cash Flow

 

 

128.4

143.6

86.8

167.8

171.8

144.6

177.2

Net Interest

 

 

(16.9)

(19.1)

(17.7)

(27.0)

(24.9)

(24.4)

(23.4)

Tax

 

 

(6.7)

(7.6)

(13.2)

(10.1)

(10.5)

(5.4)

(11.1)

Net Capex

 

 

(81.2)

(92.3)

(99.4)

(73.4)

(74.9)

(87.3)

(92.3)

Acquisitions/disposals

 

 

(4.1)

(4.8)

22.7

81.0

2.2

0.0

0.0

Equity Financing

 

 

0.6

0.6

(2.7)

0.6

(0.1)

0.0

0.0

Dividends

 

 

(24.4)

(27.6)

(27.4)

(8.6)

0.0

0.0

0.0

Net Cash Flow

 

 

(4.3)

(7.3)

(50.9)

130.3

63.6

27.4

50.4

Opening core net debt/(cash)

 

 

423.9

492.7

500.0

552.0

457.2

423.9

431.4

IFRS16 lease capital repayments

 

 

0.0

0.0

0.0

(38.5)

(35.0)

(35.0)

(35.0)

Other

 

 

(10.5)

(0.0)

(1.1)

3.0

4.7

0.0

0.0

Closing core net debt/(cash)

 

 

438.7

500.0

552.0

457.2

423.9

431.4

416.0

Closing PPP/PFI non-recourse net debt

 

82.9

94.6

95.4

90.0

84.2

84.2

84.2

IFRS16 Lease finance

 

 

 

 

 

202.7

215.1

219.6

224.1

Source: Company data, Edison Investment Research. Note: *EPS for continuing businesses in FY20 was 5.1c and the 5.4c figure shown includes discontinued operations.

Source: Sourec

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 Edison analyst 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 2020 Edison Investment Research Limited (Edison).

Australia

Edison Investment Research Pty Ltd (Edison AU) is the Australian subsidiary of Edison. Edison AU is a Corporate Authorised Representative (1252501) of Crown Wealth Group Pty Ltd who holds an Australian Financial Services Licence (Number: 494274). 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

Neither this document and associated email (together, the "Communication") constitutes or form part of any offer for sale or subscription of, or solicitation of any offer to buy or subscribe for, any securities, nor shall it or any part of it form the basis of, or be relied on in connection with, any contract or commitment whatsoever. Any decision to purchase shares in the Company in the proposed placing should be made solely on the basis of the information to be contained in the admission document to be published in connection therewith.

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 (nor will such persons be able to purchase shares in the placing).

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

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

1185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 12, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

Source: Sourec

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 Edison analyst 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 2020 Edison Investment Research Limited (Edison).

Australia

Edison Investment Research Pty Ltd (Edison AU) is the Australian subsidiary of Edison. Edison AU is a Corporate Authorised Representative (1252501) of Crown Wealth Group Pty Ltd who holds an Australian Financial Services Licence (Number: 494274). 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

Neither this document and associated email (together, the "Communication") constitutes or form part of any offer for sale or subscription of, or solicitation of any offer to buy or subscribe for, any securities, nor shall it or any part of it form the basis of, or be relied on in connection with, any contract or commitment whatsoever. Any decision to purchase shares in the Company in the proposed placing should be made solely on the basis of the information to be contained in the admission document to be published in connection therewith.

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 (nor will such persons be able to purchase shares in the placing).

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

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

1185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 12, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

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